Pricing Model Definitions, Benefits and Risks for IT Services and Outsourcing Contracts

Archived Published: 30 April 2008 ID: G00156670

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Organizations use various pricing models, but not all organizations define and use them the same way. Pricing models also have varying pros, cons and risks. Use Gartner's definitions and analysis to make informed decisions when selecting a pricing model for IT services and outsourcing contracts.

Table of Contents

  • Analysis
    • 1.0 Introduction
      • 1.1 Make Pricing Model Decisions Early and Revisit Them Often
      • 1.2 The Organization, Not the Provider, Should Define the Pricing Model
      • 1.3 Risk Is an Important Factor in the Context of Pricing Models
    • 2.0 The Eight Most Commonly Used Pricing Models
      • 2.1 T&M
      • 2.2 Fixed Price
      • 2.3 Cost Plus
      • 2.4 Open Book
      • 2.5 Unit-Based/Use-Based
      • 2.6 Incentive—Based
      • 2.7 Shared Risk/Shared Reward
      • 2.8 Gain Sharing/Business Benefits Based
    • 3.0 Additional Factors to Consider When Making Pricing Model Decisions
      • 3.1 Balance of Risk Between Organization and Provider
      • 3.2 Alternative Delivery and Acquisition Models Will Affect Pricing
  • Recommended Reading
© 2008 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartners research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

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