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Three Vignettes on Pricing of Professional Services

By:
 George Triantis, Kevin Doolan, and Nicholas Semi Haas   (Revised: May 16, 2013)
Product number:
HLS 13-17
Length:
12 pages
English:
PDF
Product Type:
Case
Link to Free Educator Copy:

Abstract

This case includes three vignettes on pricing in professional services. “Vignette One: The Franklins’ Dream Home” is told from the perspective of a client who is embarking on a major home renovation and faces a choice among different price structures for construction. “Vignette Two: Robert Bluitt” puts readers in the shoes of a law firm partner who receives a request for a steep discount from a significant long-term client. In “Vignette Three: Kimberley Anniston,” partner Kimberley Anniston and the firm’s managing partner look for ways to adapt to client requests for alternative fee arrangements.

Learning Objectives

The three vignettes start with price structure of a construction contract, follow with the negotiations that can follow when a cost-conscious client presses the firm on price, and end with consideration of how to price various types of legal engagements. Together, the vignettes encourage participants to reflect on the pros and cons of different pricing structures for professional services, from the point of view of both the client and the service provider. Participants consider the merits of various pricing structures, including time and materials (cost-plus), fixed fee, and a hybrid of cost-plus with a guaranteed cap. The choice among the alternatives depends on a number of factors, including the criticality of the service to the client, the relative importance of quality and cost, and the balance between creativity and standardization.

Subjects Covered

Pricing Structures, Client Satisfaction, Professional Services

Setting

Geographic: United States

Industry: Various

Event Year Begin: 2013



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