Gartner Research

Avoid the Financial Risks of Blended Rates for Application Services

Published: 16 April 2013

ID: G00250642

Analyst(s): Gilbert van der Heiden , Grant Bayne


Sourcing managers involved in acquiring application services based on time and materials delivery too often use blended rates. Our detailed analysis of blending models and insights into market rates highlight the best practices needed to avoid financial risk.

Table Of Contents
  • Key Challenges



  • Analyze Market Rates and the Reasons That Determine Rate Bandwidth
  • Understand the Blend Before Considering Blended Rates
    • Model 1 — Conservative Blending
    • Model 2 — Aggressive Blending
    • Consolidated View — Combining Horizontal and Vertical Blend
    • Example Blended Rates
  • Incentivize Satisfaction and Formalize Blend Evolution

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