Principles of pricing = business principles?

This is the question I have been asking myself mostly this evening.

Today we lost out on signing a traineeship, as the company did not agree with our structure of pricing from a principle point of view. They perceived that it didn't make any sense, whereas our position is that the pricing model is based on where and how we deliver value to our partners and therefore is a principle issue.

Our pricing model:

Basically we price corporate traineeships according to the length of the traineeship (which can be between 2 and 18 months). As the internship fee is a sum paid per month, the total is in accordance with how long the intern works at the company. In order to ensure that companies don't use AIESEC internship contracts as temporary work contracts and then hire the person outside internship terms without AIESEC actually being able to finance operations through this fee, there is a clause in our contract saying that up to 18 months (corresponding to our max internship length) when the person works there the company has to pay this fee. This means that if the company chooses to employ permanently an intern after f. ex. 1 year, then for the time up to 18 months they would still pay the fee to AIESEC. The logic is that a person hired permanently is clearly adding value to the company, and that only reinforces why AIESEC should be compensated for the value we bring to the partner.

The (non) customer argument

If the original internship is 12 months, then after the 12 months there should be no payment to AIESEC even if the person is hired permanently by the company after this as this has nothing to do with the AIESEC internship. Perhaps this position is related to their comparing our pricing with job advertising portals - which - while it might be perceived as similar by the company, is a completely different business.

Conclusions?

If we change a pricing principle because a potential partner tells us it doesn't make sense to them, then surely this means they would be right - if we could just change it then it doesn't make any sense and we should have already changed it?

Well, I guess we will see.

I felt a lot of pain today when my VP went home, having been close to meeting his Quarter sales goals, but not quite making it due to this difficult potential customer. The thing is, he has done such a good job in preparing the case, knowing that he was close to his target, especially considering the initial customer expectations was something AIESEC could not even deliver on.

He has worked on 2 tough projects which have both had deliverables, and neither has been a walk in the park for him. He has, in my opinion, done an amazing job this quarter, and not been quite rewarded for this (as 2 "freebie" traineeships were not matched despite high chances and would have bridged his goal gap).

I guess I would love to sit down with the customer for 20 minutes and explain one last time our position. I would love to really understand theirs as well.

I believe we did the right thing, and I believe our business and pricing model corresponds with our work and the value we bring. I guess we will be rewarded in due time if I am right. Until then, we suffer a bit on this.

Thanks for Quarter 3. The best Quarter 3 since the 80s. in 45 minutes it's quarter 4.