Ever carefully read over a contract or quote from a call center provider and still had no idea what your pricing was going to be?
Although call center pricing should be made clear during the vetting process, it’s not always. However, knowing the three main pricing models for call centers—hourly, per-minute or per-performance —should help make sense of the majority of contracts.
But once you understand the models, you also need to understand which model is right for your business. Each model offers a different balance of cost-efficiency, effectiveness for different goals, and service quality. Your outsourcing goals, business size, and a host of other variables affect which is right for you—but, of course, choosing the right pricing model won’t only affect your bottom-line expenses. It also affects the type and kinds of service you’ll receive, and sets the stage for your partnership.
In this article, we’ll look at the three main types of pricing models, as well as the pros and cons of each, so you can determine which is right for your company.
Hourly Pricing Model
When it comes to call center pricing, the hourly model is the most common. This pricing model is straightforward and also mirrors common in-house pricing models, so it’s easy to set up and budget.
With hourly pricing, you simply pay for the total number of agent hours for approved full-time agents assigned to your brand. For example, if you have 25 agents and each works 30 hours a week handling customer service for your brand, you’ll pay your provider a flat rate for 750 hours/week for your agent costs.
Your provider will be responsible for accurately and effectively scheduling agents to handle call volume, so with this model, it’s important to work with a provider who has efficient scheduling practices.
What are the pros and cons of hourly call center pricing?
Let’s take a look at some of the main pros and cons of hourly pricing for call centers:
Pros of Hourly Pricing
Cons of Hourly Pricing
simple and easy to budget
inaccurate forecasting can lead to increased idle time, which is still billed to your company
typically a predictable flat rate
hourly models can decrease productivity in some call centers
well-suited to focusing on customer experiences over operational metrics
less flexibility for fluctuating call volumes
cost-effective for bigger companies with high call volumes
Pro: It’s simple and predictable. By paying a flat hourly rate based on how much agents work, you can easily understand what your costs will be each month and budget accordingly.
Con: However, inaccurate forecasting can lead to increased idle time. When call center providers schedule more agents than are needed to meet the call volume demand, agents end up having idle time that’s still included in their billable hours. As a result, your company ends up paying for time when agents weren’t actually handling transactions.
Pro: It’s well suited for companies who want to focus on enhanced customer experiences. With other pricing center models, agents or providers may be incentivized to tackle as many calls as possible in a given amount of time, regardless of the quality of their service or solutions. With hourly pricing, agents and providers receive a flat rate regardless of how many calls are handled, so more care can be given to customer satisfaction.
Con: However, hourly pricing can also reduce productivity. Since agents and providers know they’ll be paid the same rate regardless of interactions completed, there may be less motivation to handle calls or other customer inquiries as quickly and efficiently as possible. This is more of a concern when dealing with non-immediate inquiries, such as email or social media conversations. Defining a minimum service delivery in advance with your provider can help ensure you get efficient service while still allowing flexibility for customer experience.
Who is hourly pricing best for?
Hourly pricing models are best for companies who have large enough call volumes to justify a team of full-time agents without too much downtime. In addition, companies who want to incentivize agents to spend sufficient time on each case to improve customer experience may want to consider an hourly pricing model as well.
Similar to the old per-minute models mobile phones used to offer, with a pay-per-minute pricing model, companies pay for the actual time (in minutes) spent handling your calls or interactions.
For example, if you have 5 agents and each spends 400 minutes a week handling your calls, you’ll pay for 8,000 minutes that month. Many call center providers have a per-minute rate that decreases as the volume increases—so, the first 1,000 minutes might be billed at $1 per minute, the next 5,000 minutes at $0.70 per minute, and so on.
What are the pros and cons of per-minute call center pricing?
Let’s take a look at some of the pros and cons of per-minute call center pricing:
Pros of Per-Minute Pricing
Cons of Per-Minute Pricing
pay for exactly what you use, no idle time billed
can become an expensive model for some programs, especially large or high call volume companies
flexible and easy to scale up or down based on volume
needs careful management to not shortcut the customer experience
inexperienced agents can drive up average handle times, and therefore costs as well
Pro: It’s a very straightforward pricing model where you’re billed for exactly the time you use, no more and no less. This also makes it easy to scale up and down—if your agents use more minutes, you simply pay extra that month. If call volume is down, you pay less.
Con: Because agents and providers are paid by the minute, it can lead to agents attempting to handle calls as quickly as possible. This may seem counter-intuitive, but since companies typically want to maximize their budgets, providers often encourage shorter AHTs to cut costs and present a positive record for your company. You’ll need to manage the program carefully to ensure that you’re not shortcutting the customer experience in an attempt to reduce your agent minutes.
Con: In addition, long AHT can also create negative customer experiences—and with per-minute billing, they also drive up your costs. Companies who want to focus on customer experiences may end up paying a premium if you’re being billed by the minute. Alternatively, inexperienced agents often take longer to successfully resolve customer concerns, which will also drive up costs with per-minute billing.
Connect With a Call Center Expert
Ready to take your business to the next level? Let our call center experts show you how we've helped organizations just like yours seamlessly scale while lowering costs and increasing efficiencies.
You won't regret it.
Who is per-minute pricing best for?
Since per-minute pricing is so granular (billed down to the minute!), it’s best for call centers with irregular or low call volumes. With per-minute pricing, you can have coverage for your busier times while avoiding paying for agent idle times during downtime.
Pay-Per-Performance or -Per-Transaction Pricing Model
The pay-per-performance model, sometimes referred to as a pay-per-transaction model, is less common, but still a great option for some companies. With this model, you pay based on the number of transactions handled or specific outcomes achieved.
For example, a call center providing B2C inbound customer service may bill you based on the number of customer emails replied to. A provider offering a B2B outbound service might bill you for the number of leads generated or new meetings booked.
What are the pros and cons of per-transaction call center pricing?
As with each of the other pricing models, paying per-transaction has its own pros and cons:
Pros of Per-Transaction Pricing
Cons of Per-Transaction Pricing
only have to pay for completed transactions
depending on volume and what you’re outsourcing, can be difficult to budget for
can motivate agents to be more productive
can also motivate some agents to focus on quantity over quality, leading to lower-quality interactions
Pro: You get what you pay for—or rather, you pay for exactly what you get. Regardless of how long it took the agent to complete a task or what your volume is, you still only have to pay for completed transactions or tasks.
Pro: This model can motivate providers and agents to work more productively for your business, optimizing the number of tasks they can complete for you.
Con: On the other hand, your monthly billing charge will be quite variable, as it’s tied directly to agent productivity, volume and a number of other variables. As such, this model can be more difficult to budget around. Placing a cap on monthly transactions can help you budget accordingly.
Con: Since providers (and in some cases, agents) will be able to earn more for more transactions completed, it may lead to a focus on quantity over quality, driving down the quality of your service and interactions. In the case of outbound marketing or lead generation, you might receive a lower quality return because agents are more motivated to execute the actions rather than returning the highest-quality results.
Who is per-transaction pricing best for?
Generally, pay-per-transaction pricing models are best for companies who have variable volumes, or specific one-off outsourcing needs. Since you’re paying only for work completed, companies who have very specific amounts of work, or who want to maximize output, should consider a per-transaction pricing model.
Which Call Center Pricing Model is Best For Your Company?
So, which of these models is best for your company—and how do you mitigate the downsides of your chosen pricing model to optimize your budget and your results? See which of these scenarios most closely matches your current needs and goals:
Companies with high call volumes who want to focus on customer experience: Look for an hourly pricing model. Paying hourly allows providers and agents the flexibility and security to offer your customers the best customer experience, regardless of how long the call or concern takes to resolve.
With this, you should carefully track operational call center metrics to ensure that your hourly rate isn’t decreasing speed and urgency. While customers need time to feel taken care of and understood, customers also value being taken care of quickly—metrics like Average Handle Time and First Response Time can help ensure both needs are being met.
Companies who have a high, but inconsistent call volume: Look for a per-minute pricing model. This pricing model should offer a cost-effective way to handle inconsistent call volumes. With higher volumes, you’ll get a better per-minute rate, but you’ll avoid shelling out additional costs for downtime when your call volume is lower.
Keep in mind that many per-minute models are part of a blended or shared environment where agents work on a number of brands’ customer interactions. Be sure to provide adequate brand training to agents so they feel like a natural extension of your company or organization.
Companies who need to prioritize efficiency and speed: Look for a per-transaction model. By paying for only what you need, you can motivate your provider and agents to prioritize efficiency and speed. This is particularly important for high-priority help desks or urgent help lines. Consider tracking key experience metrics alongside your completed transactions to ensure that increased speed doesn’t lead to decreased quality or customer satisfaction.
Companies who have low call volume but want to prioritize service over speed: Look for a per-minute pricing model. Per-minute pricing can help make a low call volume more affordable (as opposed to hourly rates), but paying per-minute can help you incentivize agents to prioritize service over speed (as opposed to transactional models).
Consider tracking operational and experiential metrics alongside your call volume to ensure that agents are still providing prompt and efficient service to customers. Customer experience metrics can give you a good measure of how customers are experiencing your brand to ensure excellent service.
Companies who have a low call volume or one-off projects (i.e. lead generation or surveys): Look for a per-transaction model. This model is perfect for companies who have a very low or inconsistent volume, or a high volume that will only last for a short period. Just commission and pay for exactly the amount of work you need.
How To Find The Right Call Center Partner
Of course, the right pricing model works most effectively in tandem with the right call center partner. Partnering with a high-quality, trusted and customer-obsessed provider ensures that you get the most value for your cost, no matter the pricing model.
To find the right call center provider, look for these four qualities common among standout providers:
- Clarity on pricing services: You should understand exactly what you’re paying for and what’s included. Of course, different call centers will have different pricing models (as outlined above), but it should always be clear to you what you’re paying for, what your rate is, and so on.
- Quality over quantity. A provider who focuses on the quality of your interactions—or the actions they provide on your behalf—will always pay off in the long run, even if your company is focusing on cost savings in the short run. Outsourcing can be a great way to cut costs, but opting for the cheapest option you can find is never an effective way to find a great provider.
- Experience and expertise. Can your provider get you results? Regardless of your payment structure, ensure that your potential provider has both customer service and experience expertise, as well as experience with your industry, needs, goals and audience demographics.
- Abundant agent training. Your provider’s call center agents will be the ones delivering your service and—hopefully—providing high-quality interactions for your customers. Your provider should place a strong investment in agent training, and the quality of their agents should reflect your own standards.
Looking for these four qualities can help you ensure a productive, long-term partnership with your call center provider. If you’re looking for a provider with clear and flexible pricing models alongside high-quality, customer-obsessed service you can trust, reach out to ROI Solutions. Our customer service expertise has allowed us to deliver results for brands of all sizes—and we can help you meet your goals too.