Ian Bamford is a Pricing Analyst with Elevate while attending college full-time. He recently spoke with Aryan Dhingra about his role and the value he brings to the law company and its customers.
Let’s start with your background. Where did you grow up, and what are you studying at the University of Chicago?
I am a third-year student studying economics at the University of Chicago and am originally from Connecticut. I have been studying at home in Connecticut since March 2020 due to the pandemic.
What interested you in coming to work at Elevate?
I started an internship at Elevate last year with a rare opportunity to do real, practical work on a daily basis. I am also fortunate to learn from leaders in the industry like Liam Brown and Stephen Allen.
What does a day in the life of a Pricing Analyst look like? What do you find most challenging about your role?
At Elevate, I use the economists’ toolkit to create better outcomes for the company. This largely involves realigning incentives and using data to achieve more efficient outcomes. Some days, that means using Excel to model pricing or coding to crunch data. Other days, I read economics literature to bring theory into my models. A lot of the job is simply thinking through the logic of what our prices communicate to customers.
What is your philosophy when it comes to pricing?
A price communicates a lot of information between the service provider and the customer. First of all, the price can tell the customer what we are selling. If we are selling our time, then we should sell the customer our hours. But if we are selling an outcome with measurable dollar benefit, then we want to base our price on that outcome so that we can share in our customer’s gains. This means moving towards more gain share or fixed fee models based on the outcomes we provide customers.
I believe a good price takes three components into account. First, the price reflects the value that we provide to the customer. Second, the price covers our costs. This only verifies if we can offer the service or not. If the fair price to the customer does not cover our costs, then we can’t offer the service. Last, we consider the competition’s price. This is more about where we want to position ourselves in the market. Sometimes we want to lower prices to outbid our competitors, but sometimes we can increase our prices above competitors to demonstrate higher value to our customers.
How do you stay on top of industry and competitor pricing trends?
One of the things I pay attention to is the amount the legal industry has been shifting to AFAs. While we are in the process of transitioning to value pricing, sometimes it is difficult to be at the forefront of this transition because customers are still being educated about the benefits of value pricing. As a result, the more the industry shifts to AFAs, the more understanding they will be of our own new prices.
What do customers need to understand about pricing that you think they do not? What should they be thinking about when analyzing vendor prices?
I think there is a natural inclination to try to stick with what you know. However, there are many benefits to value pricing that are not fully appreciated. First, moving to value pricing changes the vendor’s incentives to be more efficient in the delivery of the service. This results in cost-cutting, greater investment in technology, and lower prices in the long run. Second, value pricing ties the price of the service to the outcome instead of the hours. Service providers should not be paid extra for taking longer than necessary on a project. Third, value prices are fixed ahead of time, so there is no surprise bill at the end of the project. While there are certainly many cases where time-based pricing is necessary, value pricing has significant benefits for many services.
What trends related to pricing are you seeing in the legal industry? How have those been affected (or not) by the pandemic?
I think the most important trend is the growing movement to AFAs and the ever-increasing hourly rate. Legal services are becoming more expensive, and incentivizing productivity and efficiency increases through value pricing can help counter this trend. I think that as a result of the pandemic, law departments facing budget constraints will start to demand more AFAs and greater use of technology. However, law departments themselves still need to be educated on the benefits of AFAs and technology, so this is a work in progress.
How does your role contribute to the customer experience at Elevate?
My role is internal, but pricing is one of the first things that customers see when they come to Elevate. I hope that when they see this pricing, they can also see the value that we are trying to communicate with it.