The Funniest Thing About Value Pricing with Greg Kyte – 048

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.

Subscribe: Apple Podcasts | RSS | More

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