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Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
Pricing for Profitability
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Pricing for Profitability

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  • 1. Pricing  for  Profitability   by  Michelle  Golden   President,  Golden  Prac5ces  Inc   Senior  Fellow,  VeraSage  Ins5tute  @michellegolden #PSTECH      #AAMKT          verasage.com  
  • 2. Today:  2  big  things!  1. BeMer  scoping  2. Offering  op5ons  
  • 3. Price  evolu5on.   Single,  Fixed  Price   Fixed  Price  with   Op5ons   Value-­‐based  Price  
  • 4. Before  you  consider  proposing.  Are  you  confident  you  know  what  the  prospect  will   value  most?   •  What  are  their  real  issues  (pains)?   •  Can  we  ar5culate  (truly)  compelling  reasons  to  hire  us?  Do  we  really  know  enough  about  the  org?   •  Is  this  work  we  even  want?  hMp://bit.ly/bestclients     •  Are  we  aware  of  risks  in  pricing  this  work  &  promising  a   5meline  (true  scope)?   5  
  • 5. BeMer  process.  •  Discover  (value  conversa5on)  •  Debrief  •  Brainstorm,  discuss,  decide  (pricing  council?)  •  Conversa5on  NOT  presenta5on   •  Prospect  should  know  what’s  in  your  FPA  document   before  you  give  it  to  them   •  Deliver  quotes  real-­‐5me   •  Doc  must  equip  the  intermediary  to  make  your  case  
  • 6. Fixed  price  if:  •  Non-­‐dis5nct  specializa5on  •  Must-­‐have  services  (e.g.,  compliance)  AND  price-­‐ sensi5ve  economic  buyer  •  LiMle  ability  to  create  measurable  or  perceived   value  in  the  course  of  the  work  (unemo5onal)    •  Disconnect  between  technical  or  user  buyer  &   economic  buyer  •  CommiMed  to  “No  bill  &  duck”    
  • 7. Value-­‐based  price  if:  •  Demonstrated  specialist  (go-­‐to  firm)  •  Technical  or  user  buyer  same  as  economic  buyer,   or  highly  influen5al  with  •  Can  create  measurable  or  perceived  value  in  the   work  process    •  Success  fee  or  “5p  clause”  based  on  client’s   percep5on  of  outcome’s  value  •  Hint:  almost  ANY  service  can  qualify  with  a  skilled   seller  &  an  educated  buyer  
  • 8. SCOPE MATTERS
  • 9. Op5ons.  •  Anchoring  effect  –  buyer  compares  your  prices  to   your  highest  offering  •  Helps  people  decide  what  they  want  (no,  they   usually  don’t  already  know)  •  If  you  don’t  offer  a  premium  offering,  how  could   someone  ever  buy  one?  •  Move  people  UP  the  value  curve  
  • 10. Inspira5on  
  • 11. Op5on  ideas.   Leverageable  Areas   SILVER   GOLD     PLATINUM   (some  of  many)   (stripped  version)   (today’s  offering)   (premium)  Audit/review   Basic  services   Basic  services   Bundle  complementary  Tax   Basic  &  might  go  on   Basic  plus  “watch”   Bundle  proac5ve  &   extension  by  default   services   complementary  Consul5ng   Charge  for  assessment;   Charge  for  assessment;   Bundle  assessment,   less  tailored;  simple   custom  prework   customiza5on,  follow-­‐ phase   up  Access   2-­‐day  responses   Unlimited  access   First-­‐class  access  Work  5ming   At  firm’s  availability   Standard  turn-­‐around   On-­‐demand  Payment  terms   In  advance     Half-­‐down   Aligned  to  client’s  cash   flow  “Op5onal”  (a  la  carte)   List  poten5al  upgrades,  complementary  services  &  next  steps  
  • 12. Control  scope  creep.  •  Clarify  client  due  dates  •  Remind  client  •  Educate  team  •  Consequences  (price  shii)  
  • 13. Image: cefeida (flickr)
  • 14. 10  elements  of  a  project  quote.    1.  Objec5ves,  needs,  deliverables  2.  Project  structure,  5meline  &  milestones  3.  Constraints,  assump5ons  4.  Define  roles  (customer’s  responsibili5es  too)  5.  Detail  scope  &  func5onal  requirements  6.  Include  “Addi5onal  Items”  for  common  add-­‐ons  7.  Establish  parameters  for  change  request  8.  Future  projects  list  (i.e.  what  is  NOT  included)  9.  Terms  &  guarantee  10.  Approval  
  • 15. Preparing.  Prac5ce  areas,  for  each  key  service:  •  What  does  the  average  engagement  include?  •  What  can  we  strip?  •  What  can  we  add?  
  • 16. Qs  to  ask  the  customer.  Issues  that  can  be  measured:  •  How  do  you  measure  it?  •  What  is  it  now?  •  What  would  you  like  it  to  be?  •  What’s  the  value  of  the  difference  immediately?  •  What’s  the  value  over  5me?  Unmeasurable?  qualify  on  a  scale  (e.g.,  1-­‐10)  
  • 17. Tangible  value.  
  • 18. Intangible  value.  •  Specialist  exper5se/knowledge  •  Unique  social  capital  •  Brand/reputa5on  •  Unique  result:  crea5vity  &  innova5on  •  Reducing  risk  •  Excellent  service  experience  •  Makes  customer  “look  good”    •  Rela5onship  brings  benefit  or  feels  good  What  else?  
  • 19. Remember.  •  Price  beMer:  prac5ce  makes  perfect   •  Present  op5ons   •  Use  phases  (WHK)   •  Preprice  easy-­‐to-­‐an5cipate  items  •  Project  management  begins  with  scope     •  Head  off  scope  creep  at  the  pass   •  Set  then  manage  expecta5ons  with  clients   •  Communicate  scope  to  team  
  • 20. More  Info:   slideshare.net/goldenm   michelle@goldenprac5ces.com   verasage.com   goldenprac5cesinc.com   goldenprac5ces.com  (blog)   @michellegolden  (twiMer)  SEE: www.journalofaccountancy.com/Issues/2009/Jun/20091530.htm

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