Have You Considered Value Pricing?
Talk to Ron Baker about how to bill clients and you won't hear any talk of timesheets. Instead, you will enter the world of value pricing, where a job costs what it is worth, not a fee based on how much time it took to complete.
Ron Baker is the author of the best-selling book, The Professional’s Guide to Value Pricing, and has also authored several courses for the California CPA Education Foundation.
In Ron’s live workshop, he discussed the importance of putting a price on the value of a service, not determining the value by how long it takes to perform the service. He encourages people to think about how much they would like to receive for the service. "We all have a price in mind that we'd like to get." He recommends offering an unconditional money back guarantee as part of the value pricing model because it lowers customer risk, reduce's buyer's remorse, and reduces sticker shock. Baker says, "A service that is guaranteed is worth more than one that is not."
A guarantee is not anything new. "You already offer a guarantee - it's just a covert policy in your firm." Making the policy overt enables you to gain a competitive advantage.
The most difficult hurdle to value pricing is that "we don't think we are worth more than our hourly rates. Our emotional attachment to the almighty hour inhibits us from getting what the customer already thinks we're worth."
One way to successfully implement a value pricing model is to bundle services. Charge a client for tax return preparation, but bundle that service with tax planning, consulting, and a money back guarantee. By offering a customized service you keep the customer coming back.
Mr. Baker used to bill his clients hourly, then changed to value pricing when he discovered that "It is the customer, period, who determines the value of what I do."
Read the full transcript of Ron Baker's lively workshop and decide for yourself which option makes sense for valuing your services.