WSJ on Pricing

The Wall Street Journal posted several excellent articles (including links to some MIT Sloan articles) on pricing yesterday. I thought it might be helpful to provide the links.

7 thoughts on “WSJ on Pricing

  1. Hey Ed, Thanks for the notes here. It’s good to see such high profile notice for value pricing. Since we switched to fixed pricing (value pricing is harder to nail down in nonprofits) our profits have increased and client satisfaction has too. They’re not getting nickled and dimed every phone call. I even got my CPA to value price services to our firm – I’m happier that way since I know he’ll just “get ‘er done” rather than spend time billing 1/4 hours. And I fired my lawyer since he wants to bill postage! I’m in the market for value=based legal services instead. Keep up the proselytizing ! =KA

  2. As always – great stuff Ed.

    After over a year of fixed price bids, we are still finding our way. Most of the problems stem from a broken sales process – if you don’t know exactly what the customer wants, it’s impossible to give a firm price. The catch is that some clients don’t want to spend the time (and money) up front to figure it out. They want (or at least think they want) to get a-movin’ on the mission critical project right now so pleasesendtheproposalandletsgo!

    We just walked away from a decent prospect today that had that mindset and wouldn’t budge. Even though the opportunity was fairly decent sized, I’m too old to deal with cleaning up the mess post-sale. I’m just not interested in it.

    The other side of the picture that we still continue to struggle with is minor support issues. We have clients on annual support plans but for the items that aren’t covered – what do other firms do? We are moving to an empowered service staff model. The service folks plug a number into our ProjectEase add-on for SageCRM and it spits out a fixed bid price for the work. They can single click a button and the client gets an email with the amount, tasks that will be done, deliverables and assumptions.

    I can share what happens with this model in a few months once we have shaken it out if you are interested. What are other firms doing in this regards though?

    Thanks again for keeping up the good fight!

  3. Peter, I have long been a fan of access (formerly service) level agreements. If something is not included in the agreement I suggest offering the customer a few options. For example, in the case of damaged data you could offer: 1) a set of instructions on how the customer might rebuild the data themselves; 2) agree to login to their system at a fixed fee to further diagnose the situation after which you will provide them a price to rebuild the data; 3) drop everything and show up the next day and fix it.

    Option 1 might be free and option 3 might be $5,000.

  4. Agreed on the plans.

    The issue comes in that not every problem is at the level of a data repair. Some are very small jobs – 1/2 hour – 1 hour – to fix a minor problem.

    Some you don’t know what is going on until you get under the hood so it’s very difficult to provide an estimate. This is where the plan is nice because it is used to diagnose and then can be used to provide a bid to fix once the diagnosis is complete.

    I feel that you would be doing the entire channel (actually the entire WORLD!) a huge service by exploring how other partners provide this type of “break and fix” bids.

    Just my 2 cents!

  5. Peter, I would be happy to do something on this topic. What would you suggest? A blog post? Phone call? I am up for anything that will advance the cause!

  6. Glad to see the WSJ providing excellent articles on pricing. Now, if they could practice what they “print”. I have been a WSJ subscriber for many years. Normally paying roughly $120/year. My subscription was about to expire at the end of December 2009 and I was sent a renewal offer with a price of about $450/year. Thinking that this was a joke, I called the circulation department and asked them if this was correct. They assured me that it was. I let them know that I would stop taking the paper at that price (the value was not there at that price). They were fine with that and I do not believe that they have a “save” department.

    Last week I got a new offer from the WSJ and the price for a fullyear is $119.40/year. I guess they did not want me as a customer for the last seven months. Sounds like they may need your help!

  7. Thanks, Chris for the story. I agree, I think introductory pricing is not a bad idea, but you must be reasonable with what you will charge current customers. In the case of your WSJ story, this was more than double.

    I bet you would have been OK with $150 per year.

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