Customer Value Pricing: – Providing Greater Value & Getting Paid Equitably For It
Customer value pricing is one of the best and least utilized
business financial models today, for professional services.
Via this approach, customer value pricing is not only set based on the number of hours delivered plus profit markup, it’s also commensurate on the value of the service delivered to the client.
….See also: Taking Dead Aim at the Billable Hour
With client/customer value pricing, prices aren’t entirely established, as in say the billable hour model. They can change based on a variety of factors including demand, market conditions, etc. By incorporating a few simple techniques into your marketing strategy, you can increase the sales and profitability of your organization.
Customer Value Pricing is Based on VALUE
“Don’t be afraid to adjust your prices based on the immediate conditions of the marketplace. We often recommend PlanGuru software that offers in-depth forecasting and modeling tools highlighting the profitability of such strategic price fluctuations,” advises Jen Katrulya at her BMRG Group blog.
Offer Customer Value Pricing OPTIONS
Michelle Golden authored an insightful post on value pricing. She notes –
“It isn’t particularly easy for a law or accounting practice to implement value pricing. You must always think in advance what it is that the client is seeking and what it will take to produce it, rather than just jumping into the work without giving thought to what the client will have to pay in the end.”
“If what you charge is based on ‘market’—often some form of your, or your competitor’s, time-based bills—then you’re at an instant disadvantage,” adds Golden.
According to practice innovation consultant, Gary Boomer writing at Accounting Today –
“The old economic model of pricing based upon cost-plus has limited the accounting profession and is responsible for a lower perception of value in the market. Clients and entrepreneurs often have a different idea of value than what is taught in accounting classrooms and in many firms. Along with an aging population of CPA partners, the current environment provides a ‘perfect storm’ for industry transformers who can create value in the minds of clients.”
Optimally, you could base price on worth from the client’s perspective, then you would have the opportunity to set price with true advantage, both to you and your customer.
Cloud Computing & Customer Value Pricing
“Cloud computing opportunity and cloud accounting is quickly transforming the industry by streamlining the bookkeeping and accounting processes in order to cut costs and adopt services which add value in a subscription-based scheme,” writes Rita Keller at her CPA Leaders blog.
“The big hurdle is that accountants must be able to view cloud computing as a big opportunity rather than a threat. They must be willing to take the lead in this new phase of business,” adds Keller.
According to accounting industry thought-leader Jody Padar in a 2011 Cloud9 guest post:
“Change can be difficult and disruptive to existing processes…but only initially. If firms plan to grow, either in size or revenue, change is a necessity. The value pricing model requires updating internal systems with the right technologies and practices to support efficient, streamlined workflow processes. For many firms, that means implementing Cloud-based applications that offer 24/7 access to data, real-time collaboration with clients, and fully digital, standardized processes. Build the right system, and the value will come.”
Remember this key take-away: Customer value pricing is entirely about the perceived worth that you bring to the client’s table. And if you can service the client faster, provide real-time information exchange, support anytime-anywhere access, and supply clients with accurate, timely financial data, and have time left over to provide other value-added services. But before you can implement the customer value pricing model, you must first create the technological environment to support it.
Lynnea Bylund, managing director of Gandhi Legacy Tours, is the president and founder of Catalyst House, an accounting and marketing firm, and has nearly three decades of experience in administration, marketing and business development. She was a nationally recognized spokeswoman for the emerging alternative video and information delivery industries. She has a degree in holistic health-nutrition from the controversial health educator and activist Dr. Kurt Donsbach and is the founder of two small business-based wireless trade associations and has lobbied on Capitol Hill and at the FCC where she has spoken out strongly against the cable TV monopoly, illegal spectrum warehousing and ill-conceived congressional schemes to auction our nation’s precious airwaves to the highest bidder.