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Pricing Support & Services

Publication date: 1/2013

Executive Summary

The pricing of intangibles such as support and services has changed considerably over the years. Initially, pricing was fraught with guesswork, complicated by second-guessing by many people in our companies who had opinions that were influenced by their experience with product pricing (a different subject entirely) or opinions based on anecdotal evidence without any underlying systematic customer research. If one customer pushed back about a service price, we were pressured to lower prices for all customers.

Lately, however, the pricing of services has become better grounded and a more scientific discipline. Companies now pay more attention to benchmarking, best practices, and competitive analysis. Many have significant pricing strategies in place for services.

Within well-managed companies, pricing tends to be thought of as a marketing discipline. Educated marketing professionals are taught pricing methodologies, pricing strategies, and how to analyze and predict buying behavior. However, finance people generally don t learn much about pricing. Neither do sales people, although they re often trained to handle pricing objections.

At the other extreme, many companies use pricing committees to make strategic pricing decisions. This can be a worst practice if the committee is driven by other than properly trained marketers. Of course, other organizations can and should be involved, including finance, sales, and service delivery people (who are where the costs live), but the marketers should be driving these issues.

To get a pulse of the current state of pricing support and services, the ASP surveyed 129 software and technology-based companies to collect data on their experiences, practices, and problems. We also asked an open-ended question: What advice would you give a colleague whose customers seem to be unhappy with support and services prices?

Copies of the survey are free to ASP members in the members-only area.

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Copies of the survey are free to ASP members in the members-only area.

Join the ASP | ASP membership info