Is Value Pricing the Way of the Future? We Asked and You Said Yes!

Andreas Noodt | July 25, 2014 | 2

Back in early June we published a 3-part series of articles, “Pricing on Purpose: How to Implement Value Pricing in Your Firm.” Authored by Ron Baker, founder of the Verasage Institute and one of the foremost advocates of Value Pricing, the articles describe this new and fast emerging approach to pricing and explain how to get started.

When we launched the series we noted that Value Pricing, which primarily but not exclusively sets prices on the value to the client rather than on the cost of the service or historical prices, was catching on in certain markets. For example, in the US increasing numbers of accounting practices are adopting Value Pricing over billing by the hour—both to better align their and their client’s interests and to avoid commoditizing their services. But we were keen to see whether you thought it had more universal appeal so we posed the question: Do you think that Value Pricing will be the pricing strategy of the future?

The results are in! You reported a resounding yes—77% of respondents said it was likely or very likely that Value Pricing would be the pricing strategy of the future. While the results may not be globally representative, they indicate Value Pricing's growing popularity. We hope that you will find the articles, which are based on Ron’s sixth and latest best-selling book, Implementing Value Pricing: A Radical Business Model for Professional Firms (John Wiley & Sons, Inc.), helpful as you implement Value Pricing.

Issues and Insights

Andreas Noodt

Former Member, IFAC SMP Committee

Andreas Noodt became a member of the Small and Medium Practices Committee in January 2010. He was nominated by the Institut der Wirtschaftsprüfer (IDW) and Wirtschaftsprüferkammer. Mr. Noodt has 25 years of experience in the accountancy profession. He is a managing partner at FIDES Treuhand, Bremen/Germany, a Member Firm of Praxity. He is also a member of the Auditing Section of the IDW Hauptfachausschuss (Auditing and Accounting Board). See more by Andreas Noodt

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krzysztof burnos August 22, 2014

I'm for. Currently, the hourly billing concept makes many problems to SMPs relations with their SMEs clients. SMEs do not understand why they have to buy hours and not the value of services. The majority but not the all of SMPs very often copy the practices of pricing based on working hours from other parts of markets that are not relevant for the markets they operate. Finally, they loose the clients and market position. More, the profession loose the professional image. The value pricing is the way to recover not only the market position by SMPs but also the believe and trust in the value of professional services in general.

Mats Olsson August 14, 2014

Good to hear! I think it is inevitable, so why wait with the implementation? In the August edition of AICPAs The Accountant, you can read more about value pricing (p 28f) /Mats Olsson

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