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“Zero Price, Infinite Demand” Tip

The term Demand is defined as the amount of a particular economic good or service that a consumer or group of consumers will want to purchase at a given price. 

In Economics, the Law of Demand is an economic law, which states that consumers buy more of a good or service (quantity, Q) when its price is lower and less when its price (P) is higher, ceteris paribus conditions for demand. This Extension/Contraction of Demand depending on the price, as a result the Demand Curve (DD):

Finally, an important aspect of a good or service Demand Curve is how much the quantity (Q) demanded changes when the price changes. The economic measure of the response is the Price Elasticity of Demand.

An usual problem when managing a Service is to achieve that the Customer admits Changes of Scope. From the beginning of the relationship and  Customer and no matter how little they are, Provider work together indentifying and managing any Change of Scope. When this is done in a natural win-win way, it will succeed in a flexible relationship model and will always adapt to the real needs of the business.

Of course, to achieve this point, the relationship must start from a clear definition of the scope of the Service contract (this is also applicable when we are the internal providers). In a Service, the Service Scope is based upon 3 vectors:

  • Service Catalogue
  • Service Baseline (or Productive Capacity)
  • Quality of Service (or Service Level Agreements, SLA)
On the other hand, what happens when we give more things for free to the Customer without reviewing the Service Scope with him?: the response is that we consecuently impact on one of the service vectors. Whether you started doing tasks that are not covered in the Service Catalogue (deregulating service management) or developed a greater volume of activities for which the service was dimensioned (Baseline), this impacts on the Quality of it (committing ANS).

Thus, any Change in Scope (or new demand) in the service should be formalized with the Client in regards to the adequacy of any of the above figures or a combination thereof. These changes should be properly reflected in the documents of the Service Management Office (SMO).

This is a key lesson learned from the best practices for Service Government; thus, securing the proper management of customer expectations and satisfaction with the quality of services. Furthermore, the TCO of the delivered services will be as they were scheduled and will avoid any “surprises” motivated by future scopes not estimated and valued.

Have you ever experienced infinite demand at zero price?

Author: angelberniz (All Rights Reserved by the author).
Source: Original Text (based upon first hand knowledge).
Image: © Paulus Nugroho R –
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