Implementing an Optimum Pricing Strategy

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Reginald Tyler
6 years ago
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1 16 MAY :15 SAPHIR ROOM Concurrent Session: Newcomer Track Implementing an Optimum Pricing Strategy Moderator: Bryan Peña, VP, Contingent Workforce Strategies and Research, Staffing Industry Analysts Panellists: Sandie Bonner, Director, Global Labour Category, Unisys David East, Projects Director, de Poel Nick Whitcher, Head of Procurement Marketing, Sales & Professional Services, Centrica plc Sponsored by: 2013 Crain Communications Inc

2 15-16 MAY 2013 What Goes into the Bill Rate? Markup Gross Margin Markup Statutory Expenses Operating Expenses + Profit Statutory Expenses Pay Rate Direct Pay to Worker 2013 Crain Communications Inc

3 15-16 MAY 2013 What pricing strategies are there? Bill rate-open/fixed/max Pay Rate Plus Mark up But some others are Fixed $ per unit/output Fixed $ per unit/time Flat rate per day/week Deliverable based rates Gross margin based pricing Etc Crain Communications Inc

4 15-16 MAY 2013 What are other buyers doing? Source: SIA 2011 Buyers Survey 2013 Crain Communications Inc

5 15-16 MAY 2013 Pricing Strategy Pro Con Pro /Con of Bill Rate vs. Mark Up Fixed Bill Rate Ceiling Protection Predictability Job Category Specificity Less Downside Misclassified Candidates Recruiters Not Incented Max Bill Rate Ceiling Protection Misclassified Positions Recruiters Not Incented Possible fill rate issues Open Bill Rate Market Rate No rate protections Volatility Pay Rate /Mark UP Pay Parity Pay rates may edge upward Misclassified Candidates Crain Communications Inc

6 15-16 MAY 2013 Incentives and Discounts Conversion discount Spend volume discount Early payment discount Overtime discount Tenure discounts Fees at risk Statutory rebates/discounts Gain share Revenue share 2013 Crain Communications Inc

7 15-16 MAY 2013 Incentives and Discounts (cont d.) Source: SIA, Buyers Survey Crain Communications Inc

8 KB MAY 2013 Don t Be Greedy Average Number of Discounts/Incentives as a Function of Buyer Annual Spend SIA data shows that most buyers only apply 3-4 discounts per contract. 1.9 <$10 million $10-$499.9 million $500MM+ Source: SIA, Contingent Buyers Survey Crain Communications Inc

9 Slide 8 KB1 I think we should say between 2 and 4 not 3-4. Also we could revert back to the slide before with the frequency of the discounts used. Kersten Buck, 4/8/2013

10 Pricing Contingent Labour 9 Nick Whitcher Head of Procurement, Marketing Sales & Professional Services

largest storage operation in the UK we trade

sign contracts to secure gas for our customers

..to millions of residential and commercial

11 Who are Centrica? we source it...by finding and producing new gas reserves across the world we generate it...through our highly efficient gas-fired power stations and wind farms we process it...at our onshore gas terminals to make it safe for our customers to use we store it...at our Rough gas storage facility - the largest storage operation in the UK we trade it...in the UK, North America and Europe and sign contracts to secure gas for our customers We supply it,...to millions of residential and commercial customers in Britain and North America we service it....through our energy services and installations businesses in Britain and North America we save it...by offering innovative low-carbon products and services to our customers 10

12 Where do we operate in the UK Downstream (British Gas) Upstream (Centrica Energy) 11

13 What roles do we have and how do we source them Temporary office staff (administrators, call centre agents, etc) IT contractors Professional (non-it) contractors Downstream engineering contractors commercial & domestic installations and repairs Upstream engineering contractors offshore, renewables Sourced through a mixture of: Agencies Direct (call-off & fixed term) Managed service Neutral vend 12

14 So what is the optimum pricing strategy? At the moment it really is a case of what s appropriate: Day rates + margin (agencies) Job rates (direct) Fixed price (managed service) Hourly rates including mark up (neutral vend) We re working with to optimise The delivery of contingent labour into Centrica in the UK providing price competitiveness process consistency compliance With the potential to roll out to our operations in Europe and our business in North America 13

15 Contingent Labour Pricing: Optimal Model

16 Pricing Models at Unisys- Germany Germany: % Markup How Standard % Markup model Why Competition through PSL Challenges higher margin expectations Learnings E- auction possibilities 2012 Unisys Corporation. All rights reserved. 15

Need for Optimal Pricing Strategies 2012

18 About Unisys Unisys HQ in Blue Bell, Pennsylvania Delivering a safer and more secure connected world 22,600 employees worldwide, 36+ countries Contingent Workforce Programme Multiple MSP and single global VMS Current Initiatives Expanding COE Master Vendor in India 2012 Unisys Corporation. All rights reserved. 17

20 Factors affecting Pricing Model Selection Nature of jobs/skill Set required Local Market Maturity Contract Duration Account team Compensation Need to maintain pay parity 2012 Unisys Corporation. All rights reserved. 19

21 Pricing Models at Unisys- India India: Bill Rate How Rate card set per role/ experience Why Easier to manage operationally Challenges Out of pocket expenses Learning's Audit effort 2012 Unisys Corporation. All rights reserved. 20

22 Pricing Models at Unisys- APAC APAC: % Markup How Standard % Markup model Why Simple to add competition and Tiering Challenges More prone to invoice abuse Learnings Regular audits and appropriate KPIs 2012 Unisys Corporation. All rights reserved. 21

23 Pricing Models at Unisys- South America LACR: % Markup How Composite % Markup/ Open book Why Labour Law Challenges Limited negotiation possibilities Learnings Keep supply chain simple 2012 Unisys Corporation. All rights reserved. 22

25 Pricing structure requirements Legal & Quality Issues Inefficient Expenditure Undercharge Optimum Charge Overcharge Bill Rate - APAC - Capped - Fixed

26 Effective pricing negotiation barriers Charges Margin Emp cost Tax Traditional structure Margin focused Little supplier incentive Limited alignment of interests Pay Rate

27 Effective pricing Improve cost base Charges Costs Understand cost per hire Transactional On boarding costs Knowledge and planning Profit Management information Real supplier relationship

28 16 MAY :15 SAPHIR ROOM Concurrent Session: Newcomer Track Implementing an Optimum Pricing Strategy Moderator: Bryan Peña, VP, Contingent Workforce Strategies and Research, Staffing Industry Analysts Panellists: Sandie Bonner, Director, Global Labour Category, Unisys David East, Projects Director, de Poel Nick Whitcher, Head of Procurement Marketing, Sales & Professional Services, Centrica plc Sponsored by: 2013 Crain Communications Inc

Crafting a Pricing Strategy That Works

Crafting a Pricing Strategy That Works Presented by: Bryan T. Peña, Senior Vice President, Contingent Workforce Strategies, CCWP Jason Ezratty, President & Founder, Brightfield Strategies Thursday June