Background

Our client is a high profile global professional services firm, which enjoyed an enviable reputation as a market leader during the 20th century. Gradually, over a 10-20 year period, the firm’s profitability fell significantly behind its peers.

The partners had autonomy to set their own fees and the firm’s largest clients enjoyed substantial discounts.

A new leadership team was committed to improving the firm’s profitability to re-join their peers. While they knew they needed to improve pricing, they didn’t know where to start.

Positive Pricing Approach

We were engaged to conduct a pricing review to identify and prioritize opportunities to improve the firm’s performance.

This started with interviews of key executives and partners in the various offices and service lines to understand existing pricing processes, explore challenges and identify opportunities. We also reviewed proposals, client feedback and the firm’s financials. We then conducted a short survey amongst partners to quantify key issues and identify differences across offices, services and client types.

Key Findings

From this review we were able to identify a number of areas where rates could be increased immediately.

Significant effort was also placed on improving the processes for negotiating agreements with key clients. Over the next 18 months many poor arrangements were renegotiated to ensure they were not destroying the firm’s profits. One renegotiation alone increased profit by more than $10m.

Detailed pricing plans were prepared for the largest practice groups and for an unprofitable group. Pricing became a regular agenda item at local and practice group retreats. Significant investment was made in training and support, albeit on a voluntary basis.

Immediate gains were made through increased rates in targeted areas. These gains alone were 10 times the cost of the review. But bigger opportunities remained. It took 6-12 months to implement the plan and the firm reported a spike in profit of 18% during the following financial year – an increase that was described as “stunning” by a leading industry analyst.

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Pricing Review Results

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Key clients

Re-negotiated rates with one key client and gained $10M in revenue

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Profit improvement

Firm-wide profit up 18%, a result described as 'stunning!'

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The Pricing Masterclass provided practical strategies to help us win work, analyse pricing risks, and promote value internally and externally. It presents all sides of the equation: clients, partners, back office, and more. We immediately capitalised on what we learned. Thanks for a fantastic and interactive workshop.

Peter Lane Secor
Director of Strategic Pricing and Project Management
Pepper Hamilton, Boston

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