Value Pricing 2.0 for Accountants with Ron Baker (highlights)
Episode 85. On today's season ending show, we end with a bang as Rob interviews pricing legend Ron Baker about pricing 2.0 for accountants and CPAs.
Ronald J. Baker started his CPA career in 1984 with KPMG’s Private Business Advisory Services in San Francisco. Today, he is the founder of VeraSage Institute, the leading think tank dedicated to educating professionals internationally. His radio show Soul of Enterprise with Ed Kless goes out weekly. Ron is also Chief Value Officer at Armanino LLP, the 23rd largest firm in the USA.
Ron has been an instructor with the California CPA Education Foundation since 1995 and has authored twenty courses, and seven best-selling books, including: The Firm of the Future, Pricing on Purpose and Implementing Value Pricing.
Key takeaways from the full uncut interview include:
➯ Customers don’t care about the time you spend doing things, what they are about are the outcomes
➯ Accountancy is not alone in struggling with the billable hour – any industry that sells time has challenges with pricing
➯ The billable hour only looks at inputs, not outcomes, and takes no account of value
➯ Value was first defined by economists and is the maximum amount a customer is willing to pay for an item
➯ Value is not a number, it’s a feeling – accountants have a problem with non-quantifiable things
➯ When it comes to value pricing, accountants have to be comfortable with ambiguity and psychology
➯ Accountancy has a relevancy problem – it’s a deteriorating paradigm that becomes increasingly complex but explains less and less
➯ If accountants think stock market investors are using their financial statements to make decisions, they are insane – it’s all too old and historical
➯ The accountancy profession is stuck in a 100 year old business model of ‘we sell time’
➯ With Value Pricing 1.0, pricing and packaging was customised for each client
➯ The subscription business model is a massive macro economic trend which has a place in the accounting profession
➯ Value Pricing 2.0 is more focused on not pricing a product or service, but rather the client relationship, transformation and peace of mind
➯ Throughout commercial history, anytime a business model changes, the pricing strategies change and also the metrics or KPI dashboards
➯ The growth of ‘concierge medicine’ in the US is basically selling insurance and peace of mind
➯ How Porsche are using value pricing 2.0 with subscription models to their vehicles
➯ Any profession or business can be turned into subscription model like Spotify, Amazon, Netflix or accountancy
➯ Subscription models for accounting firms create predictable revenue and greater customer loyalty
➯ We all buy insurance – it’s a 3.3tn industry, so why not buy accounting services in the same way to get peace of mind?
➯ Amazon Prime members spend 7x more than non-Prime members – it was never about free-shipping but ‘buy everything here’
➯ New accounting firms have no tolerance for the billable hour – 10 of the top US 100 accounting firms are using value pricing
➯ Lawyers started timesheets and billable hours in 1919, and there has been little change in 100 years
➯ How ideas, intellectual capital and knowledge separates the good firms from the great ones, so dynamic learning, innovating firms make great firms
➯ Think what Amazon (and Facebook) know about you – knowledge of your clients gives accountants a competitive advantage
➯ The best accountants or CPAs are always investing in their human capital – curious and constantly learning
➯ Why accountants should find a new specialty every 5 years
➯ Do you want to be led by someone who doesn’t read 50 books a year, because where are they getting their ideas from?
➯ Why ‘The End of Accounting’ by Baruch Lev and Feng Gu is a ‘nuclear bomb and should be debated by the whole accountancy profession
➯ How Ron Baker went from pro-choice to pro-life on the abortion issue
➯ We learn more from people we disagree with and those voices of dissent who challenge your ideas
➯ The conception of the Verasage Think Tank – an alliance or mastermind of thought leaders in professional services
➯ How accountants can get started with a different pricing approach and a better client relationship
➯ Not selling services, but creating annuities with a lifetime value that far exceeds whatever you paid to acquire them
➯ Collective knowledge of your customers, which is a competitive advantage that cannot be duplicated
Ron has toured the world, spreading his value-pricing message to over 210,000 professionals. He has been named on Accounting Today’s Top 100 Most Influential People in the profession, selected as a LinkedIn Influencer Blogger and inducted into the CPA Practice Advisor Hall of Fame. He graduated in 1984 from San Francisco State University, Disney University in 1997, and a faculty member of the Professional Pricing Society. He presently resides in Petaluma, California.
Ron on LinkedIn https://www.linkedin.com/in/linkedin.com/in/ronbaker1
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