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Mastering Services Pricing: Designing pricing that works for you and for your clients

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Mastering Services Pricing: Designing pricing that works for you and for your clients


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  • Copyright 2015
  • Edition: 1st
  • Book
  • ISBN-10: 1-292-06336-X
  • ISBN-13: 978-1-292-06336-2

The definitive guide on how to price services to deliver profit, fund for product development and meet the needs of the customer/client at a price they are happy to pay.

As traditional manufacturing companies move to service provision, how should they price their services?

What pricing model should they develop and what buyer behaviour model should they nurture? What will happen if you get your services offering right, but your pricing model wrong?

Mastering Services Pricing shows you how to create pricing that allows you to deliver maximum profit and high client satisfaction.

· Learn that the ‘cost plus’ model won’t work for service provision

· Understand how your competitors will use pricing to gain market share, create growth and tie in existing customers

· Recognise that Product pricing is coercive, services pricing is collaborative

· Understand that services pricing includes lots of ‘frees’

· Understand market positioning and how this affects your price and how you can communicate this to clients

· Discover how to maximise profit and client satisfaction

· Be confident in your pricing strategy by having a sound basis for your decision making

Sample Content

Table of Contents

About the author

Publisher’s acknowledgements



1  How clients buy services

The data

Rocket Science

Relationship Advice

Routine Work

The five criteria

Pricing Rocket Science

Pricing Relationship Advice

Pricing Routine Work

2  Cost-plus pricing and beyond

Cost-plus pricing

Client-driven pricing

Competition-driven pricing (market-driven)

How service firms compete

What next?

Client messaging

The competitive landscape – what is your market positioning?

New service launches – setting the market price

3  Pitching for work

Pitching for Rocket Science

Pitching for Relationship Advice

The link between chemistry, likeability and price

Pitching for Routine Work


Post-pitch negotiation on price

The tactics of pitching4  Negotiating price

Price and scope are linked

A small reduction

Major reductions

Clients on historically low rates

Dealing with procurement

Just how strong is your relationship?

Negotiating with procurement

Negotiations and Routine Work

5 The pricing lever

Strategy one – increase your prices

Strategy two – work harder

Strategy three – work smarter not harder

Strategy four – cut overheads, reduce the cost base

Strategy five – cut prices, win more work

6 Alternative fees

Option 1 – fixed fees

Option 2 – project-based costing

Option 3 – blended rates

Option 4 – capped fees

Option 5 – annual retainers

Option 6 – contingent fees

Option 7 – success-based fees

Option 8 – discounted hourly rates

The confident partner

7  Pricing tactics

1. Free not cheap

2. Show the price of added value

3. Give the client options

4. Dealing with lowballing

5. Supporting a client in distress

6. The ultimatum

7. Pedestal selling

8. Discounts for volume

9. Annual price rises

10. Having lower cost options

11. Team structure

12. Be in the pack

13. Market intelligence

14. Trophy clients

15. Negotiate with the toughest clients at the right time

16. Differential partner rates

17. Deliver what was actually paid for

18. Show the discount

19. Lower rate does not equal less spend

20. Act for clients that you like (not the bullies)

From tactics to strategy

8  Drivers of value

Typical starting point

Creating different services – part 1: best ever service

Creating different services – part 2: lowest cost

Creating different versions

Price discrimination

Creating different services – statistics and data

Using existing clients as your differentiator

Moving from costs incurred to value delivered

The perfect solution – start with value

Value pricing by work type

The big question: does value pricing mean the end of charging by time?

9  Learning from industry

Pricing across the lifetime of a product

Penetration pricing

Learning from airlines

Add-ons and after care – double the profit

Unexpected extra costs and penalties

Insurers and the pool

Price matching promises to (accidentally) stop competition

Power by the hour – changing the supply dynamic

10  Saving clients money

The pricing dilemma

KPI exercise

Spend reduction projects

Targeted reductions

Consolidation and its dangers

Creating and sharing savings

Hidden resources and how to use them

Rocket Science

Routine Work

When to say no

Clients who always want to save money

Finally – when did you last save a client money?

11  Pricing controls and capabilities

Building pricing controls


The rate card


Analysis of current clients

Building pricing capabilities

The role of pricing in the organisation

Defining pricing capability

Pricing needs a home



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