Dynamic pricing for consulting services

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We’re so accustomed to talking about dynamic pricing on websites for eCommerce businesses, airlines, hotels, physical stores, cinemas, theatres, and so on that we often forget service companies, such as companies that offer consulting services, for example. In the first place, we often fail to recognise these as real companies with perishable resources. At the end of each month, any available capacity that hasn’t been sold will no longer have an outlet, which will diminish the company’s profits because the professionals will continue to be paid even if their knowledge hasn’t been shared with customers.

Needless to say, if hotels, music events, and supermarkets have to manage demand by using price to maximise their revenue – among other objectives and factors – a consulting firm ought to do the same.

Correctly segmenting the target audience, bundling services to allow for a certain amount of alignment with those segments, and properly managing the sales funnel and the price will allow a company to use its full capacity and maximise its revenue. Let’s take a more detailed look at each of those points.

Years ago, companies were highly focused on a very concentrated segment. But today, they are more open to a series of micro-segments that create a more stratified target market without losing positioning. But, they shouldn’t sacrifice any of these before reaching an excessive number of segments, of course. Each micro-segment will require distinct products and prices.

Bundling services allows for greater granularisation and the proper placement of small windows of available capacity, without overlooking the fact that this format will allow you to personalise the offer for both micro-segments and price.

The sales funnel, by way of factory settings, will provide the name and number of operations to be expedited using the appropriate service and price. However, you’ll always have to assess whether to wait for natural maturation at a higher price or a lower price, while avoiding the cost of idle resources for a time. Provided that idle fixed resources are occupied now with an operation that was for later, this will leave you with availability for future operations while also increasing turnover. Optimising the current “load profile” is almost always a good decision.

The price is the glue that holds all these elements together, which will also use each of them in the pursuit of maximising revenue and profit, even though the latter objective is a problem with optimisation that’s separate from that of revenue. But before any available resources – generally fixed costs – go unsold, dynamic pricing would be a good option.

Rafael Oliver
Pricing Expert in TDC
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