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Pricing Support & Services
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Pricing Support & Services
Publication date: 1/13
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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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