How we… Revamped Pricing Strategy for Enhanced Profitability
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Size of company:
Mid-market ($50M-$1B)
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Industry:
Technology Enabled Services
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Type of service:
Sales Transformation
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Engagement model:
Full time
The Challenge
A company had been using a 'cost-plus' pricing methodology from its inception, pricing all their employees at the same margin, irrespective of their skillset or level. The company suspected this strategy was leading to underpricing their premium offerings, especially as demand for certain skillsets significantly outpaced supply.
The Result
A leader from Horizon Now conducted a detailed analysis of rates for roles that made up over 80% of the company's revenue. We used a combination of factors including win rates, the distribution of realized rates, and client willingness to pay. Based on this analysis, we developed a client rate card that better reflected market rates. The rate card was adjusted based on the location of the resource and their specific skillset, allowing the company to price more accurately and fairly.
The Solution
This revamped pricing strategy led to a significant improvement in the company's profitability. The company experienced a 500+ basis point enhancement in gross margin, leading to increased financial performance and a more competitive position in the market.