In most professional practices, the issue of value pricing often arises in a discussion with a new client or an existing client, when that client starts shopping a service. Ron Baker, founder of the VeraSage institure, describes the issue with the following example:
“We can’t measure value by the amount of time someone spends on something,” he says.
“The value of the polio vaccine isn’t determined by the amount of time it took Jonas Salk to invent it.”
Instead, he argues that the value of a service is determined by the customer, not the supplier. The same service can have a very different value, depending on the customer’s needs.
“If I’m in the desert and I haven’t had water for days, a bottle of water is worth a lot, because it’s going to save my life,” Baker argues.
“If I’m home washing the dog with the same quantity of water, it’s worth a lot less. But if my basement is flooded with water, now what’s water worth to me? Its value is negative, and I have to pay somebody to come and pump it out. In all three cases, we didn’t change the product, but the value went from almost infinite to negative, depending on the context I’m in.”
However, the issue is not simply a demand-side issue. As professionals, we must also decide whether the pricing the client will accept is acceptable to us. All too often, we as professionals accept the value the client offers, rather than how we value our services. The value of the time spent performing a task, is far less relevant than the value it provides to a client. By protecting our ‘rate card’ we establish the value of our services. If a potential client does not place the same value on our services, it is better to allow that client to go elsewhere. I am reminded of the following quote from Benjamin Franklin, “The bitterness of poor quality remains long after the sweetness of low price is forgotten”
In concert with this understanding of our valuation of our services, we must communicate the true value proposition we offer. What is our ‘Unique Value Proposition (UVP)?’ Perhaps the client does not understand the value of our credential. As an Enrolled Agent, I have the authority to represent my client throughout the maze of levels within the IRS. Others have limited or no authority. Perhaps, your UVP is your specialized expertise in the client’s field of service or area of business.
Perhaps your experience, your back-office support or your technology enhance your UVP and sets you apart from your competition. In my practice, I use the best analytics software I can find to streamline my process and enhance my evaluation of my client’s situation. Technology does not detract from the value of my services, but helps me to determine my strategy more quickly.
The bottom line is you must determine your value and direct your marketing efforts toward the segment of the potential clients that can benefit from and value your Unique Value Proposition.
Gary J. LaRoy, Enrolled Agent