ITSMA Releases Services Pricing Study
Although clients are looking for business value from professional service providers, those same providers are relying on pricing discounts to win new business.Although clients are looking for business value from professional service providers, those same providers are relying on pricing discounts to win new business, according to the second part of a study released last week by the Information Technology Services Marketing Association. The ITSMA study on services pricing found that two-thirds of technology companies are selling IT services at a discount. The "Professional Services Pricing Study" looked at the services pricing practices of 13 large technology companies. The first half of the study, released in December, looked at pricing from the customers perspective.
The vendor-focused study found that 34 percent of the companies price their services higher than market rates and then offer a discount, and 33 percent price at market rates and then offer a discount. Such practices are typically used when vendors are pursuing multiyear contracts or when they are in competitive bidding situations with rivals, according to Rich Staples, ITSMA marketing director, in Lexington, Mass. When such discounts are offered, the scope of the project is also scaled back in most cases, Staples said.