If you’ve been hearing about outcome-based pricing lately, it’s for a very good reason. If not, you may want to pay special attention because outcome-based pricing is a transformative model. One that puts managed service providers and their MSO clients on the same page when it comes to goals and accountability.
Traditional transactional and resource pricing models that most companies use are not designed to align providers to their client’s goals. Why? They incent providers to spend more time and put more personnel on projects since that’s how they get compensated, while, of course, clients are fighting to keep budget in check. Those models are designed for budget control, not accountability. And there’s no focus on the business outcomes that make for a successful engagement.
At OnProcess, we’ve been big advocates of outcome-based models, where partners share your risk and rewards. They incent partners to perform. But as much as business stakeholders love outcome-based models, it’s hard to get a handle on them. Implementing them is challenging because they’re a new concept for many organizations, and figuring out how to balance budget requirements with pay-for-performance pricing is complex.
We’ve put together a whitepaper that explains outcome-based pricing and outlines best practices around:
- Internal alignment
- Planning and communication
- Baselines and measurements
- Structuring a plan
- Anticipating the unexpected
- Committing to Partnership
- Walking before running
Download “Best Practices for Outcome-based Pricing” to get the details and see how it could work for your business.