A research done by ScrumStart concludes that while customers do not have significant dissatisfaction to a fixed $/hr pricing model globally, however, they would love to get transparent pricing. This verdict is unanimous amongst all customers cutting across the geographies.
The study that was conducted to chart out the Trust Pricing strategy for ScrumStart came with exciting findings on why global customers want transparency. The top five reasons why the customer loved the transparent pricing option over a fixed price are:-
a. A whopping 72% clients were of the opinion that transparency in pricing will make the same service lower in cost
b. Around 5% feel that they will have better control to decide on the talent and value
c. About 4% said that it will help strategize to make or buy any particular service better than today
d. Approximately 3% said that it will allow fair comparison between vendors will shift focus from cost to quality of talent ultimately benefitting the business
e. Nearly 16% respondents more natural tradeoff between a captive to a transparent provider who can add more value and govern the outcome better.
An overwhelming number of respondents cited lower prices as their reason for choosing transparent pricing if they had an option. Captives have already proven that a transparent cost-plus pricing model is significantly better than the traditional $/hr based service providers. Moreover, that comes with a freedom to choose a better quality of talent and even own them. This awareness has led almost every company look at a captive option along with a service provider who provides significant value in bringing expertise on the table along with flexibility that is not generally possible internally. The current understanding at customer’s end comes with a stereotype that vendors always charge either as an hourly rate or a fixed cost; but never transparent price. The initial reaction was of disbelief when they were asked about their option for transparent pricing. Few questioned even the intent asking why someone would leave money on the table.
Many customers were quick to understand that transparency will give them a strong lever to get the best talent and give them far better control over the service provider that they have now. While initially, it did not register as to why the vendor is ready to be transparent even with lower margin and loss of control; almost everyone was unanimous with the view that the trust-building with such pricing model will be immense.
Few customers who were working on their offshore captive found transparent pricing a better option because it gave them the cost advantage and took all the overheads of setting and running a company in an entirely different geography. To them, it was zero capex, quick return on investment and lower risk that made the transparency a better option. Added with an opportunity to own the team in future, it came out as a better option to set their captive.