Mastering services pricing: designing pricing that works for you and for your clients

Cover......Page 1
Contents......Page 10
About the author......Page 14
Publisher’s acknowledgements......Page 15
Author’s acknowledgements......Page 16
Preface......Page 18
Introduction......Page 20
1 How clients buy services......Page 30
 THE DATA......Page 32
 ROCKET SCIENCE......Page 34
 RELATIONSHIP ADVICE......Page 37
 ROUTINE WORK......Page 38
 THE FIVE CRITERIA......Page 39
 PRICING ROCKET SCIENCE......Page 41
 PRICING RELATIONSHIP ADVICE......Page 44
 PRICING ROUTINE WORK......Page 49
2 Cost-plus pricing and beyond......Page 52
 COST-PLUS PRICING......Page 54
 CLIENT-DRIVEN PRICING......Page 59
 COMPETITION-DRIVEN PRICING (MARKET-DRIVEN)......Page 62
 HOW SERVICE FIRMS COMPETE......Page 66
 WHAT NEXT?......Page 74
 THE COMPETITIVE LANDSCAPE – WHAT IS YOUR MARKET POSITIONING?......Page 75
 NEW SERVICE LAUNCHES – SETTING THE MARKET PRICE......Page 77
3 Pitching for work......Page 82
 PITCHING FOR ROCKET SCIENCE......Page 84
 PITCHING FOR RELATIONSHIP ADVICE......Page 86
 THE LINK BETWEEN CHEMISTRY, LIKEABILITY AND PRICE......Page 91
 PITCHING FOR ROUTINE WORK......Page 96
 RETENDERS......Page 100
 POST-PITCH NEGOTIATION ON PRICE......Page 102
 THE TACTICS OF PITCHING......Page 104
4 Negotiating price......Page 110
 PRICE AND SCOPE ARE LINKED......Page 117
 A SMALL REDUCTION......Page 121
 MAJOR REDUCTIONS......Page 123
 CLIENTS ON HISTORICALLY LOW RATES......Page 124
 DEALING WITH PROCUREMENT......Page 128
 JUST HOW STRONG IS YOUR RELATIONSHIP?......Page 129
 NEGOTIATING WITH PROCUREMENT......Page 131
 NEGOTIATIONS AND ROUTINE WORK......Page 138
5 The pricing lever......Page 142
 STRATEGY 1 – INCREASE YOUR PRICES......Page 144
 STRATEGY 2 – WORK HARDER......Page 153
 STRATEGY 3 – WORK SMARTER, NOT HARDER......Page 158
 STRATEGY 4 – CUT OVERHEADS, REDUCE THE COST BASE......Page 159
 STRATEGY 5 – CUT PRICES, WIN MORE WORK......Page 162
6 Alternative fees......Page 166
 OPTION 1 – FIXED FEES......Page 169
 OPTION 2 – PROJECT-BASED COSTING......Page 173
 OPTION 4 – CAPPED FEES......Page 185
 OPTION 5 – ANNUAL RETAINERS......Page 186
 OPTION 6 – CONTINGENT FEES......Page 187
 OPTION 7 – SUCCESS-BASED FEES......Page 189
 OPTION 8 – DISCOUNTED HOURLY RATES......Page 190
 THE CONFIDENT PARTNER......Page 191
7 Pricing tactics......Page 192
 FREE, NOT CHEAP......Page 194
 GIVE THE CLIENT OPTIONS......Page 196
 DEALING WITH LOWBALLING......Page 197
 THE ULTIMATUM......Page 200
 DISCOUNTS FOR VOLUME......Page 201
 ANNUAL PRICE RISES......Page 202
 HAVING LOWER COST OPTIONS......Page 203
 TEAM STRUCTURE......Page 204
 BE IN THE PACK......Page 205
 MARKET INTELLIGENCE......Page 206
 TROPHY CLIENTS......Page 207
 NEGOTIATE WITH THE TOUGHEST CLIENTS AT THE RIGHT TIME......Page 208
 DIFFERENTIAL PARTNER RATES......Page 210
 SHOW THE DISCOUNT......Page 212
 LOWER RATE DOES NOT EQUAL LESS SPEND......Page 213
 ACT FOR CLIENTS THAT YOU LIKE (NOT THE BULLIES)......Page 214
 FROM TACTICS TO STRATEGY......Page 215
8 Drivers of value......Page 216
 TYPICAL STARTING POINT......Page 218
 CREATING DIFFERENT SERVICES – PART 1: BEST EVER SERVICE......Page 219
 CREATING DIFFERENT SERVICES – PART 2: LOWEST COST......Page 223
 CREATING DIFFERENT VERSIONS......Page 224
 CREATING DIFFERENT SERVICES – STATISTICS AND DATA......Page 228
 USING EXISTING CLIENTS AS YOUR DIFFERENTIATOR......Page 230
 MOVING FROM COSTS INCURRED TO VALUE DELIVERED......Page 231
 THE PERFECT SOLUTION – START WITH VALUE......Page 232
 VALUE PRICING BY WORK TYPE......Page 235
 THE BIG QUESTION: DOES VALUE PRICING MEAN THE END OF CHARGING BY TIME?......Page 236
9 Learning from industry......Page 238
 PRICING ACROSS THE LIFETIME OF A PRODUCT......Page 240
 PENETRATION PRICING......Page 244
 LEARNING FROM AIRLINES......Page 245
 ADD-ONS AND AFTERCARE – DOUBLE THE PROFIT......Page 252
 UNEXPECTED EXTRA COSTS AND PENALTIES......Page 255
 INSURERS AND THE POOL......Page 256
 PRICE MATCHING PROMISES TO (ACCIDENTALLY) STOP COMPETITION......Page 257
 POWER BY THE HOUR – CHANGING THE SUPPLY DYNAMIC......Page 259
10 Saving clients money......Page 262
 THE PRICING DILEMMA......Page 264
 KEY PERFORMANCE INDICATORS EXERCISE......Page 269
 SPEND REDUCTION PROJECTS......Page 271
 TARGETED REDUCTIONS......Page 273
 CONSOLIDATION AND ITS DANGERS......Page 274
 CREATING AND SHARING SAVINGS......Page 276
 HIDDEN RESOURCES AND HOW TO USE THEM......Page 277
 ROUTINE WORK......Page 278
 WHEN TO SAY NO......Page 279
 CLIENTS WHO ALWAYS WANT TO SAVE MONEY......Page 280
 FINALLY – WHEN DID YOU LAST SAVE A CLIENT MONEY?......Page 281
11 Pricing controls and capabilities......Page 284
 UTILISATION......Page 286
 THE RATE CARD......Page 288
 WRITE-OFFS......Page 291
 ANALYSIS OF CURRENT CLIENTS......Page 292
 BUILDING PRICING CAPABILITIES BY ROBERT BROWNE......Page 295
 THE ROLE OF PRICING IN THE ORGANISATION......Page 296
 DEFINING PRICING CAPABILITY......Page 297
 PRICING NEEDS A HOME......Page 301
 SUMMARY......Page 307
Index......Page 308