Why pricing?


For any for-profit organization to be successful it needs to do two things:

  1. Create value for clients, and
  2. Capture a fair share of that value for themselves.

Unless we are creating value for clients, we have no right to capture value. But creating value is insufficient for success. If we create value for clients but are not successful at capturing a fair share of the value, then we are going to be less profitable than our peers and increasingly compromised in the war for talent.

Many leading professional service firms have a very strong focus on creating value for clients. They invest in getting to know their clients so that they can serve them better. They pull in all the resources needed to address often challenging timelines. Expertise is never compromised. But when it comes to capturing value, few firms regard it as a key competence. Few firms believe their pricing capability provides them with a competitive advantage.

Successful pricing delivers significant benefits to those firms that do it well, including:

  • Winning more work – Through better targeting, effective communication and use of appropriate pricing tactics, firms should be able to reduce the number of occasions where the price-point gets in the way of them winning work.
  • Improved client relationships – Where pricing is managed poorly, it becomes a source of tension between firms and their clients. Where pricing is managed effectively it should strengthen client relationships and build trust.
  • Capturing a greater share of the value created – For a firm with revenue of $1m per partner, a 5% improvement in pricing equates to an additional $50k in profit per partner. A 5% improvement can be achieved through higher rates, lower discounts, reduced write-offs, providing a higher estimate or a combination of 1-2% on a few these.

Clients have become much more aggressive in the way they procure professional services. Firms are now investing in their pricing capabilities to help rebalance negotiations.

Our approach is highly tailored to meet the specific objectives of each engagement, while focussed on transferring knowledge to clients. Combining academic theory with a practical bent, our aim is to deliver measurable value to our clients.