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The Funniest Thing About Value Pricing with Greg Kyte

The Funniest Thing About Value Pricing with Greg Kyte – 048

June 2, 2015 by Kirk Bowman Leave a Comment

Greg Kyte is a CPA and comedian. He teaches ethics and fraud courses for accountants with a comedic edge at ComedyCPE.com. He is also the G. Robert Newhart Non-Value-Added Fellow at Versage Institute.

http://traffic.libsyn.com/artofvalue/048-The-Funniest-Thing-About-Value-Pricing.mp3

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The Real Context of  Value

  • What is the most important thing you can share about pricing?
    • You need to price your services like you know magic.
    • The Labor Theory of Value says that the value of something is equal to the materials and labor it takes to create it. It is a fallacy.
    • Dan Ariely, the author of Predictably Irrational, says you have to realize that people will determine the value of your product/service by inserting their context.
    • All value is subjective.
    • When people have no context for the work you are doing, they will create a context for themselves.
    • You must talk to your customer upfront about what they need/want from a transaction before doing the work.
    • Collect the money upfront.
    • People are afraid of talking to their customers.
  • What is the funniest thing about value pricing?
    • When accountants talk to Greg about upfront payment plans, they worry about negative accounts receivable.
    • According to accounting theory, it is unearned revenue.
  • What is the funniest thing about hourly billing?
    • As an accountant in a firm, when you have to ask yourself, “Do I stop my time billing software when I have to go to the restroom?”
    • It raises an ethical question about going pee-pee.
    • What if it your bathroom visit was longer than 6 minutes?

Value Pricing in Accounting

  • What is the state of value pricing in the accounting profession?
    • By and large, the average person in the accounting profession would say, “That seems like a great thing, but we cannot do it.”
    • The billable hour has too much inertia.
    • Joe Manzelli was a partner in a firm and was left alone to do his value pricing “thing”.
    • His realization rates were off the charts compared to his colleagues.
    • Ask your customers if they like how you are billing.
    • Do some experiments; do not be a weenie!
    • Some people are angry about value pricing and seem to have a weird idea of what it is.
    • The fear of people “shopping” accountants is one of the arguments against value pricing.
    • Accountants are not selling a commodity.
    • Everyone hates the billable hour.
    • The customer has no idea what the bill is going to be.
    • The firm is “billing and ducking.”
    • The employee feels his subjective well-being is being torn down.
  • What was your first exposure to value pricing?
    • In a previous life, Greg was a middle school math teacher.
    • He knew he was 10 years behind the other CPAs.
    • He was working hard to catch up with everyone.
    • He read Pricing on Purpose by Ron Baker in the Journal of Accountancy.
    • Greg was shocked to learn it was even a possibility.
    • He hated the environment in which he worked.
  • What is the funniest thing the IRS did for the 2014 tax year?
    • They were dealing with budget cuts, and the Affordable Care Act added workload.
    • They understaffed their phone lines.
    • On the website, the IRS posted that a caller might be subject to a “courtesy disconnect“.
    • Greg went to a one-hour presentation for the Affordable Care Act to learn how to calculate the credit.
    • Even though he learned how to calculate it, he also knew he would never be able to remember the complex calculation.

Creating Comedy About Ethics

  • Can you explain the irony between comedy and ethics?
    • The things that are the driest and most mundane are the easiest source material.
    • He looks at ethics per the Code of Professional Conduct from the American Institute of CPAs.
    • Any legal document is easy to pick apart.
    • There is a code that says that there is an ethical responsibility to follow the Code of Professional Conduct.
    • Ethic-hacks (similar to Lifehack) combine behavioral psychology and economics to increase the level of professional ethics.
    • Cheating is contagious.
  • What is one of your best stories about creating value for a customer?
    • John Shaver from Aries Technology Group hired him to do a funny video to explain fixed pricing called Bob's Barbecue.
    • Performing comedy in a club or during a CE presentation, when all cylinders are hitting, and everyone is having a great time. He is creating value for the participants as well as for himself.

About Greg Kyte

  • Website: GregKyte.com
  • Twitter: @GregKyte
  • Co-host of ThriveCast with Jason Blumer

Filed Under: Accounting, Episodes, VeraSage Tagged With: Accounting, Hourly billing, VeraSage

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