Scope for More Work - Since this approach calls for collaborating with clients, so it provides further scope of work to the consulting firm. As clients see value in this collaborative approach, so further assignments are generally planned out.

No analysis would be complete unless we list down the risks associated with Value Based Pricing. The major risks that can cause this model to fail in a certain environment are: -

Not setting realistic targets, and going overboard with level of benefits that can be realized.

Attempting to change everything for some short term benefits, including processes which might not be an industry standard, but something which is unique and provides the client a competitive advantage over its rivals.

Clients should be careful while choosing a consulting partner, and should avoid getting into deals with everyone. This can result in wastage of time, and implementation of a wrong solution.

Value Based Pricing, however lucrative it may seem, may not be practical in all cases and scenarios. There can be umpteen occasions wherein it is difficult to map a tangible benefit of the consulting service provided. In such cases, it would be advisable to adopt one of the older means of pricing.

Formulating a Risk Mitigation Framework, we observe that: -

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Devroop Dhar is a Management Consultant with PricewaterhouseCoopers in Mumbai. He has almost 5 years of experience in the field of Consultancy, Project Management, IT. He is an alumnus of IIM Kozhikode, specializing in Finance & Operations. He has also worked with TCS & Bristlecone in the past, and done internship with EXL Service. He also holds BE Degree in Production Engineering from Jadavpur University, Kolkata.
All views expressed in this article are author's own, and not related in any way to his employer.