Pricing options for professional firms

Passle

With the rise of procurement professionals at client organisations, advisory firms need to be better equipped to deal with challenges on price and value. Their ability to take control can be enhanced by clear articulation (with pros and cons) of pricing options early in the process and can often lead to better outcomes for both sides.

Richard Burcher, widely regarded as a leading expert in professional firm pricing (and speaker at this year's PM Forum Conference - Tomorrow's World ) explains the advantages to the approach, amongst others the 'deal effect' which can encourage your prospect to pick a premium product.

Client 'willingness to pay' has less to do with the service itself and more to do with the context in which it is sold and how it is presented. An intriguing example emerged a few years ago with an offer proposed by The Economist, in which the annual subscription to the online version of the magazine was sold for $59, and the subscription for the paper edition and the one for both versions together was sold $125. Professor Dan Ariely, a scholar at MIT decided to test the effect of the same offer without including the disfavoured version i.e. only the paper edition. The result was the structure of the offer adopted by The Economist exploited a concept known as the 'deal effect' that enabled them to enhance the sales of the more expensive product when compared with the alternatives.