Service Industry-Pricing Issues

Topics: Cost, Price, Service provider Pages: 3 (630 words) Published: July 27, 2010
J.R KUMAR Faculty Director, FAPCCI.

The basic aim of the Service Industry is to provide services to the clients/customers who need those services. These services include the services for the manufacturing units, as well as the services to other direct or indirect service providers who offer services to others involved in meeting human needs.

Pricing the services is always considered as difficult, especially when the quality of services vary from customer to customer. Some of the methods adopted could be:
a. Charge the price as per cost of service-Based on costing of time spent, materials used etc., in rendering the service. b. What the others are charging.-most common method.
c. What customer is willing to pay or what the customer is charging his customers based on this input service. d. Gamble and charge an estimated price.

We can see that every consultant might have tried one or more of such methods, or variations of them, at one time or another with varying degrees of success.

If service providers are operating in a protected environment, they have the advantage of charging the declared price as fixed by the apex/regulatory body. When the service provider is operating in a competitive field, the price fixation is very difficult. Similarly in case of service providers operating in unorganized sectors, the price fixation is very difficult job and many service providers are underpaid.

If we are service providers and if study the methods adopted by established service providers in industry it can help us in pricing our services properly.

Some of such factors which are generally considered by the service providers in fixing price for their services are:

1. Market Conditions-Demand for services and availability of Service providers. Most service...
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