Value Pricing: An Introduction

Dollar Sign

If you could simultaneously strengthen relationships with your client and charge higher fees wouldn’t you want know how? Value pricing is your answer.

Value pricing is simply charging a flat­fee 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.

Consider The Following Points:

    • There is a 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.
    • 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.
    • The focus in traditional hourly billing is on the time (i.e., the cost) to complete a service rather than the value of that service for your client.
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.

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.

To learn more about value pricing, take a look at these resources:

    • eBook: Breaking the Time Barrier by Mike McDerment
    Professional’s Guide to Value Pricing by Ronald J. Baker
    Implementing Value Pricing: A Radical Business Model for Professional Firms by Ronald J. Baker
    Pricing on Purpose: Creating and Capturing Value by Ronald J. Baker
    The Firm of the Future: A Guide for Accountants, Lawyers, and Other Professional Services by Ronald J. Baker
    Measure What Matters to Customers: Using Key Predictive Indicators (KPIs) by Ronald J. Baker