Services pricing through business value modeling and analysis

Abstract

The service sector is the dominant part of the economy, and yet services pricing is not well studied. The pricing of services, especially IT services, differs from the pricing of products to a certain extent. This paper proposes a feasible value based pricing method. The pricing process includes: business value modeling and analysis, customer segmentation, and fully distributed cost pricing. A practical case is presented to show the applicability of the new pricing method. The pricing solution followed the proposed methodology can lead to higher profits and more-satisfied customers than possible with uniform pricing. © 2007 IEEE.