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Ways to deliver fair value

This post explores ways to deliver fair value to both their clients and professional services firms. It shows why one of the key elements of beatonbenchmarks research is an analysis of what clients consider to be fair value for professional services in any given market.

One of the key elements of beatonbenchmarks research is an analysis of what clients consider fair value for professional services in any given market. The perceived level of a firm’s fees, as judged by its clients, is plotted against the firm’s overall client service score and then compared to the other firms in the market.

A ‘Fair Value’ line is drawn through the average points of the axes and is a proxy for clients’ perception of a fair price for a given level of performance. In other words, on the top right of the chart, clients pay top dollar for top quality, and firms on the bottom left provide bargain basement prices for acceptable quality.

Firms that lie above the Fair Value line are perceived by clients to have a price that is above the level of the overall client service they receive, i.e. these firms are perceived to be too expensive for what they deliver. They risk losing market share to firms that deliver the same performance for a lower price, or better performance for an equivalent price. To maintain market share such a firm has the options of improving performance and/or reducing price.

Firms that are below the Fair Value line are delivering higher performance than average relative to their perceived price. These firms are in a position to gain market share, and they have some discretion to increase price without losing market share. However, beaton research shows that the level of perceived performance is increasing each year, which means firms that are considering increasing their price must also focus on continuing to improve client service.

Ways to deliver fair value

Importantly, the research also shows there is a correlation between price and quality over time, so firms that are below the Fair Value line must ensure their low price positioning does not undermine clients’ perception of their quality.

Finally, firms should also consider this extract from an excellent white paper by Deloitte,

“Pricing has two to four times the potential to influence profitability relative to other business levers…Companies that actively pursue pricing as an important part of their strategy typically outperform industry peers on several financial metrics”,

and ask the following questions:

  • How are we perceived against the Fair Value line?

  • Do we have pricing discretion now? and if not…

  • What do we need to do to earn pricing discretion?

For more insights on related topics

+ Why consideration matters

+ Maximising your bid:win ratio

+ Focusing your prospecting and pitching on what matters most to clients

+ Why haven’t we done something about our pricing sooner?


This post was written by David Goener, a beaton partner based in Brisbane. You can connect with David on LinkedIn or follow him on Twitter at @dpgoener.