Shared Services Pricing

Article Index
Shared Services Pricing
Terminology
Organizational Boundaries
Design Principles for Pricing
Costing and Pricing Approaches
Final Considerations
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Costing and Pricing of Services / Funding Models

Introduction

This discussion considers the development of a single costing and pricing approach that would support establishing and operating a shared services organization for a Government of Canada enterprise.

A fundamental challenge with costing and pricing aspects of shared services is that it involves using common infrastructure (e.g., technology, support personnel) to provide a range of services to a range of customers or service consumers. Common infrastructure usually requires larger scale, fixed cost investment, which needs to be recovered over an extended period of time.

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  • Determining which portion of the costs are attributable to any single service, or any specific consumer or customer, requires some estimation of the ‘appropriate’ amounts of indirect costs to charge
    • Who pays for how much, what is fair, how is it decided, and is it understood?
    • Given the difficulty in determining true, full costs, the concept of cross-subsidizing needs to be considered carefully
    • What is included in the full cost of providing the product or service?
  • Success requires a framework of costing and pricing shared services that works for each of the key stakeholders:
    • Shared Service Provider
    • Service Consumer or client (e.g., departments and agencies), and
    • Government of Canada enterprise as a whole.

 



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