The document discusses pricing strategies for professional services firms to maximize profitability. It recommends moving from single fixed pricing to offering optional packages at different price points like silver, gold, and platinum. This allows clients to choose different levels of services. The document also stresses the importance of clearly scoping projects to control scope creep and change requests that can impact profits. It provides tips for having value-based conversations to understand what clients truly need and will value most.

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

5. 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

6. 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

7. 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”

8. 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

9. SCOPE MATTERS

10. 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

11. Inspira5on

12. 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

13. Control
scope
creep.
• Clarify
client
due
dates
• Remind
client
• Educate
team
• Consequences
(price
shii)

14. Image: cefeida (flickr)

15. 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

16. Preparing.
Prac5ce
areas,
for
each
key
service:
• What
does
the
average
engagement
include?
• What
can
we
strip?
• What
can
we
add?

17. 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)

18. Tangible
value.

19. 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?

20. 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

21. 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