Pricing as a design constraint

Dissecting the customer’s business model is necessary to design, develop, package and offer services that meet the business needs of customers. Service designs are better with pricing as a key design constraint. By analysing how customers create value for their own customers it is possible to correctly identify the most important attributes of the service. This leads to better design and packaging of services. What outcomes are customers aiming to achieve? What resources and constraints do they have? What is the value customers place on the achievement of those outcomes, productivity of those resources, and the removal of those constraints? Answers to those questions are the basis for weighing the individual attributes and pricing them within a service bundle.

Take, for example, an aircraft manufacturer that designs derivative aircraft as a service for subsequent lease to specific customer segments. By utilizing price as a design constraint, and applying insight gained from customers sharing their specific industry knowledge, needs, business and revenue models, the manufacturer can decompose the final product into characteristics that can then be analysed in two ways. The first analysis focuses on what combinations of characteristics can maximize customer revenue, margins and/or excitement or satisfaction. This includes the price the customer is able and willing to pay for various characteristics, given its market positioning and economic models. The second analysis focuses on what groupings of characteristics the provider can bundle to best fulfil the needs of the customer, that also represent the best opportunity for cost reductions related to provisioning those services.

A common illustration of bundling service components in a manner that generates service cost reductions for a provider, while maximizing positive service impact for the customer, can be found in a car maintenance example. For many cars, the price of replacing a timing belt is fairly high, and is composed primarily of labour. Because the time and activities required to gain access to the timing belt are the same as those required to gain access to the water pump, mechanics will offer to replace both parts while servicing the car. By doing so, the customer can receive services for two components of great utility at a reduced rate, achieving greater piece of mind at a price substantially less than it would cost to have each component serviced separately. Conversely, while the provider sells only an incremental increase in the amount of labour, it can sell an additional piece of hardware which carries a superior margin, and increase the overall margin achieved on the service labour performed. In this example, both the provider and the customer achieve greater satisfaction from the transaction.

Дата добавления: 2015-11-14