[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.the-future-of-commerce.com\/2017\/05\/31\/embracing-new-pricing-models-in-the-age-of-disruption\/#BlogPosting","mainEntityOfPage":"https:\/\/www.the-future-of-commerce.com\/2017\/05\/31\/embracing-new-pricing-models-in-the-age-of-disruption\/","headline":"Embracing new pricing models in the age of disruption","name":"Embracing new pricing models in the age of disruption","description":"Digital disruption is changing how the professional services industry does business. This means restructuring of standard time and materials pricing models.","datePublished":"2017-05-31","dateModified":"2024-07-24","author":{"@type":"Person","@id":"https:\/\/www.the-future-of-commerce.com\/contributor\/matthias-barth\/#Person","name":"Matthias Barth","url":"https:\/\/www.the-future-of-commerce.com\/contributor\/matthias-barth\/","identifier":226,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/18dc9565e6805b2faedb3c30ba9a768f03c244af609d6beff3e016f82be871a4?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/18dc9565e6805b2faedb3c30ba9a768f03c244af609d6beff3e016f82be871a4?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"The Future of Commerce","logo":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2023\/01\/logo-foc-schema-app-1.png","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2023\/01\/logo-foc-schema-app-1.png","width":172,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2017\/05\/new-pricing-models-FTR.jpg","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2017\/05\/new-pricing-models-FTR.jpg","height":375,"width":1200},"url":"https:\/\/www.the-future-of-commerce.com\/2017\/05\/31\/embracing-new-pricing-models-in-the-age-of-disruption\/","about":[{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/commerce\/b2b\/","name":"B2B Commerce","sameAs":["https:\/\/en.wikipedia.org\/wiki\/B2B_e-commerce"]},"B2C Commerce",{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/commerce\/","name":"Commerce","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Commerce","http:\/\/www.wikidata.org\/entity\/Q26643"]},"Professional Services",{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/commerce\/trends-commerce\/","name":"Trends","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Fad","http:\/\/www.wikidata.org\/entity\/Q787045"]}],"wordCount":1075,"keywords":["B2B Subscription Commerce","Digital Transformation","Marketing","Pricing","Professional Services","Subscription Models"],"articleBody":"Digital disruption\u00a0is changing how the professional services industry does business. This includes the restructuring of standard time and materials pricing models.Established companies have a hard time understanding why the status quo model is now a thing of the past. What it all comes down to is that customers have become savvy forward thinkers.Consumers embrace the digital era and expect service providers to be just as innovative.New startups entering the game are giving customers what they want, disrupting the industry and forcing incumbents to catch up or fall behind.One way to stay innovative is to restructure outdated time and materials pricing models. While these simple models worked well in the past, outcome-based models are the new standard. And though outcome-based billing is more complicated for service businesses, innovators are making it work.Consider how the transportation, legal, and consulting industries are making new models work for them.Digital disruption of the services industry is inevitable.Adapting to new ways of doing business now will signal to customers that you are moving forward and adapting to their needs.      Automated order processing puts distributors closer to customers                By automating order processing, wholesale distributors can streamline the sales ordering process and improve the customer experience for competitive advantage.      The transportation revolutionNo industry is seeing the effects of digital disruption more than transportation. Digital upstarts like Uber and Lyft have upset the taxi business in dramatic ways. This transportation disruption is also affecting car rental and car ownership industries.New models focused on a\u00a0shared economy\u00a0are forcing these industries\u00a0to rethink their strategies.Zipcar, a car-sharing startup, is changing the way people drive. Rather than targeting the point-to-point, short-term travel industry, Zipcar focuses on lifestyle change.Instead of renting or owning a car, many people are opting for car-sharing options.Zipcar markets itself as a car ownership alternative. Cars \u201clive\u201d in designated spots throughout the city, in neighborhoods, at airports, and other points. Zipcar members can walk up to any available car, swipe a card, and drive away. They use the car as needed and then return it to its original location. Zipcar\u2019s membership-based pricing model gives customers flexibility and eliminates mileage, gas, or insurance fees. It’s an innovative, simple way to get around town without the hassle of going to a rental office.Where car companies once relied on the idea that everyone wants to own a car, Zipcar is changing that model.      Direct to consumer automotive: Is it finally getting up to speed?                The concept of direct to consumer for automotive is quickly gaining popularity. Learn the challenges and opportunities in going DTC for OEMs.      The Yelpification of lawLegal firms are also moving away from traditional hourly pricing models. Law firms have become more transparent with their pricing and value due to the disruption of traditional models.New, high-quality competition is driving prices down, and the unbundling of legal services is increasing flexibility.Online performance reviews of legal firms are improving quality and customer service.Firoz Dattu, the founder of AdvanceLaw, calls this \u201cthe Yelpification of law.\u201d Price, flexibility, and customer satisfaction are now top concerns for most law firms. These factors forced firms to embrace disruption and create new models to stay relevant.Lawyers on Demand\u00a0is proving this by offering outcome-based pricing and flexibility. Rather than paying high costs for\u00a0full-service firms, clients pay for only what they need. Services adjust up or down to fit customer needs and are project- or outcome-based.High-quality freelance lawyers can work on-site or off-site on specified projects. Rather than charging a traditional hourly rate, total fees are set in advance. Depending on the expertise of the lawyer needed, daily, weekly, or monthly rates are set.Lawyers on Demand also offers three working models:\u00a0instant on-call services, managed teams for specialized projects, and on-site services. These models give clients the flexibility to hire lawyers as-needed or long-term. Instead of hourly rates and overhead costs, outcome-based pricing gives clients more control. Prices are competitive, quality is high, and customers maintain control.      B2B subscription models: A guide to future-proofing your enterprise                B2B subscription models can offer the same bottom line and loyalty benefits as their B2C counterparts, and enterprises are taking notice.      Consulting outside the black boxWhile most consulting firms have held on to the belief that their business models are immune from disruption, this is changing. Consulting performance is difficult for clients to judge in advance – it’s hard for them to assign a value to unknown solutions or results. It’s also difficult to judge consulting performance after a project is complete.Consulting operates in a mysterious \u201cblack box\u201d where clients cannot see the processes that solve their problems. They have no choice but to accept time and material pricing formats to assess value.The opaque nature of consulting has been successful and allowed firms to maintain control. Since outcomes are harder to pin down, this model is harder to disrupt. Andrew von Nordenflycht,\u00a0of Simon Fraser University, found that in opaque service industries, \u201cnew competitors typically enter the market by emulating incumbents\u2019 business models rather than disrupting them.\u201dCustomers are catching on, however – they realize that they’re paying for services they don’t need. Clients now want more control, greater speed, and increased responsiveness from consulting firms. Alternative firms, like Business Talent Group, are capitalizing on this and becoming more transparent. They use\u00a0smaller teams of high-level freelance consultants at reduced prices. These teams price their services in smaller, outcome-based chunks rather than larger, time-based models.Larger firms, like\u00a0McKinsey Solutions, are also disrupting traditional models, offering proven modular solutions with self-service packages. Pricing is subscription- or license-based. This gives clients access to flexible, efficient, proven solutions without the high cost. Rather than reinventing the wheel, they add to their level of expertise with each client.      Online subscription services: 3 ways to maximize stick rates                Subscription services offer brands a lot of benefits, but retaining customers can be hard. Here are three tips for reducing customer churn.      Embracing new modelsProfessional service providers must adapt to the changing digital landscape.Some businesses will continue to resist disruption, and will therefore risk the loss of customers.As disruption continues, clients will move to companies brave enough to embrace new models at the dawn of the digital age.  Modern business, meet revenue:\u2013 End-to-end connected data\u2013 Engage quickly with a great CX\u2013 Sell anytime, anywhereGet going TODAY."},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"2017","item":"https:\/\/www.the-future-of-commerce.com\/2017\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"05","item":"https:\/\/www.the-future-of-commerce.com\/2017\/\/05\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"31","item":"https:\/\/www.the-future-of-commerce.com\/2017\/\/05\/\/31\/#breadcrumbitem"},{"@type":"ListItem","position":4,"name":"Embracing new pricing models in the age of disruption","item":"https:\/\/www.the-future-of-commerce.com\/2017\/05\/31\/embracing-new-pricing-models-in-the-age-of-disruption\/#breadcrumbitem"}]}]