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Three Key Reasons Why There Is Still Value Pricing Hesitation

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May 14th 2015
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Value pricing has been around as a concept and practice in the accounting profession for nearly two decades, yet while comparatively on the rise of late, it is still not fully embraced. Ron Baker, founder of VeraSage Institute and longtime value pricing proponent, explains why.

Overall, it seems in Baker’s view that the profession is not entirely against the concept, but there are several factors that have truly prevented accountants from implementing value pricing more broadly.

Aside from the usual adversity to change, which he professes is not entirely a mitigating factor when it comes to value pricing, here are the three key reasons Baker sites for accounting professionals not using the fee model more regularly in their practices, as well as his reasoning for the pushback:

One foot out the door. “We have a good portion of the [accounting profession] leadership that is angling toward retirement and they don’t want to screw around with their revenue model", he says. "They feel it could also screw up their retirement plans and that they may lose money or even be undervaluing themselves.”

Low self-esteem. There is a less-spoken-of self-esteem issue in the accounting profession and it has had an impact, according to Baker, on moving value pricing forward. As he puts it, “if you don’t think you are valuable, your clients won’t either.” Baker further notes that there is a general reluctance to express or even quantify that value to clients, largely tied to the esteem issue.

Feeling commoditized. A common perception in the profession is that what accountants are “selling” is becoming a commodity. As he states it, “accountants think tax and audit, the staples of the profession, are becoming a commodity so in essence they are selling things people don’t necessarily want. I just don’t buy that thinking. I think there is value in what you would call ‘negative goods.’ For example, does that mean you go out and buy the cheapest aspirin when you have a headache or pain? Probably not.”

In the same right, Baker does see a movement favoring value pricing, and after more than two decades of preaching its benefits, the profession is “nearing a tipping point” toward larger acceptance.

“A big part of [the use of value pricing] the last three to four years is we’ve got the software publishers behind us; those who feed the profession are now saying you need to price better,” according to Baker. “You can do things in a more automated way than ever before, which saves you time and you just can’t sell time well anymore. I couldn’t have said that 10 years ago.”

Ron Baker is the founder of VeraSage Institute, a think tank dedicated to educating professionals internationally, as well as a radio talk-show host and a frequent speaker, writer, and educator.He will be speaking in detail about the value pricing model and how it specifically can work in your firm during his session entitled “The Journey to Value Pricing” as part of the upcoming Scaling New Heights conference June 21-24, 2015. Please visit this link for more information and event details.

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By Virginia Nicols
Jun 25th 2015 20:12 EDT

If ever there were a profession that could see -- and demonstrate -- what a financial
difference their services make, it ought to be accountants!

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By piepieces
Jun 25th 2015 20:12 EDT

value pricing hinders independence and violates the professional code of ethics - tell us again, what CPA firm this guy runs? I don't see ",CPA" behind his name...

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By Seth Fineberg
Jun 25th 2015 20:12 EDT

Forgot to add, 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. He has been an instructor with the California CPA Education Foundation since 1995 and has authored fifteen courses for them.

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