Abstract
A cost based pricing system is proposed as a better alternative to the Information Technology service pricing strategy currently administered by The Information and Communication Technology Services group (I&CTS) of a large Canadian bank. Two bank services were selected for this study. A fixed variable costing model was applied to the services' 1990-92 resource utilization records. Growth, inflation, and functionality estimates were applied to the costing data to produce services prices for 1991-93. The cost based pricing system communicates resource utilization information to I&CTS clients. Empowered by this knowledge, clients can modify their own consumption habits to reduce the costs for their use of I&CTS services. This pricing system provides a proper cost allocation to assist in the cost benefit analysis of investments in information technology and minimizes client cross subsidization.