Conversation with Tim Matanovich of Value and Pricing Partners: Profitable Technology Services Pricing
One of the benefits of attending our Technology Services World Conference is the ability to spend a day in a professional development course, doing a deep-dive on a subject critical to your organization’s success in 2012. Our Spring TSW event will be held at the Santa Clara convention center May 7th-9th, with the professional development courses taking place on May 7th from 8am to 1pm on the 2nd floor of the rotunda. For a complete overview of the courses being offered, follow this link to Monday’s schedule.
I’m very pleased to bring you an interview with one of the professional development course instructors, longtime TSIA partner, Tim Matanovich of Value and Pricing Partners.
John: Thanks for agreeing to share your wisdom and expertise with TSIA members at your upcoming professional development course from 8am-1pm on May 7th at the opening of our Technology Services World conference. Can you give my readers an overview of the course?
Tim: The course is titled Profitable Technology Services Pricing, and will give participants skills and tools to drive more profitable growth. I focus on profitability because price is arguably the most powerful driver of business profitability. In addition, a focus on pricing contributes to closer customer relationships, more effective sales people, breakthrough service strategies and less competitive intensity.
John: Could you talk a bit about how the course is structured? How will attendees spend their day?
Tim: My advice is: Don’t show up unless you want to be engaged. We start by listing the pricing issues that brought participants to the course, and then keep coming back to them as they relate to the material. The program is built around the four components of our pricing system: Pricing Objectives, Pricing Strategy, Pricing Execution and Pricing Infrastructure. This is very much a workshop. During the last hour, participants will be given a copy of our Pricing Impact Model, and we will be quantifying the impact of a pricing change on their businesses to demonstrate the power of price in driving financial results.
John: TSIA continues to expand our membership, now offering research and conference content across technical support, professional services, field service and education services. What departments and titles do you see as the target for your professional development course? Any positions you would like to see paying more attention to this topic?
Tim: Many service organizations don’t have pricing specific job titles. Pricing is a marriage of marketing and finance (Some would say a marriage made in hell). A person who attends will often be responsible for margins or profitability. In addition, price is one of the three legs of marketing strategy, so someone responsible for services strategy or marketing would be a good fit. Finally, price can be a powerful weapon in the arsenal of executives.
John: What are some of the common challenges you run into when working with companies on services pricing? Do you see companies struggling with similar problems?
Tim: Sure, there are several common challenges we see. Number one is that services organizations don’t do a very good job of measuring price performance, and so they can’t manage what they don’t see. Second is widespread use of cost based pricing. Cost based pricing leads to weak margins, stressed sales people and unhappy customers. Third is monopriceosis, aka, one price fits all. Monopriceosis leads to both lost margins and lost sales. Each of these is an anchor to more profitable growth.
John: What are some of the key trends you see making services pricing a critical topic for service professionals? Why should companies focus more on this area?
Tim: The move toward cloud services can take an enormous toll on services revenues and margins, but it doesn’t have to. Services organizations need a migration strategy that meets business objectives while optimizing profitability across the transition. As JB Wood put it “I could argue that how to price services is the most important financial issue facing tech companies.”
John: Tim, thank you so much for taking the time to speak with me today, and good luck on your professional development course!
Tim: My pleasure John. See you at TSW!