TSIA fields hundreds of PS member inquiries every year. Always among the most common service business challenges (SBCs) represented is how to improve PS price performance. That’s why for the last decade, TSIA has been capturing extensive professional services rates and pricing practices information in our Professional Services Market Rates Study. This study distills the latest developments in professional services pricing and collects detailed data surrounding 8 job titles at 3 levels in roughly 60 countries to provide our members with the most current market rates benchmarks and data. In this post, I’m going to share what this study can do for your organization through real-world examples of how it’s currently being applied to businesses in the industry.
Whether you’re already a TSIA member or have been considering membership, this is a way for you to quickly pay for your entire TSIA membership with the revenue generated from just one of your service lines.
– Tim Matanovich, Value and Pricing Partners
Case Study: How TSIA’s Professional Services Market Rates Study Data is Being Used in Businesses Worldwide
To provide more context about exactly what can be achieved by applying the data gathered from TSIA’s Professional Services Market Rates Study to an actual business scenario, I spoke with Tim Matanovich of Value and Pricing Partners, one of TSIA’s esteemed Consulting Alliance Partners and a specialist in helping companies achieve better price performance. Here’s what he had to say.
Tim: “Value and Pricing Partners has been working with TSIA Members on offering design, value and pricing challenges for a nearly a decade now. I can honestly say, for pricing professionals, TSIA’s Professional Services Market Rates Study is a gold mine. Here are some examples of observations we’ve found with some of our clients using the data from this study:
- Despite reporting from sales directors that their professional services rates were too high, benchmarking the TSIA Professional Services Market Rates Study revealed the firm’s rates were, in fact, the lowest of 19 other software companies. That was great incentive to change direction.
- Three years later, a second company saw the same result, and even claimed the coveted bottom spot, prompting a similar change.
- One hardware firm discovered that their discounting was 3X the average of their peers. Their list rates had no relevance whatsoever in the marketplace.
- Another firm discovered their rates were much too high, given their brand value, causing lost sales. Lower rates removed an impediment to growth.
- A tech company used the TSIA Professional Services Market Rates Study as the foundation for their global pricing model, making the transition from cost to market based pricing. The move permitted them to hit their target growth and margin targets and rationalize global pricing.
- Analysis of pricing practices across companies using TSIA’s Professional Services Market Rates Study revealed that value pricing could generate margins 3X as high as cost-based pricing.
For pricing professionals, TSIA’s Professional Services Market Rates Study is a gold mine.
In addition, I've also just put together a video you can watch that shares 3 more case studies about value and pricing for professional services. This video has even more examples of TSIA's Professional Services Market Rates Study in use, as well as other TSIA resources.
By combining our own analysis of historical transactions, data science methods and TSIA data, such as that gathered from the Professional Services Market Rates Study, we formulate individualized treatment plans for any combination of region, product, customer, and project lifecycle. This allows our clients (and TSIA members who work with us) to go beyond rate setting and traditional discount control to establish value with their customers and compete more effectively. Just some of the areas we can help with include low profit business models (e.g. SaaS), weak offerings and value props, low value capture, aggressive price competition, high discounting, etc.
More intelligent pricing practices, beginning with use of the TSIA Professional Services Market Rates Study, allow you to step out of the race to the bottom and prepare a customer journey that is individualized, long lasting, and value-driven.”
Discover What TSIA’s Professional Services Market Rates Study Can Do for Your Organization
TSIA’s Professional Services Market Rates study is free as part of your Professional Services TSIA membership. Using the data from this study, you can put your firm on the path to set rational, profitable pricing levels that are adaptive and outcome-driven. This can be a one-time exercise, or a modeled solution with machine learning capability that adapts and adjusts as you grow. Contact us today to learn more about this study and the many other great research initiatives TSIA has to offer that can help your organization stay competitive in the market and increase profitability.
About the Author
Bo Di Muccio, Ph.D., is the distinguished vice president of professional services research for TSIA. He is also the chairperson of the TSIA Professional Services Advisory Board. Using his nearly 15 years of experience in technology industry research, analysis, and consulting, Di Muccio develops and delivers research and advisory programs that help some of the world's leading technology companies build and optimize their professional services business. Connect with Bo on Twitter @Bo_DiMuccio
Read more from Bo on these topics:
Professional Services | Tips for a Successful Professional Services Organization | Project Performance