Total lack of understanding

Total lack of understanding

Didn't find your answer?

Just in case you haven't noticed, over the years I've had some discussions with various members about Value Pricing (VP).

The members who disagree with me seem to think VP is about ripping clients off. They prefer a "time/cost plus notional profit" approach to pricing, sometimes using timesheets sometime not.

I come at this from the position that time/cost pricing is selfish/self-centred and effectively makes the profession unethical. Continuing with time/cost pricing will make the accounting profession irrelevant. The conclusion is that accountants will just do is more accounts/tax returns as they gradually become more efficient forced by prices falling.

Many existing practitioners may get out before they experience too much pain, but what about the future?

When you understand VP you appreciate it is the only approach to pricing that:

  • Puts the client first
  • Fully aligns the accountant and client
  • Encourage and rewards innovation
  • Drives down costs on low value work
  • Maximises value for everyone (clients, practice owners, employees and society)

Pricing is fundamental to strategy so it seems sensible to me to understand as much as possible about such an important topic. At the end of the day being an accountant in practice requires much more that technical knowledge of accounts/tax. But, there is another reason to fully understand VP.

Business owners expect/need this extra knowledge (especially now) and an accountant who does not understand VP and just prices with cost/plus will probably only be able to talk to their client about things like job costing. 

Over the years I have invested time and energy to build my knowledge of VP through:

  • Reading books
  • Attending seminars and Webinars
  • Accountants (and other professional) who have adopted VP
  • Using VP

I'm interested to know where you have gained your understanding. What have you actually done to build your knowledge of VP?

Bob Harper

Replies (380)

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By Bob Harper
13th Nov 2012 12:39

Alignment

@Nigel - what part of alignment do you think clients will object to?

Paying for advice that:

Reduces their taxIncreases their profitSaves them timeIncreases their wealthReduces their stressGives them more freedom to do what they enjoy outside work

I could go on but you get the point.

@Shirley - the first step is to understand why you have not adopted VP. You seem reluctant to be specific?

Bob

 

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Replying to peterpaice:
Me!
By nigelburge
13th Nov 2012 12:45

My dear chap

Bob Harper wrote:

@Nigel - what part of alignment do you think clients will object to?

Paying for advice that:

Reduces their taxIncreases their profitSaves them timeIncreases their wealthReduces their stressGives them more freedom to do what they enjoy outside work

I do all that already. I am sure that all the posters here do that already. It is what any half-decent accountant does. Now tell me again why I need to join the Church of VP?

Hopefully yours,

N

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Replying to peterpaice:
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By The Black Knight
13th Nov 2012 12:52

that's not new

Bob Harper wrote:

@Nigel - what part of alignment do you think clients will object to?

Paying for advice that:

Reduces their taxIncreases their profitSaves them timeIncreases their wealthReduces their stressGives them more freedom to do what they enjoy outside work

I could go on but you get the point.

@Shirley - the first step is to understand why you have not adopted VP. You seem reluctant to be specific?

Bob

 

that's not new Bob in fact it's as old as prostitution itself (or was that accountancy? Can't remember which of the two essentials of civilization came first.)

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Replying to kate321:
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By User deleted
13th Nov 2012 12:59

Civilisation

The Black Knight wrote:

that's not new Bob in fact it's as old as prostitution itself (or was that accountancy? Can't remember which of the two essentials of civilization came first.)

Neither - comedy was first. Quite appropriate, really :¬)

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Replying to Kent accountant:
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By The Black Knight
13th Nov 2012 13:07

very good

BKD wrote:

The Black Knight wrote:

that's not new Bob in fact it's as old as prostitution itself (or was that accountancy? Can't remember which of the two essentials of civilization came first.)

Neither - comedy was first. Quite appropriate, really :¬)

 

I notice you went with the S not the Z ! bloody American spell checking....although my oxford dictionary  said Z and listed S as an alternative...have the yanks bought Oxford too I wonder.

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By petersaxton
13th Nov 2012 12:47

Mugs?

"Paying for advice that:

Reduces their taxIncreases their profitSaves them timeIncreases their wealthReduces their stressGives them more freedom to do what they enjoy outside work"

You think accountants are miracle workers. We can do some of that but there are limits. Our clients are not fools.

It would appear that you think by saying you can do all this, and wanting paying, you can achieve it when in reality you are looking for gullible mugs.

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Locutus of Borg
By Locutus
13th Nov 2012 13:11

Next week's debate ...

The world is flat.  Because I say it is.  Everyone else is wrong.

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By Bob Harper
13th Nov 2012 13:13

Do you?

@Nigel - I am sure you do but how effective are you?

My guess is that you are excellent at tax and weaker in the other areas. The reason being that you are not being judged/rewarded.

VP encourages investment (time, energy and money) to help clients achieve excellence. If you charge for time or a fixed price for accounts the business model doesn't allow/justify the investment needed.

Bob

 

 

 

 

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By Bob Harper
13th Nov 2012 13:25

Software

@Kent - reading a few posts makes me say a little bit of information is dangerous. 

Yes, Times Up works...I know I've done it, so does time billing, I've also done that BUT these are not VP. I am happy to have a chat with you, Steve Pipe and/or Mark Wickersham about why VP cannot be done properly with a calculator.

The main reason is that VP prices the person not the work.

Bob

 

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Replying to John Stokdyk:
Man of Kent
By Kent accountant
13th Nov 2012 14:12

You really are...

Bob Harper wrote:

@Kent - reading a few posts makes me say a little bit of information is dangerous. 

...an ignorant [***]!!!

When someone demonstrates quite clearly that you're wrong you can't respond in any other way than insults

Peddle your ideas expecting what....?

Based on your complete lack of success over the last 5+ plus years and the way you conduct yourself on here I'm not surprised the only accountant  to sign you up is an AAT with no practice experience.

God help you and them

and their clients (with a bit of luck they'll see the light and find a decent accountant).

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By ireallyshouldknowthisbut
13th Nov 2012 13:28

.

I was idly wondering if it had occurred to Bob that lots of clients do actually value compliance work done properly. And by properly I mean doing basic stuff such as saving them tax, looking at their bookkeeping, seeking improvements to their business if anything springs to mind.

Not least if they have had some iffy solo accountant or bigger firm's unsupervised junior fudge it up before hand. 

Could this be his epiphany?

 

 

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By Bob Harper
13th Nov 2012 13:29

Easy

@Fidodido - VP works with all work and with all prices.

@Peter - no I am saying that if accountants changed their business/pricing model they would be better.

Bob

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By Bob Harper
13th Nov 2012 13:32

Compliance

@YouReallySHouldn't - yes, compliance is valuable.

There is a limit and that is probably lower than other work but the value can be enhanced by the way the work is delivered.

Bob

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By mwngiol
13th Nov 2012 13:44

Important point

I just thought I'd take advantage of the opportunity to type this sentence.

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Replying to jasongibson:
Me!
By nigelburge
13th Nov 2012 13:51

May I?

mwngiol wrote:

I just thought I'd take advantage of the opportunity to type this sentence.

Take this opportunity of nominating this post for the "Most Useful Post of the Thread Award"

Well - I liked it anyway!!!

Thanks Mwngiol

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By petersaxton
13th Nov 2012 13:50

JCresswellTax was right

 

If I said to my clients that I could:

Increase their wealth,

Reduce their stress,

Give them more freedom to do what they enjoy outside work, and

Help them to achieve excellence.

I am sure they wouldn’t be able to get out of the door fast enough and label me a bullshitter.

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Replying to shezhamill:
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By The Black Knight
13th Nov 2012 14:05

offer

petersaxton wrote:

 

If I said to my clients that I could:

Increase their wealth,

Reduce their stress,

Give them more freedom to do what they enjoy outside work, and

Help them to achieve excellence.

I am sure they wouldn’t be able to get out of the door fast enough and label me a bullshitter.

 

I would stay if you offered added value, say a high class hooker for half an hour for free. That's satisfied 2 to 4 you can get on with 1!

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Replying to Duggimon:
Man of Kent
By Kent accountant
13th Nov 2012 14:14

Leave the label for Bob

The Black Knight wrote:

petersaxton wrote:

 

If I said to my clients that I could:

Increase their wealth,

Reduce their stress,

Give them more freedom to do what they enjoy outside work, and

Help them to achieve excellence.

I am sure they wouldn’t be able to get out of the door fast enough and label me a bullshitter.

 

I would stay if you offered added value, say a high class hooker for half an hour for free. That's satisfied 2 to 4 you can get on with 1!

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By Bob Harper
13th Nov 2012 14:03

Your right

@Peter - without you investing in yourself with personal development and new knowledge your clients would be right.

Bob

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By User deleted
13th Nov 2012 14:08

Blimey ...

... spend the morning adding value to a client and see what happens!

For the record, the £200/£2000 job comparisons was just that, I prefer the £750 financial statements/CT600 jobs, big enough to get out of bed for and small enough to not loose sleep over when you're in it.

But, that is personal preference - horses for courses, I wouldn't boast about the size of my average fee, or belittle anyone for theirs, we alll find what we prefer.

Also Bob, I never said you couldn't add value on a £200 job, in fact it is probably easier, and most likely on a percentage rather than absolute basis probably a lot more value than you could add to a £2000 job.

As I see it your VP model uses compliance work as a loss leader, so if you priced compliance on a cost/time basis and all other work on a value basis you would actually achieve higher income and profits than your model, the alleged only credible pricing model!

Bob Harper wrote:

@Peter - no I am saying that if accountants changed their business/pricing model they would be better.

Bob

Hogwash, can you substantiate this? They may make more profit, they may make less, but better assumes quality of advice given which depends on many variable and has no direct co-relation with your pricing model. How good you are detemines what your value is not vice versa!

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By uktaxpal
13th Nov 2012 14:19

Dont think the ultimate "Mousetrap" has been built yet?

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By The Black Knight
13th Nov 2012 14:21

It's you're right.

 

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By Bob Harper
13th Nov 2012 14:25

Ignorant

@Kent - I call it as I see it. 

I respect you for what you are doing and have been complimentary. I respect you for answering my question with what you have done to educate yourself on VP. I just think reading a few posts isn't enough to have a good understanding of anything.

Perhaps Crunchers has most value with AAT accountants with no practice experience. That is not the intention but time will tell.

Decent is about accepted standards...we expect much more that.

Bob

 

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Replying to nicmgfi:
Red Leader
By Red Leader
13th Nov 2012 14:30

Pardon?

Sorry, I didn't catch that. Could you repeat it, please?

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Replying to nicmgfi:
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By The Black Knight
13th Nov 2012 14:35

Deluded

Bob Harper wrote:

Perhaps Crunchers has most value with AAT accountants with no practice experience.

Deluded me thinks...much to learn....mmmm

 

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By User deleted
13th Nov 2012 14:35

I'm with BKD now ...

... much more of this and the ozone layer will be gone.

Bob, learn the difference between being enthusiastic and bening patronising.

I suggest you read Dale Carnegie's book

http://www.amazon.com/How-Win-Friends-Influence-People/dp/1607962179/ref=sr_1_2?s=books&ie=UTF8&qid=1352817267&sr=1-2&keywords=win+friends+and+influence+people

 

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Replying to ctsol:
Me!
By nigelburge
13th Nov 2012 14:38

Well said that Man

Old Greying Accountant wrote:

Bob, learn the difference between being enthusiastic and being patronising.

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By uktaxpal
13th Nov 2012 14:39

What are the odds comments reach 1000?

 

 

Betting book opening  .Odds for       5-1

 

 

Any takers?

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By mrme89
13th Nov 2012 14:57

@uktaxpal - I'll have a pint on that ;-P

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By Henry Osadzinski
13th Nov 2012 15:01

Comments Closed

Unfortunately, due to the number of personal / disruptive comments in this thread, comments are now closed. Out of respect for the constructive points raised in the debate, we'll be leaving the discussion up.

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