Contingency Pricing Failure

This came in recently from across the pond:

"R&D tax is dominated by consultants charging heavy contingent fees (value based pricing in the extreme) - HMRC are currently reviewing the R&D tax scheme because they believe that contingent fees have generated very poor behaviour in this sector (stretching the scheme boundaries in order to max fees) - our customers are going the other way - fixed fees based on value and competitive pricing - my point is there is a limit to value-based pricing and the R&D tax sector has gone past it! (it’s an extreme case)"


Clarification #1:
Contingency pricing is contingency pricing. Contingency pricing is not value pricing.

More accurately, contingency has fees, which are contingent on parameters defined at the outset. Contingency fees will never have an upfront price because the outcome is unknown, and the fees depend on the outcomes.

By contrast, a service, product, or project that is value-priced will always have an upfront price, where the potential value to the customer is assessed in advance.

Contingency pricing isn't "value-pricing in the extreme." Simply, it's not value-pricing.
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Further clarifications to follow this week; stay tuned.