This week we're excited to release our interview with Ron Baker. He's been our *most requested* guest for quite some time, and now we have the full, one hour interview live! In this interview, we cover:
- The foundation of time based billing, it's origin, and where it falls short
- The new formula for creating a value based billing process
- How to build certainty into your clients experience
- How to structure prices and payment schedules around specific industries
- How to remove client decision paralysis and package a monthly service plan
- Why focusing on billable time could limit client profitability
“Many people ask how to ascertain value since it’s subjective and there’s no formula. The answer is with a deep understanding of your client’s value drivers, which requires a deep conversation with the client.”Step 4: Once The Options Have Been Crafted, It’s Time To Present Them To Your Clients Now it’s time to consolidate all of your hard work, and bring your new 3 tier pricing and value offer to your current clients. This will provide an opportunity for the conversation and feedback to come directly from your customer, without wondering what they are thinking. Remember that this conversation needs to be done with someone comfortable to discuss pricing. Your client might start off with saying it’s too expensive. You will need to ask additional questions and might need to head back to step 3, to make sure you have identified how to price your value properly. Step 5: Create A Fixed Price Agreement (FPA) This step can only be completed, once you have successfully identified your value service offering and the prices you are willing to offer for those services. Essentially, an FPA is an engagement letter detailing out the value you are willing to offer and the price you have come to an agreement on with your potential new client. Step 6: Begin Planning On The Engagement Now that you have your FPA and are ready to start working, it’s now time to plan the engagement. The planning steps can include the following: • Scoping the work • Organizing who will staff the job • Set up client expectations and timelines (due dates) • Plus other planning items (risk assessment, etc) Step 7: New Additional Work Arises (Scope Creep) We have all been there, contracted the engagement to do one job and find out there is a lot of other work that needs to be done. This is where “out of scope” billing comes into play. When scope creep occurs, you can give your client the option on how they want to proceed. Whether it be through signing an additional FPA or adding on additional fees to your current arrangement. Just make sure you have a clear communication line with your client when this occurs. Step 8: Review The Work, After It Has Been Completed Within most jobs, we review the work to make sure everything is in place before sending it to the client to finalize. An additional step you can take, to confirm the value you have provided, is to perform what Ron Baker calls an: After Action Review (AAR). Per Ron Baker, “You will need to find out how you did as a service provider. Whether it be through a phone call, in person meeting or a simple email, set up communication with your customer to confirm that they have received the value that was offered in the FPA.” This is a core competency that all firms should be implementing, regardless of staying with the old or new business model. Want To Dive Further Into Value Pricing? We are offering a new Book Giveaway for Ron Baker’s published book titled: Implementing Value Pricing. To be entered into this book giveaway, leave a comment answering the following question: Which business model have you implemented at your firm: Value Pricing Model or the Billable Hour Model? Want To Dive Further Into Value Pricing? We are offering a new Book Giveaway for Ron Baker’s published book titled: Implementing Value Pricing. To be entered into this book giveaway, leave a comment answering the following question: Which business model have you implemented at your firm: Value Pricing Model or the Billable Hour Model?