Gartner Research

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

Published: 30 April 2008

ID: G00156670

Analyst(s): William Maurer , Frank Ridder , Lorrie Scardino, Kris Doering


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
  • Overview
  • Introduction
    • Make Pricing Model Decisions Early and Revisit Them Often
    • The Organization, Not the Provider, Should Define the Pricing Model
    • Risk Is an Important Factor in the Context of Pricing Models
  • The Eight Most Commonly Used Pricing Models
    • T&M
    • Fixed Price
    • Cost Plus
    • Open Book
    • Unit-Based/Use-Based
    • Incentive—Based
    • Shared Risk/Shared Reward
    • Gain Sharing/Business Benefits Based
  • Additional Factors to Consider When Making Pricing Model Decisions
    • Balance of Risk Between Organization and Provider
    • Alternative Delivery and Acquisition Models Will Affect Pricing

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