The Professional Guide to Value Pricing by Ronald Baker is in its sixth edition, and I still am amazed by the impact that the book has made on the profession. I recently spent some time talking to Ron and an associate at a conference that we attended. As ever, I got the distinct impression that Ron enjoyed his role as evangelist for value pricing, although he showed a little frustration that many in the profession still don't get it.
I can understand his frustration, because many practitioners have difficulty breaking from an hourly billing mentality especially with regard to existing clients. To reassure Ron, I have noticed many CPAs are trying to implement some kind of value pricing for particular types of engagements.
I believe that the key to value pricing is not just the two parties see value in the services, but that there be some commonality in the value seen by the provider and the recipient of the service. Without that commonality, there is often only is an illusion of value.
Let me give you two examples. The first was a teacher who took advantage of an offer by a now Big Four firm to help her with financial planning for a modest fee. After filling out a very short questionnaire, she quickly got back an extensive report. On close examination, it was obvious to anyone who knows anything about financial planning that the report was a template, and the only thing original in it was a pie chart showing the breakdown by type of the individual's assets coupled with a boilerplate recommendation that the allocation wasn't right for someone of the individual's age. Of course, there was the siren's call, "We would like to talk to you about this further, please contact us." Luckily, this illusion of value was seen and the call was never made.
The second example deals with a regional firm that was doing some internal control evaluation work for a public company until one of the company's managers discovered that a college intern was doing the work rather than a firm member. The company quickly discharged the regional firm and hired a much smaller, local firm to complete the engagement.
I believe that in order for value pricing to succeed within the accounting profession, accountants have to do a little self-promotion of the actual value they are providing to clients. They also must educate clients on the significant value of their time. This will help a client understand that if they want something done quickly, a surcharge will be in addition to the standard fee for the engagement.
The end result of this search for commonality, hopefully, is that clients and their CPAs will have similar values as to what constitutes value pricing.
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