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BVM - Value-Based IT Costing and Pricing Strategies

 
Costing  
   
Historically costing was used to determine how resources were consumed.  While the principle is the same today, the methods and approach have evolved significantly over the years. Historical approaches to gathering data proved labour intensive and timely. Manual efforts and complexities to capturing the data components meant this could only be done once a year. Volume and sales data was generally collected after the financial year-end results. The data was becoming increasing less relevant, not only were companies using last year’s data, they were doing so months after year end.  
  
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Pricing  
   

 Pricing can be derived from many sources and mean different things to different companies.  Consumer’s reaction can drive price, industries can set standard pricing and companies can determine pricing using profit inspired formulas. While there are many, the method for determining price is less relevant. The objective and the impact resulting from price are most important. While profit is the motivator for many, Internal IT departments, Government Agencies and Not-for-Profit companies are looking to just break even. Are you recovering all your current costs? Will future outlay’s of cash cause your price to fluctuate?  Does price include the cost to refresh or maintain currency? Is there enough room between cost and price to meet company hurdle rates and make a profit?
   

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