Vol. 5 No. 11, November 2013
The Leadership Forum is a panel of the most prominent thought leaders in the profession. Each month we ask them to respond to a question dealing with CPA firm management and leadership.
This month's question is:
What percentage of firms do you think use value pricing? Do you see any trends towards more value pricing? Do you believe value pricing is right for CPA firms?
Consultants and Other Prominent Observers
| August Aquila | Aquila Global Advisor Group, LLC | www.aquilaadvisors.com [email protected] |
| I believe that value pricing is proper for CPA firms if it is handled in the following way. The service provider has different ways to bill clients and may have multiple billing rates. For example, the lowest billing rate for tax preparation might be for a simple 1040, while a more complex return would be billed at a higher rate. The client should know what the fee is prior to beginning the work... More | ||
| Ron Baker | Verasage Institute | www.verasage.com [email protected] |
| It's a difficult question to answer with any precision, since most firms who claim to be Value Pricing are doing nothing more than the billable hour in drag. Our best estimate is somewhere between 5-10% of firms that actually price upfront, use change orders, and ... More | ||
| William Carlino | Transition Advisors | www.transitionadvisors.com [email protected] |
| Industry estimates vary but probably between 15 and 20 percent of firms use value pricing. For the past decade or so, there's been a "tear up the timesheet" movement that has been slower to catch on than anticipated... More | ||
| Rita Keller | Keller Advisors, LLC | www.ritakeller.com [email protected] |
| ...In my opinion, CPAs don't embrace value pricing because they are so stuck in the "management by time sheet" world. They are looking backwards to see how their people are performing. I feel value pricing would require more actual proactive management of people by CPAs... closely supervising the work (and people), asking them if they need help, holding them accountable for deadlines, etc... More | ||
| Patrick Pruett | The Rainmaker Companies | www.therainmakercompanies.com [email protected] |
| ...A small number of firms have 100% of their practice using a value billing strategy. The verdict is still out as to how successful these pioneers have been however if they are able to make it work (e.g. generate greater profits, grow revenue), other firms will follow their lead. The upside for the trendsetters is that they have gone through the pains of implementing a dramatic change in business practice and... More | ||
| Terrence Putney | Transition Advisors, LLC | www.transitionadvisors.com [email protected] |
| I can't give a percent but the answer is a low number. Very few firms we see use a formal value pricing model. If they do it is limited to highly specialized services like business valuations. Much more prevalent are firms that routinely modify their standard hourly charges (normally down, not often enough up) based on an assessment of value of the service provided versus... More | ||
| Marc Rosenberg | The Rosenberg Associates | www.rosenbergassoc.com [email protected] |
| ...The other definition of value pricing is when a partner bills the client based on the value given to the client, which overrides the time accumulated in WIP, the former being higher than the latter. This type of value pricing has been around for 50 years or more - nothing new about this... More | ||
| Jennifer Wilson | ConvergenceCoaching LLC | www.convergencecoaching.com [email protected] |
| I think a high percent of firms use "not to exceed" or fixed fee pricing that is NOT necessarily related to value delivered but is also not hours-based. I think a low percent of firms (15% max) use true value-based pricing. More firms would like to figure out how to do this... More | ||