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Research Report

The State of Technology Services Pricing

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April 11, 2025

Overview

Challenges
In the technology sector, TSIA has observed a slow transition from traditional cost-plus and market-based models to more value-centric approaches. As companies navigate challenges like measuring customer outcomes and communicating value, the need for an evolved pricing strategy becomes critical to maintain competitive advantage and drive sustainable growth. This report provides a data-informed review of the current landscape, and recommendations for future action.
Summary
The report addresses key challenges in the evolution of service pricing within the technology industry, highlighting a shift away from traditional models towards more value-centric approaches. It reveals that while many companies recognize the need for change, prevalent practices like cost-plus pricing still dominate. The findings emphasize the urgency for businesses to adapt their pricing strategies to enhance revenue growth and meet evolving customer expectations.

Included in the full report

Dominance of Traditional Pricing Models:

Cost-plus and per-user pricing remain the primary methods for technology products and services, indicating a slow transition to new pricing strategies.

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Challenges in Value Measurement:

The main obstacle in adopting value-based pricing is the difficulty in measuring tangible customer outcomes and effectively communicating this value.

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Divergence in Adoption of Forward-Thinking Models:

Some companies are exploring innovative pricing strategies, but many are resistant to change, showcasing varying adoption rates across the industry.

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Discounting Practices Affecting Value Perception:

A significant portion of companies lacks consistent discounting policies, which may undermine the credibility of value-based pricing initiatives.

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Need for Dedicated Pricing Functions:

Many organizations lack focused resources for pricing strategy, indicating a gap that needs to be addressed to facilitate development toward more customer-centric pricing models.

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