Steve Major is a pricing and business consultant from Australia. He started out as a charted accountant (CPA) and then founded a consultancy for accountants called Pricing Power. He grew up on a sheep station (70,000 acres) in Texas, Queensland. He is the host of the Pricing Power podcast and enjoys landscape photography.
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Switching to Value Pricing
- What is the most important thing you can share about pricing?
- Pricing is the most important lever in your business.
- It has more impact on your profit than anything else.
- Pricing can change your life as well as your firm.
- What was your first exposure to value pricing?
- Twelve years ago, Steve built his home with a fixed-price contractor.
- It made Steve wonder if he could price accounting services the same way.
- Did you bill by the hour before you switched to value pricing?
- Yes, in essence, but without accurate time sheets.
- They used a rough guesstimate for time sheets.
- Billing was done at the end of the job, not upfront.
- What were some of the challenges when switching to value pricing?
- Steve thought the challenge would be with his customers.
- The biggest challenge was his own confidence.
- He had to be certain in his own value.
The State of Value Pricing
- What is the state of value pricing in Australia in 2015?
- Australia is getting close to a tipping point in the accounting and legal professions.
- It is widely believed that the billable hour is dead, but people are unsure what to do.
- Some have moved from the billable hour to menu pricing.
- In law, value pricing is starting to make headway.
- The billable hour is still being used in consulting, IT and web development.
- Starting to see firms in other industries adopt value pricing.
- Why is a fixed price not the same as a value-based price?
- A fixed price is a step on the way to a value price.
- A value price is based on the customer's perception of the value of the engagement.
- Fixed prices are not automatically connected to value.
- Why has value pricing been more adopted in the accounting and legal fields?
- It is reflective of the consultants to the industries.
- The accounting environment has changed due to compliance work.
- Accountants are working differently with customers due to technology.
- The customer perspective of the value of accountants has changed.
- There was a shortage of good talent in the both industries.
- The speed of technology is turning some accounting work into a commodity.
- Has value pricing made deeper penetration in Australia than in the US?
- Yes, but only slightly.
- Australia is closer to the tipping point than the US.
- Particularly in accounting, several pricing consultants have great influence in Australia.
- The economic imperative to change has not come to many industries yet.
Learning to Value Price
- How can someone start learning to have a value conversation?
- Start asking the questions to get to an understanding of what is happening in the customer's business.
- Realize that you are not just selling a solution, but providing a significant change in the customer's business.
- What are some of your favorite value questions to ask the customer?
- What are the problems the customer has in the business?
- What are the opportunities the customer would like leverage?
- What are the strengths the customer should be embracing?
- What should you do if you the customer is reluctant to answer value questions?
- If a person is not willing to talk about the topics, then you cannot deliver value.
- State that the purpose of the question is ensure that the solution is valuable to them.
- If they still will not open up, it is red flag.
- The core of value pricing is that you cannot be all things to all people.
- Be willing to walk away.
- What are some of your favorite ways to offer options to a customer?
- Options are powerful.
- Value pricing can change your business; value pricing plus options can change your life.
- Payment terms is one of the most neglected options.
- How you interact with the customer can be good option (technology, in-person, etc.)
- Take the premium solution and then strip away elements create lesser other packages.
- What is one of your best stories about creating value for a customer?
- In his accounting firm, a manufacturing customer was struggling.
- He discovered the key issue quickly and let the customer determine the price.
- People's lives were hanging in the balance because the business was declining fast.
- Three months later, the business was profitable and the customer wrote a check for $150K.
- The customer said it had saved his life.
- He helped an accountant with pricing. Her husband called later to say thank you for helping her.
- In his accounting firm, a manufacturing customer was struggling.
About Steve Major
- Pricing and business consultant in Australia
- Former chartered accountant (CPA)
- Host of Pricing Power podcast
- Writing: Pricing Power blog
- Twitter: @steve_major
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