crafting a pricing strategy that works
TRANSCRIPT
Crafting a Pricing Strategy That Works
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Thursday June 22, 2017
10 am PT 1 pm ET
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©2017 by Crain Communications Inc. All rights reserved.
Presented by:
Bryan T. Peña, Senior Vice President, Contingent
Workforce Strategies, CCWP
Jason Ezratty, President & Founder, Brightfield
Strategies
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This webinar is broadcast through your computer speakers via the audio broadcasting icon on your screen. You may adjust the sound
volume by using the slide bar on the audio broadcasting icon. You may dial into the call by dialing EUROPEAN NUMBER:44-203-478-5287
or US +1 650-479-3208 and using access code 660 391 720. Need other assistance? Please contact SIA customer service at
[email protected]. The presentation will be available 48 hours after the webinar.
©2017 by Crain Communications Inc. All rights reserved.
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©2017 by Crain Communications Inc. All rights reserved.
Jason Ezratty,
President & Founder,
Brightfield Strategies
Today’s speakers…
©2017 by Crain Communications Inc. All rights reserved.
Bryan T. Peña, CCWP
Sr. VP, Contingent Workforce Strategies,
Staffing Industry Analysts
What Goes into the Bill Rate?
Confidential and Proprietary. ©2015 by Crain Communications Inc. All rights reserved.
Markup
Pay Rate
Statutory Expenses
Gross Margin
Markup
Operating Expenses + Profit
Statutory Expenses
Direct Pay to Worker
Rate ElasticityDegree to which CW demand affects rates
Sourcing Model Framework
©2017 by Crain Communications Inc. All rights reserved.
CompetitivenessDegree to which agencies are invited
to bid against each other with respect
to submission time, candidate quality,
and price
Sourcing Model Framework
©2017 by Crain Communications Inc. All rights reserved.
Vendor IntegrationDegree of external resource
integration with your CW program
Sourcing Model Framework
©2017 by Crain Communications Inc. All rights reserved.
What Defines Quality?
• Talent Quality
– Right fit, right price
• Supplier Quality
– Speed and accuracy
• Program Operation Quality
– Delight internal customers and meet CW
resource demand requirements
– No Noise
©2017 by Crain Communications Inc. All rights reserved.
How Do You Define Cost Management?
• Cost savings
– Lowering costs by negotiating deals, incentives, and discounts
• Cost correction
– Getting the right value for your money
©2017 by Crain Communications Inc. All rights reserved.
Staffing Partner Considerations
• Client risk
• Cost to deliver
• Availability of candidates
• Brand and industry
• Strategic vs tactical
• Competitive advantage
• Revenue/Gross Margin
©2017 by Crain Communications Inc. All rights reserved.
Incentives and Discounts
• Conversion discount
• Spend volume discount
• Early payment discount
• Overtime discount
• Tenure discounts
• Fees at risk
• Gain share
• Revenue share
©2017 by Crain Communications Inc. All rights reserved.
Incentives and Discounts (cont’d.)
Confidential and Proprietary. ©2015 by Crain Communications Inc. All rights reserved.
0% 10% 20% 30% 40% 50% 60% 70% 80%
Revenue Share
Gain Share
Statutory Discounts
Fees at Risk
Tenure Discounts
Overtime Discount
Early Payment Discount
Volume Discount
Conversion Discount
Percent of Buyers Reporting Use of Selected
Discounts/Incentives with Suppliers/MSPs
Source: SIA, Buyers Survey.
©2017 by Crain Communications Inc. All rights reserved.
Don’t Be Greedy
SIA data shows that most buyers only apply 2-4 discounts per contract.
Average Number of Discounts/Incentives as a
Function of Buyer Annual Spend
1.9
3.0
4.0
<$10 million $10-$499.9 million $500MM+
Source: SIA, Contingent Buyers Survey.
©2017 by Crain Communications Inc. All rights reserved.
Theory vs Application
How are rates effected by:
– Geography
– Tenure
– Sourcing Channel
– Title/Job Description
Proprietary & Confidential
It All Looks So Logical on Paper…
Job Title X
Location “Buckets”
Low Cost Mid Cost High Cost “Premium”
Level 1 34 37 41 46
Level 2 38 41 45 50
Level 3 42 45 50 55
Level 4 46 49 54 59
29
Proprietary & Confidential
Rate Cards Set Parameters Across Multiple Dimensions
� Job Title
� Job Level
� Work Location (country, state/province, city)
� Supplier or Supplier Type
� Candidate Source (recruited, pre-identified)
� Assignment Duration (very short vs very long)
� Volume Discount Thresholds
� Other Embedded Costs (insurance, equipment, per diem)
30
100
4
20
10
3
3
NA
NA
720,000 Combinations!
Proprietary & Confidential
The 4-step Analytics Journey…
1. Are my rates where I want them?
2. If no, what are the underlying causal factors?
3. And, what rates should I be expecting to pay?
4. How can I get there?
31
Proprietary & Confidential
Taxonomy Issues:
Isolating Segments Within Job Titles
32
Non-IT Project Manager
Proprietary & Confidential
Granular Details Drive Machine Learning Nuances to Better Reflect the Many Realities
33
Proprietary & Confidential
Comparing Distributions Can Be Done with Statistics (e.g. t-test)
34
H0: A = B, H1: A < B
Group A Group B
Proprietary & Confidential
Each Dimension of Rate Card has its Own Associated Distribution: e.g. Source Type
35
RFQ Master Direct-sourceSelf-sourced
Sparsity becomes an issue the more you slice and dice
Proprietary & Confidential
Granularity & Conformity of Data is Key to Successful Analysis
38
Level 1
Level 2
Level 3
Level 4
High Cost Location
Low Cost Location
18-19 July 2017
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Join hundreds of your peers at the annual CWS Summit followed by the game-changing Collaboration in the Gig Economy event.
Collaboration in the Gig Economy delegates include:• Staffing Firms • RPO providers• Workforce solution buyers • Suppliers to Staffing• Gig economy/Human cloud companies • VMS/MSP
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18-19 July 2017Grand Hyatt | Singapore
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Upcoming Global Webinars:
Managing SOW Around the World: July 6
The Gig Economy and Changing Work: August 5
Increasing Value in CW Programs: August 31
VMS/MSP Landscape: November 9
2017, Future Shock, The State of Workforce Solutions: December 7
Lessons for CW Managers: December 14
©2017 by Crain Communications Inc. All rights reserved.
Thank you!
Jason Ezratty, Co-Founder & President, Brightfield Strategies
Email: [email protected]
Bryan Peña, SVP, Contingent Workforce Strategies, CCWP
Email: [email protected]
© 2015 Crain Communications Inc. All rights reserved.