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| 2.2. Value Pricing - An Introduction |
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Written by: KATHYE KOCHANOWSKI |
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If you could strengthen relationships with your client and charge higher
fees wouldn’t you want know how? Value pricing is your answer. |
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Value pricing is charging a flat-fee based on the value a client places on the service you
provide. The reason value pricing is a better solution than traditional hourly billing is because
the hourly billing causes conflicts and stress in the client service provider relationship. |
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| Consider The Following Points: |
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• There is conflict of interest between you and the client when using traditional hourly
billing methods. Your client wants to minimize your billable hours to minimize how
much they need to pay. You want to maximize billable hours to maximize how much
you receive. |
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• As you become more efficient in performing your services, you are penalized receiving
less money for the same services simply because you are able to complete them faster. |
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• The focus in traditional hourly billing is on the time (i.e. cost) to complete a service
rather than the value of that service for your client. |
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Instead, if you offer your client a fixedfee rate, you reduce the uncertainty and risk for them.
Assuming you are working with your ideal client, handpicked from your chosen niche group,
the client can be confident in your capabilities because you are practiced in providing them
exactly what they need in an efficient manner. |
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After all, if you weren’t, you would not be charging them a flatfee rate! If you have established
a reputation as being an industry expert, you can charge a higher rate than competitors and
offer value added services at a premium. |
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| To learn more about value pricing, take a look at these resources: |
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| • 'eBook: Breaking The Time Barrier' by Mike McDerment |
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| • 'Professional's Guide to Value Pricing' by Ronald J. Baker |
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• 'Implementing Value Pricing: A Radical Business Model for Professional Firms' by
Ronald J. Baker |
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| • 'Pricing on Purpose: Creating and Capturing Value' by Ronald J. Baker |
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• 'The Firm of the Future: A Guide for Accountants, Lawyers, and Other Professional
Services' by Ronal J. Baker |
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| • 'Measure What Matters to Customers: Using KPIs' by Ronald J. Baker |
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| Kathye Kochanowski |
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A degree in Economics with a focus in International Studies from Lawrence
University. She is a Marketing and Sales consultant for Clear Biz, focusing
on their expansion into the United States. |
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