Why professional services need better pricing models
The big question that many professional services firms struggle with is how to price their services so they can make a healthy profit while still retaining clients who are looking for more value. Making the situation even more complex is surging client demand for transparency on pricing – and why and how the price is what it is. In order to meet these challenges, firms are looking at modern technology to leverage past data and outcomes to improve accuracy and profitability in all their pricing endeavors.
We recently had the opportunity to speak with Jill Nelson, Senior Director of Client Delivery, Intapp about the impact data can have on pricing for professional services firms.
Intapp: What is one of the most important aspects of the pricing maturity model?
Jill Nelson: Most firms are now well into at least the second level (evolving, heading toward optimized) – with designated functions for Pricing and LPM, and moving toward refining processes, systems and data management improvements. Because of this, they are at a critical point for both success and growth of the functions. They also have the chance to assess and balance the path forward to established KPIs and standard methods for measuring and monitoring, data governance and strong lawyer adoption around process, technology and data.
Intapp: What impact does pricing have on firms, clients, lawyers, and partners?
JN: For lawyers and partners, modern data-driven pricing drives an important range of capabilities and insight: understanding the true effort to deliver the work; having the opportunity to optimize resourcing and alternative models to meet client and law firm goals; developing and offering profitable fee arrangement options; and, managing those plans throughout the matter. The visibility of activity and progress affords lawyers, partners and LPM teams the opportunity to maintain strong communications with their clients.
Intapp: What is the relationship between data and pricing?
JN: Pricing remains a best-assessment, better-than-a guess function, a far less-informed function than most lawyers and teams would like. Given the need to not only be responsive to client requests and goals but to also demonstrate solid business partnering with clients, uninformed pricing materially limits success. Data has the ability to change that!
Intapp: What can firms do when they have poor quality data, but want to innovate their pricing strategies/models? Can you talk about the role that AI plays in pricing?
JN: For Intapp Pricing, leveraging its ingredient of Engagement DNA™– an AI-powered technology that automatically sifts, sorts and categorizes all past engagements by shared characteristics to identify “families” of past engagements similar to the matter at-hand – equips the pricing process with predictive intelligence, deep insight and algorithmically informed templates to ensure accurate and optimized plans and budgets.
Intapp: How can firms price competitively and meet client requirements, while delivering profitable work? Do you foresee this extending the longevity of client relationships/retention?
JN: Acumen applied to the business of law and managing client relationships, whether to retain or grow, is paramount in the legal competitive landscape. Demonstrating capabilities that engage intelligently around the economics of the legal service delivery – aligned with how a firm’s clients articulate goals and needs – will equip law firms with a strong foundation for managing internally to profitability and to externally solidify client relationships.
Learn more about how to maximize firm profitability with smart scoping, pricing and visibility with Intapp’s Pricing and Engagement DNA solutions.
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