PODCAST: Are you ready to make the change to value pricing?

Written on Sep 05, 2019

By Abigail Draper, OSCPA communication & engagement manager

Ron Baker, CPA, founder of the VeraSage Institute, said firms might be “in a perilous place” if they don’t take risks like adopting a value pricing business model.


“Hourly billing methods have been around since 1919,” Baker said in the latest episode of The State of Business podcast. “So, we are literally in the hundredth anniversary of the ‘we sell time’ business model, and we are still teaching it to accountants.

“A business model that's 100 years old is probably not relevant anymore.”

Baker began looking at value pricing when he began his own firm in 1989. He examined the pricing at his firm closely and said he “got really tired” of customers asking why he hadn’t told them how much the services would cost upfront.

“I wanted to change that customer experience,” he said. “I wanted to create better customer service, and what I learned was giving customers predictability and certainty around price did that.”

How do you begin to switch to a value pricing model? Baker said you must think about your firm’s purpose or why it exists. This includes determining what you want to specialize in instead of trying to be a “general practitioner.”

“By specializing, you expand your geographic market and your geographic customer base. You get more interesting work and you can charge a price premium because you're creating more value as such a deep expert in that (topic).”

Value pricing shifts the risk from the customer to the firm, Baker said, and he thinks firms need to become comfortable with taking risks to make money and be more successful.

He said this is the business model of the future and in the next few years, pricing of the past will no longer fly.

“Value pricing is here, it's not going anywhere. I think the train has left the station. Now, it's a question of, are you on the train? Or are you under it?”

Listen to the full episode now to hear more. And if you’re interested in learning the details of value pricing, Baker is speaking at the Cincinnati Accounting Show Sept. 25-26, the Cleveland Accounting Show Oct. 29-30, and the Columbus Accounting Show Nov. 7-8.

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