{"id":100776,"date":"2022-09-18t14:00:59","date_gmt":"2022-09-18t18:00:59","guid":{"rendered":"\/\/www.g005e.com\/?p=100776"},"modified":"2024-09-01t14:48:48","modified_gmt":"2024-09-01t18:48:48","slug":"why-value-pricing-works","status":"publish","type":"post","link":"\/\/www.g005e.com\/2022\/09\/18\/why-value-pricing-works\/","title":{"rendered":"why value pricing works"},"content":{"rendered":"

\"\"and how marketing fits in.<\/strong><\/p>\n

by bruce marcus<\/i>
\nprofessional services marketing 3.0<\/i><\/a><\/p>\n

we\u2019ve seen accounting and law professionals learn to work as partners with marketers. typical proponents of this new form of marketing are accountants who have learned to think and act like marketers, accountants who have developed new kinds of accounting firms and new kinds of governance structures. it\u2019s a system that in at least one aspect draws upon a product marketing practice \u2013 in that the marketers participate in designing aspects of accounting and law practice.<\/p>\n

more: <\/b>how marketing has evolved<\/a> | accountants don\u2019t sell soap.<\/a> | why competition matters most\u00a0<\/a>| nine fundamentals for a healthy marketing culture in an accounting firm<\/a><\/p>\n

editor\u2019s note: 卡塔尔世界杯常规比赛时间 was privileged to have a long relationship with bruce w. marcus, who was ahead of his time in his thinking and practice in marketing for accounting. we are publishing some of the late expert\u2019s evergreen work, which retains wisdom for the present.<\/i><\/h6>\n

\"goprocpa.com\"exclusively for pro members. <\/span><\/strong>log in here<\/a> or 2022世界杯足球排名 today<\/a>.<\/span><\/p><\/blockquote>\n

it\u2019s a system in which accountants relate to clients in more constructive ways, and in dialogues rather than monologues. in accounting firms in which the barriers between partners and associates who are skilled and talented have eroded, and client service teams that not only serve clients better, but function as marketing instruments, by virtue of developing better ways of demonstrating the possibilities of extended service.
\n
\nsome examples<\/strong><\/p>\n

david urbanik is one such individual functioning under marketing 3.0. neither a lawyer nor a trained professional marketer, no lawyer or marketer better understands both the legal profession and its practices, as well as the art of practice development. urbanik pointed out that,\u201cproduct companies do market research and alter their products to better fit what their customers need or desire. traditionally, professional service firms look at markets and attempt to deliver services they have to the opportunities they see.\u201d maybe the shifting paradigm, he says, is the need for professionals to listen more carefully to clients and change what they do and how they do it (shape a product\/service)) in response to what they hear.<\/p>\n

and, notes urbanik, \u201cyou can\u2019t shape something if you don\u2019t understand it and can\u2019t communicate clearly with those who must be at the core of building it \u2026 meeting the explicit or implicit client need, which very well may require something different from the traditional law firm model.\u201d<\/p>\n

working with urbanik, we added a new marketing component to the firm\u2019s practice groups. this not only enhanced each group\u2019s marketing efforts, but helped build a firm marketing culture. we then focused marketing efforts on those prospects and markets with the greatest potential for growth and profitability, without totally ignoring those at the other end of the spectrum. the emphasis is on focused. it worked.<\/p>\n

in the brochure and website we did, we broke our services into groups that addressed the specific need of clients \u2013 what they needed \u2013 not merely what we had to sell off the shelf. thus, we spoke of meeting the needs of clients in areas of value creation, operational support, transactional support, risk management, preventative law, asset recovery, litigation services, and wealth preservation and distribution. in other words, we tailored our product \u2013 these categories \u2013 in terms of the client\u2019s needs and opportunities, not just laundry lists of our services.<\/p>\n

in this context, the need to bring a firm\u2019s capabilities to the market is resulting in new kinds of firms, structured to address and serve the markets for its services. these new firms focus on client service and firm productivity, without in any way diminishing professional integrity<\/p>\n

examples<\/strong><\/p>\n

outstanding examples of the new kind of law and accounting firms arising in this context are shepherd law group, valorem law group, exemplar law partners, seiler llp and axiom legal. they have in common a drive to remake the law and accounting firm business models to better and more economically serve clients. their focus is on putting the client, rather than the practice and the firm, at the core of their business model.<\/p>\n

ronald baker, founder of the consulting firm and think tank verasage, was a pioneer and early advocate of value pricing (which is most often at the core of the contemporary firm), including considerable original thinking on the definition of the concept of value to a client, for both law and accounting firms. a former accountant \u2013 he started a career as a junior accountant in the former big eight accounting firm peat, marwick mitchell (as did i, a decade or more earlier, and in a different capacity) \u2013 baker has been a driving force in persuading firms to consider value pricing. where it\u2019s used most successfully, it\u2019s based on his models, which are then further adapted firm by firm.<\/p>\n

the contemporary law firm is epitomized in the boston-based shepherd law group, both in concept and in practice. specializing in employment law and litigation, it was started some 13 years ago by jay shepherd. about eight years ago, functioning on value-based principles delineated by ron baker, shepherd abandoned the hourly billing format to develop a workable system of ascertaining the value of his service to his client and billing accordingly.<\/p>\n

value pricing, says shepherd, is more than just a replacement of the anachronistic hourly billing system \u2013 it\u2019s a manifestation of understanding the meaning of value \u2013 but value to the client, before the considerations of the firm. the result is not only satisfied clients, but increased profit for the firm. at the same time, says shepherd, value pricing impels the firm to avoid unnecessary processes \u2013 to be more efficient.<\/p>\n

the shepherd law group is a small firm, but they are leading specialists in employment law and litigation. while it\u2019s been said that a litigation practice is difficult to price by value rather than by billable hours, shepherd has clearly demonstrated how it can be done, particularly where a firm\u2019s expertise supplies the knowledge and experience. he is the firm\u2019s owner, with no other partners, and functions with a small staff of specialists. this form of operating, he says, is a paradigm that breaks a mold, and that functions particularly well.<\/p>\n

interestingly, shepherd disdains the term \u201calternate billing,\u201d particularly because it assumes that the other alternative is the billable hour. the problem with the billable hour, he and others have pointed out, is that if there\u2019s any value in hourly billing, it\u2019s to the firm, not the client. to perform a service to clients with no value to clients is to be anti-competitive \u2013 particularly with today\u2019s sophisticated clients.<\/p>\n

shepherd\u2019s use of value pricing is so effective that he has established a subsidiary operation, called prefix, to both teach other firms how to do it and to consult to, and advise, law and accounting firms on specific pricing problems. his 14 points of how to determine a value price are widely known and are increasingly used by other firms, both in the united states and abroad.<\/p>\n

those points are \u2026<\/p>\n

    \n
  1. i analyze the client.<\/li>\n
  2. i assess the importance of the situation.<\/li>\n
  3. i assess the urgency of the situation.<\/li>\n
  4. i pay attention to what my competitors charge.<\/li>\n
  5. i consider the relative values of each possible outcome.<\/li>\n
  6. i figure out how hard it would be for the client to get better service elsewhere.<\/li>\n
  7. i determine how important my firm\u2019s expertise is to the likelihood of a successful outcome (in other words, is this going to be easier because of our particular skills, or could any monkey on the internet find the answers?).<\/li>\n
  8. i consider what we charged other clients in the past for similar work.<\/li>\n
  9. i consider whether those charges were heavy or light in retrospect.<\/li>\n
  10. i consider the likelihood of getting more work from this client.<\/li>\n
  11. i assess how much work we\u2019ve done for this client already.<\/li>\n
  12. i wonder how important getting this particular job is to our firm (if it isn\u2019t, i might raise the price).<\/li>\n
  13. i decide whether to do a single price for the whole gig or how to break up the job into mini-gigs with separate prices.<\/li>\n
  14. then i say, \u201cthis is our price.\u201d<\/li>\n<\/ol>\n

    valorem was founded in 2008 by the noted attorney patrick lamb and several like-minded attorneys (now five), all of whom saw the traditional law firm model as less than relevant to the changing needs of the contemporary clientele. their objective in starting the firm was to find ways to improve client service at reasonable fees. they, too, function with value billing. the five lawyers are all partners, all with equal compensation. lamb is widely known for his work as a practicing attorney and, particularly, for client service.<\/p>\n

    there is a freedom from the traditional top-down pyramid law firm to a firm more concerned with client service than the formalities of the traditional firm. this approach is enhanced by the elimination of the billable hour and a focus on value \u2013 both in resolving client needs and problems and in billing. one of the foremost thinkers and practitioners in the legal profession, lamb has been a pioneer in alternative, value-based fees. as a founder of valorem law group, he is also a pioneer in new forms of management and governance for the contemporary firm. his book, published by managing partner magazine, is alternative fee arrangements: value fees and the changing legal market<\/em>, (ark, $450.00). it demonstrates the new perspective of lawyers who think beyond the traditional practice formats, and is one of the most comprehensive discussions of the subject. it\u2019s based upon lamb\u2019s extensive experience in the process. more than merely a primer, it explores concepts of value and different pricing models and their effect on a practice, and particularly on client service. its concepts are the foundation on which valorem is built, and the book is having a profound impact on the emergence of value billing as a replacement for the billable hour.<\/p>\n

    in an extensive article in his outstanding blog, adam smith, esq. (bruce macewen), reports that exemplar law partners was started in 2006 by christopher marston, who was fresh out of law school. dissatisfied with what he saw as an outdated law firm model, including the cumbersome billable hour and top-down management structure, he felt that no one, least of all the clients, benefited from the traditional standards. his firm hires lawyers with business degrees or extensive industry experience and a team orientation. it offers a client service guarantee. and significantly, it has been an enthusiastic marketer since its inception. among the innovative practices (at least for law firms) he has adopted are:<\/p>\n