Factors driving Output based pricing in IT Services

What are the factors that drive output based pricing in IT Services?

This is an interesting question client seem to be asking for IT services from vendors. Lets define the context for zeroing into the factors for output-based pricing. The context of our discussion is typical Application maintenance engagements with defined Service level metrics. Some of these factors that could be applicable are:

1. Price per ticket. To accomplish this the ticket has to be clearly defined and categorized:
a. Level of ticket (L1/L2/L3 definition,
b. Priority/Severity of ticket (P1/P2/P3),
c. Technical skill/experience required to resolve the ticket (Technical/Functional),
d. Timing when the ticket is raised for resolution
The best place to apply these is in the Application maintenance tickets.
2. Price per Service. To accomplish this the service has to be clearly defined and categorized using the same parameters as above. This is typically valid for Infrastructure based tickets, archiving, patch application, typical admin. tasks, pwd resets and so on.
3. Price per outcome/deliverable. This can often be applied for minor enhancements tickets such as price to perform a test based on defined test scripts, release/transport of objects to production, etc.

But to define all the above one needs to have control over the mean and almost negligible variance in resolving the ticket, providing a service or a standard estimates for outcome agreed by both the client and vendors/service providers.

We'll discuss the benefits of such a pricing model to client in a seperate thread...

Avenues are available to play more with this by providing options to client. Any ideas that you want to share. If you are interested to develop and share more perspectives on this mail me to sunil_raghunathan@hotmail.com...