Implementing Value Pricing: A Radical Business Model for Professional Firms

CHAPTER 32

Step Five: Customer Selection Codified into the Fixed Price Agreement

Once the customer has selected the option they desire, the Fixed Price Agreement (FPA) memorializes the meeting of the minds between the firm and the customer. It codifies in a plain-written agreement what services will be performed, the price, payment terms, scope of services, and the responsibilities of both parties, as well as other clauses that help the firm communicate value and reduce customer risk. A sample FPA is provided in Figure 32.1 for a CPA firm, to illustrate the various clauses in general.

FIGURE 32.1 Sample Fixed Price Agreement

Let us scrutinize each section of the FPA and explain why it is designed the way it is.

Date of the FPA

For most CPA firms, the date of the agreement is usually in the last quarter of the customer’s calendar or fiscal year. It is advantageous to meet to agree on the terms of the FPA to clarify the customer’s expectations before the new year begins, as well as to learn of opportunities that may be present to offer the customer additional services. Do not feel the need to rush this process. If it takes multiple meetings with the customer, as it sometimes does to get over price resistance and anxiety, do not panic and feel the need to draft something. The FPA is not ...