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Mark Burton
Mark Burton

Key factors in successful pricing of outsourced services

BusinessEconomy & Finance
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Winning Customers, Making Profits: Pricing For Success Mark Burton Vice President, Holden Advisors
Agenda ,[object Object],[object Object],[object Object],[object Object]
What Clients Are Looking For* ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],The problem is that many clients don’t define this well - and many service providers lack the service management and pricing expertise to profitably manage these relationships. *Source: MIT Center for Information Systems Research and CIO Magazine
Negotiating Outsourcing Deals Solution Price Logic is often the first casualty.
The Solution? SLA’s! Solution Price
The Problem With SLA’s What the Client Wants What’s in the RFP A Better Solution? Needs definitions lead to suboptimal solutions, pricing, and performance!
This Approaches Misses Something Risk is a critical element of all outsourcing relationships. It must be evaluated, negotiated, and priced.
Defining Risk Call Center Example Understanding operations enables a risk score to be developed – and negotiated ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],+1 +2 +3 ,[object Object],[object Object],[object Object],[object Object],[object Object],Risk range from 1 to 10 (highest risk is 10) More Risk Less Risk
Services Pricing Models Two Key Drivers ,[object Object],[object Object],[object Object],Do conditions favor being able to deliver against requirements on time, on budget, and to a high degree of quality? Risk to Supplier Connection to Value LOW HIGH LOW HIGH
Value and Risk Drive Pricing Model Output-based Find Balance Input-Based Danger Zone Low High Low High Risk Connection to Customer Value
Example: IT Outsourcer ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Low High Low High Risk Connection to Customer Value
Pricing: Risk, Value, and Offering Software Application Development Deal Guidance +% Deal Guidance -% ,[object Object],[object Object],Gold Package SLA’s Base Package SLA’s Price Levers +% +% -% -% Price Levers Initial Fixed-Price Level Set by: Type of Application Size Complexity Criticality
Final Thoughts ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Thank You! Mark Burton Holden Advisors 978-405-0020 x1021 [email_address] www.holdenadvisors.com www.pricingwithconfidencebook.com

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Osw Pricing For Success Mark Burton

  • 1. Winning Customers, Making Profits: Pricing For Success Mark Burton Vice President, Holden Advisors
  • 2.
  • 3.
  • 4. Negotiating Outsourcing Deals Solution Price Logic is often the first casualty.
  • 5. The Solution? SLA’s! Solution Price
  • 6. The Problem With SLA’s What the Client Wants What’s in the RFP A Better Solution? Needs definitions lead to suboptimal solutions, pricing, and performance!
  • 7. This Approaches Misses Something Risk is a critical element of all outsourcing relationships. It must be evaluated, negotiated, and priced.
  • 8.
  • 9.
  • 10. Value and Risk Drive Pricing Model Output-based Find Balance Input-Based Danger Zone Low High Low High Risk Connection to Customer Value
  • 11.
  • 12.
  • 13.
  • 14. Thank You! Mark Burton Holden Advisors 978-405-0020 x1021 [email_address] www.holdenadvisors.com www.pricingwithconfidencebook.com