Adventures in Value Pricing
Source: Accounting Today
In this article, several practitioners who have successfully made the switch to value pricing offer their insights. Here are some of the highlights:
- If you're committed to the switch, one practitioner advises making a “full pivot.”
- Prepare to say “no.” Some customers will want to continue being billed by the hour. If they insist, offer to refer them to another firm.
- Get help. Don't just read a book about value pricing; firms benefit significantly from coaching by outside advisors.
- Be ready to experiment and fail. There's no magic formula for value pricing. It's an ongoing process and you need to experiment until you get it right. It helps to form an internal group to review prospective pricing agreements and facilitate the negotiation process.
- Focus on project management. Managing deadlines, etc., is always important, but in a value-pricing context it “becomes paramount.” It's critical to find things to measure and track, such as turnaround time, customer satisfaction, and referrals.
For the complete article, read “Valuable Lessons in Value Pricing.”
From Accounting Today, April 1, 2014, www.accountingtoday.com.