Service profitability: for pricing strategies, cross-service discounting and optimization

Natasha Leigh Giles ()
Additional contact information
Natasha Leigh Giles: Capco, Postal: Zurich, http://www.capco.com

Journal of Financial Transformation, 2012, vol. 35, 8-16

Abstract: What is service profitability? With the financial industry facing economic turmoil, a squeeze on margins and a wave of new regulatory policies, there are many companies facing an urgent need for change to improve their profitability. There are also firms benefiting from the new era with a significant growth in business, prompting decisions about how to grow their range of services to achieve the highest profitability. Any decisions taken in the process of change or growth are best made where there is clear visibility of the effects of the proposed new model. Knowledge and visibility of the profitability of a service are essential inputs for increasing the probability of a successful decision as part of a change or investment for growth. The profitability of a service is the balance of income received for the receipt of that service minus the costs to provide that service to the client. This relationship between income and costs can be used to drive pricing strategies, relationships or discount pricing and is a valuable starting point for reviewing any changes in sourcing. For the purposes of this study, a service can be interpreted as the processes related to providing an offering of a particular product. For example, the service provided to clients which allows them to invest in hedge fund products would include the full end-toend business processes needed. These involve researching the hedge fund providers, maintaining the product listing, selling the position to the client, supporting the client during the investment lifetime and closing out any client investment in a hedge fund. All companies have a form of pricing strategy, but in reality there are many variances from their rate cards or “expected” levels of income and the “actual” received income. This variance can be described as revenue leakage.

Keywords: service profitability; pricing strategy; cross-service; service fees; process optimization (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:jofitr:1523

Access Statistics for this article

Journal of Financial Transformation is currently edited by Prof. Shahin Shojai

More articles in Journal of Financial Transformation from Capco Institute 77 Water Street, 10th Floor, New York NY 10005.
Bibliographic data for series maintained by Prof. Shahin Shojai ( this e-mail address is bad, please contact ).