Implementing Value Pricing: A Radical Business Model for Professional Firms

Preface

People of the same trade seldom meet together, even for merriments and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

—Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776

One of my mentors is the late Peter Drucker, who always insisted on asking himself before writing any book, “Why this book, now?” It is a good question to ask oneself before setting out to write a book.

This book is a Declaration of Independence to my colleagues in all of the professions—to once and for all free ourselves from the tyranny of time. The “We sell time” business model I was taught as a young CPA is outdated, suboptimal, and driving the best and brightest out of the professions. We simply must find a better path to take us into the future.

Since 1995, I have been speaking to leaders in the professions around the world on the shift from “hourly billing” to value pricing, and if an observer from outside the profession were to attend, Adam Smith’s charge above would certainly seem true. In a sense, this book is about how to raise your prices. But it is emphatically not a conspiracy against the public. Indeed, the main message of this book is that the customer is the sole and ultimate arbiter of the value that we, as professionals, provide. Further, the customer, too, must earn a profit from the relationship with our firm. If we do not provide something of value to the customer from which they will profit, ...