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Ron Baker joins Mike Michalowicz, Chris Curran, and Ron Saharyan to give us the scoop on value pricing. Welcome to Episode 17 of the Grow My Accounting Practice Podcast!
Ronald J. Baker started his CPA career in 1984 with KPMG’s Private Business Advisory Services in San Francisco. Today, he is the founder of VeraSage Institute—the leading think tank dedicated to educating professionals internationally—and a radio talk-show host on the www.VoiceAmerica.com
show: The Soul of Enterprise: Business in the Knowledge Economy.
As a frequent speaker, writer, and educator, his work takes him around the world. He has been an instructor with the California CPA Education Foundation since 1995 and has authored fifteen courses for them, including: You Are What You Charge For: Success in Today’s Emerging Experience Economy (with Daniel Morris); Alternatives to the Federal Income Tax; Trashing the Timesheet: A Declaration of Independence; Everyday Economics; Everyday Ethics: Doing Well by Doing Good; and The Best Business Books You Should Read.
He is the author of seven books, including: Professional’s Guide to Value Pricing; The Firm of the Future: A Guide for Accountants, Lawyers, and Other Professional Services, co-authored with Paul Dunn; Pricing on Purpose: Creating and Capturing Value; Measure What Matters to Customers: Using Key Predictive Indicators; Mind Over Matter: Why Intellectual Capital is the Chief Source of Wealth; Implementing Value Pricing: A Radical Business Model for Professional Firms; and his latest book The Soul of Enterprise: Dialogues on Business in the Knowledge Economy, co-authored with Ed Kless.
Ron has toured the world, spreading his value-pricing message to over 120,000 professionals. He has been appointed to the American Institute of Certified Public Accountant’s Group of One Hundred, a think tank of leaders to address the future of the profession; named on Accounting Today’s 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2011, 2012, 2013, 2014, and 2015 Top 100 Most Influential People in the profession; voted number three six, and nine, of the Top ten Most Influential People in the profession in 2012, 2013, 2014, and 2015; selected as one of LinkedIn’s Influencer Bloggers; and received the 2003 Award for Instructor Excellence from the California CPA Education Foundation. He graduated in 1984 from San Francisco State University, with a Bachelor of Science in accounting and a minor in economics. He is a graduate of Disney University and Cato University, and is a faculty member of the Professional Pricing Society. He presently resides in Petaluma, California.
Hourly based pricing is slowly dying. The death of the billable hour and the time sheet may not be within reach but it is definitely within sight.
The billable hour is the symptom; the cancer is the timesheet because it keeps professionals in the mentality that what they sell is time. There’s not a customer alive that buys time! They buy outcomes.
Billing is done in the rears when the work is done. Pricing is done upfront. Value pricing means you’re pricing the customer individual, not the service.
If you’re about to die in the desert, chances are you’d pay anything to get your hands on a bottle of water… but if you’re at home and giving your dog a bath with the same amount of water, how much is it worth to you? If you’re basement get’s flooded now that water becomes a negative value because you have to pay someone to pump it out. Here’s the thing… the water hasn’t changed within those 3 scenarios!
Value is completely subjective; which means value is not a number it’s a feeling.
Have the value conversation with your customer. DO NOT use this type of thinking to take advantage of them… you just want to get a sense of what the value is to them, because some customers are not a good fit for you because they’ll never appreciate your value and what you do. When would you rather find out the client doesn’t like your price: before or after you do the work?
We are one of the few businesses on the planet that doesn’t offer us options. Offer turn around time options (how fast do they need the work done), structuring payment terms (monthly vs. upfront). This should have nothing to do with technical quality.
If you put 3 options in front of someone it changes the question from “should I work with this firm?” to “how should I work with this firm?”
The Psychology of the Sale: the Law of Consistency
People feel compelled to be consistent with their verbal and written announcements, therefore you improve the chance of selling your services if you can get your customer to commit. When we state something we live by it. People have an automatic compulsion to defend and protect what they write or what they state – utilize this! Ask your client to email you PRIOR to your call with what they want to achieve in their business; this is their written commitment. Ask them in your meeting what they intend for their business which is their verbal commitment. Ask them why the bookkeeping or accounting services they are searching for is important for them now. Ask the questions: “do you believe it’s extremely important to cut costs and increase bottom line profits?”
GMAP Now Task
Write down what you’re billing your customers. Ask yourself “Is this number treating me fairly? Is this my true worth?” Until you feel this in your heart you are not going to be able to get the price that you deserve. This isn’t about your customer, it’s about you. How valuable to do you see yourself?
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