Question

Topic: Strategy

Best Pricing Method Question And Pitfalls

Posted by Anonymous on 9/29/2008 at 2:12 AM ET 250 Points
Greetings Profs!

I run a strategic firm and I'm putting together a proposal for a company who is doing well and needs a plan and execution of all marketing functions except sales (strategy, PR, AD, positioning, management of campaigns, etc.)

This is slightly different than what I'm used to, however I believe that the best pricing module for them is a combination of a contracted monthly retainer and a modicum of funding that goes into a capital account.

My question is: can anyone give a sound reason for another pricing model (to the client) and if not then what are some of the pitfalls that I should consider as I proceed in pitching it to the client.
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RESPONSES

  • Posted by Jay Hamilton-Roth on 9/29/2008 at 9:02 AM Accepted
    To your knowledge, has your client already used this pricing model previously? If so, they'll know the pros/cons.

    If you'd present this to me, I'd ask for a breakout of how much it'd cost for each of the planning/functions you propose. To achieve the agreed-upon goals, I'd want to have a "to not exceed" number (or a fixed price) to ensure no budgeting problems and to allow me to compare your costs with those of your competitors. Depending on the value of the goals, I might even have a performance bonus (if ROI is over X%, I'd pay more, and if less than Y%, I'd pay less).
  • Posted by steven.alker on 9/29/2008 at 4:31 PM Accepted
    Dear Karl

    I would seriously consider contacting Tim Smith of this forum (Wiglaf)

    He is a pricing specialist and has both practical and academic experience to bring to bear. (I think that he is an associate professor as well as a businessman)

    Also, with a respected client, I would be careful about ploughing in because you think that you know them well. Maybe you do, but it can be damaging for you to assume that you have taken on-board last night’s latest opinions. I’ve done that with a long standing client and it took me a week to recover from the fact that they thought that I was being a bit of a know-it-all!

    If they don’t want sales advice, be very careful how you present proposals concerning pricing. Once, you’ve found an acceptable pricing strategy and communicated it to their existing customers and holders of quotes and price lists, it will be the sales people who will have to sell the new structure as a benefit.

    Best wishes


    Steve Alker
    Xspirt.com
  • Posted on 10/9/2008 at 3:23 PM Author
    Sorry about that. Both responses were good. I just got busy and was unable to get back but awarding both parties was appropriate and I'll take their responses to heart. Thanks!
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