Unordinary Thinking No.33 – Customer Satisfaction based pricing

Ever since I heard that Radiohead allowed fans to determine the price of their music downloads I wondered if the model could be applied to the professional services market. With a mass offering like music, the advantage is that volume and time allow for the remuneration to build to recoup the costs to produce it; an unending opportunity to eventually break even. With a professional service such as marketing strategy support to a time critical defined problem from a specific client, the model is a little less forgiving.

IMG_6330I buried the idea as nonsense until I was in St Katharines Dock in London recently where I saw the Honesty Shop Bus. It’s a double-decker which contains tourist type items for sale. There is an honesty box inside where customers make a self-imposed contribution in line with what you feel is right to pay. Those on the bus that day made what I regarded as reasonable payment gestures.

I decided if Radiohead and an unattended London bus can elicit purchasers without naming a price, surely Lexden can.

Earlier this year I got my chance to try out the idea. We received a request to provide PR strategy support to a well-known agency who were pitching for a slice of a media owner’s budget. The brief was familiar to us; get under the skin of the consumer audience and unearth their emotive drivers and motivations to help a brand connect in a meaningful way.

We were asked what we would charge for insight, analysis and presentation. At this point, as in most pitches, we appreciated our fee may be beyond the pitch support budget of the client. Normally I would propose a number of days based on an established day rate. However, on this occasion I suggested our client decided what the piece of work was worth to them when we had submitted it. We both accepted the risk (with pitch support there is no second chance to get it right, so like Radiohead, this was a calculated risk because of our reputation to deliver).

We completed the work. The client loved it. 

The client then proposed an amount. It was coincidentally similar to the amount of time I spent on the work. So what’s the advantage you may ask?

Using the traditional model, the client pays and we are paid, the client values the work and we value the business. A very transactional affair. Not to be sniffed at but less inspiring.

However, under the new model, we produced the work, the client valued our work, the client decides on an appropriate fee (so they are more engaged in the assessment of the quality of the work), we are rewarded for our craft and we both feel valued equally in the equation. It becomes more of an emotional engagement rather than just a supply and demand contract.

In an era where crowd sourcing, community collective schemes and credit unions are emerging to stimulate economic growth. It shows specialist B2B providers can participate too.

And how did it all turn out? They won the pitch. 

Posted by Christopher Brooks

Lexden is a marketing strategy agency which creates unordinary propositions to motivate customers and deliver commercial advantage for brands.

For more information please contact christopherbrooks@lexdengroup.com  or call us on M: +44 (0) 7968 316548. And you can follow us on LinkedIn Facebook and Twitter @consultingchris

Who we work with…

clients mar 2013

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