PriceGain Partner Caroline Rosén has written an article for Balans, the monthly publication of the FAR organization on the theory in practice behind value-based pricing.
The article, entitled “Forget Hours and Charge for Value”, focuses on new pricing strategies for professional services firms. Service firms typically charge hourly rates, which is hardly optimal for either the client or the service provider. Clients want predictable costs and also want to keep the number of hours billed as low possible, while the service provider seeks to maximize both the hourly rate and the number of hours used. This adversarial relationship can damage the long term health of the business relationship. The article explains how a value-based pricing approach can can improve customer satisfaction and profitability at the same time.