Source’s Managing Director of Legal Stanislav Roth features in NAB Business View to discuss value-based pricing.
The article discusses the potential acceleration of the decline of the hourly billing model in professional services firms due to advancements in technology and the emergence of value-based pricing.
Stanislav Roth argues that time is losing relevance in professional services as routine tasks become automated but, on the other hand, quick strategic advice may hold significant value:
“It might take you 10 minutes to deliver a really good piece of advice – are you going to charge $100 for that?” he says. “On the other hand, are you going to keep charging thousands of dollars for hours of routine work which is increasingly being automated?…
Value-based pricing is not random like that; it’s far more targeted.”
He explained that the value-based pricing model involves a complete mindset change:
“If you’re still measuring how the work you’re doing compares with an hourly rate then you won’t get value-based pricing right, because it has absolutely nothing to do with time…
Meet with a client and have an honest conversation. Understand their business, their needs and what solutions you might be able to offer to their problems. From there, you can make an educated guess about what value you’re going to be delivering. Finally, try to reach a consensus on this with the client..,
Value isn’t static”
Stanislav also commented the oft-expressed fear of ‘under-pricing’ can be addressed through open and ongoing client relationships.
“It gets better with experience, but under-pricing is certainly something I’ve done. It can be remedied. If you have open and ongoing relationships with clients, then you can have conversations with them about adjusting pricing…
Take fear out of the equation and have conviction that you can in fact run a very sustainable and profitable business by pricing this way.”
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