How Do You Know if the Price is Right?

Source: Journal of Accountancy 

In this article, Ron Baker — author, consultant, and “unabashed value-pricing champion” — answers questions about pricing strategies. Here's one example:

When clients hear you talk about this, they may say, ‘Wait a minute, they're just trying to gouge me.' What's your response to that?

Baker: We are not talking about gouging the customer or taking advantage of the customer, because one of the things that we're very strong advocates of is all firms putting a value guarantee into all of their fixed-price agreements, which basically says, Mr. and Mrs. Customer, if you're not satisfied for whatever reason, only pay for the value that you think you received. If that's zero, that's zero. Now to me, that's the antithesis of being unethical. 

Plus, keep in mind that we're presenting these options to the customer before we do the work. The customer is voluntarily entering into this transaction. If they think any of our options are gouging them, they're not going to buy from us, and they're going to go somewhere else. I actually think there are more ethical issues when you bill in arrears under hourly billing.

For the complete article, read “Q&A: Price-sensitivity training.” 

From Journal of Accountancy, August 1, 2015, www.journalofaccountancy.com/news/2015/aug.