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    IT Pricing Models: Service Marketing

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    Nishan Shetty
    The document discusses various IT pricing models, including linear and non-linear models. Linear models discussed are dedicated team, time and material, and fixed cost models. Non-linear models include managed services, outcome-based, and transaction pricing models. The hybrid model combines features of time and material and fixed-price models. Initial due diligence for dedicated team and hybrid models includes assessing project scope, cost, duration, risks to client and service provider, budgets, and billing approaches.

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    IT Pricing Models: Service Marketing

    Uploaded by

    Nishan Shetty
    61 views10 pages
    The document discusses various IT pricing models, including linear and non-linear models. Linear models discussed are dedicated team, time and material, and fixed cost models. Non-linear models include managed services, outcome-based, and transaction pricing models. The hybrid model combines features of time and material and fixed-price models. Initial due diligence for dedicated team and hybrid models includes assessing project scope, cost, duration, risks to client and service provider, budgets, and billing approaches.

    Original Description:

    Pricing models of different IT services

    Original Title

    IT Pricing models

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    The document discusses various IT pricing models, including linear and non-linear models. Linear models discussed are dedicated team, time and material, and fixed cost models. Non-linear models include managed services, outcome-based, and transaction pricing models. The hybrid model combines features of time and material and fixed-price models. Initial due diligence for dedicated team and hybrid models includes assessing project scope, cost, duration, risks to client and service provider, budgets, and billing approaches.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    61 views10 pages

    IT Pricing Models: Service Marketing

    Uploaded by

    Nishan Shetty
    The document discusses various IT pricing models, including linear and non-linear models. Linear models discussed are dedicated team, time and material, and fixed cost models. Non-linear models include managed services, outcome-based, and transaction pricing models. The hybrid model combines features of time and material and fixed-price models. Initial due diligence for dedicated team and hybrid models includes assessing project scope, cost, duration, risks to client and service provider, budgets, and billing approaches.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 10

    IT Pricing Models

    To Dr Sugant R
    Service Marketing By Group 8
    Kishor M 19027
    Harshith Y 19081
    Akshay Shetti 19125
    Nishan N 19153
    Sindhuja Sista 19171
    • Pricing is the process where companies set the price for
    its services basing on the company’s average prices and
    demand in the market.
    Introduction to • For a pricing model to be successful, it should have the
    right balance between customer’s expectations of
    Pricing quality, speed and price.
    • there are 2 categories of pricing models
    1) Linear pricing models
    2) Non linear pricing models.
    Pricing models of IT companies

    Linear Pricing Non-Linear


    Models Pricing Models

    Time and Managed Outcome-based Transaction


    Dedicated Team Fixed cost Hybrid Model
    material Services Model pricing Model Pricing Model
    Dedicated Team
    • Team acts as the virtual extension of the client’s in-house development team
    • Monthly bills are raised based on the number of resources dedicated every
    month
    • Best suitable when the scope of the project is unknown and flexibility is
    required.
    • Ex-Value Coders
    Pros
    1. Flexibility
    2. Simple to understand and implement
    Cons
    3. Low commitment
    4. No incentives for encouragement
    • Engagement model in which client pays only for time and resources
    spent on project.
    • In this model responsibility lies on clients. Project delivery time depends
    on speed, professionalism and accuracy of project
    Time • Since, clients pay only for hours and expenses spent on project they
    must be provided convenient way to control time, expenses and
    and materials
    Pros
    material 1. Transparency
    2. cost effective
    Cons
    3. Overpricing
    4. No proper plan
    Fixed cost

    • Customers pays fixed fee to service provider.


    • It eliminates disadvantages of time and management model
    • The risk of project is transferred to service provider.
    • This is beneficial for the short term projects.
    • Example- DuPAM consulting
    Pros
    1. Project completion assurance
    2. Low risk
    Cons
    3. Adjustments in the cost cannot be made
    Hybrid model
    • The best pricing model for bigger, longer and ongoing projects when the objectives in the initial stages
    are not clear
    • It uses T&M techniques for the cost estimation of the projects when requirements are not specified
    completely
    • Predominantly, it helps the customers optimize budgets without compromising on the quality of the
    product or application
    • E.g SalesForce
    Pros
    1. Utilization of best features of T&M and FP pricing models
    2. Low risk
    Cons
    3. No control of customers in resource utilization
    4. Shared risks between service provider and customer
    Managed Services model
    • This model offers defined service deliverables at a fixed cost
    • Customers are billed at a fixed monthly plus unit cost per additional unit delivered
    • For customers, this model helps them to arrive at a anticipated target and for service providers, it
    assures continuous fixed revenue and also additional revenue through scalability and better margins
    • E.g Cognizant
    Pros
    1. Delivery and stakeholders expectations are responsibility of service provider
    2. Enables service providers to make long term strategic investments than short term
    Cons
    3. Occurrence of culture mismatch between service provider and customer
    4. Reluctancy of service providers to manage more responsibilities
    Initial due diligence models for Dedicated team and Hybrid models
    Pricing Project scope Project Ct Project duration Risk Client Service provider Service Engagement
    model scale budgeting billing provider maturity
    margins
    Dedicated Flexibility to All Ongoing long • Low risk Fixed Resource based Low Initial
    team change term milestones for monthly engagement
    service budget
    provider
    • Low risk
    for client
    Hybrid • Unclear Large Ongoing short 1st phase: 1st phase 1st phase: Moderate • Initially
    (T&M for targets in term milestone • Low risk • Floating • Resource T&M
    FP) initial for budget based • FP, post
    phase service • 2nd • Effort based clarity on
    • Initial provider phase: 2nd phase customer
    phase • High risk • Specific • Milestone IT
    defines for client /limited based processes
    scope for 2nd phase budget • Project and scope
    subsequent • Low risk completion
    phases for client based
    • High risk
    for
    service
    provider
    Thank You

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