Ronald J. Baker is the founder of VeraSage Institute, a reformed CPA and cost accountant who has changed his mind on the value of timesheets and cost accounting. His quest is to bury the billable hour and timesheets.
He is also a radio talk-show Host, The Soul of Enterprise: Business in the Knowledge Economy heard on www.voiceamerica.com.
In this episode, Ron let us know whey he changed his mind when it comes to the use of timesheets when setting up pricing. Hear his reasoning about why you should also get rid of timesheets. He offers profound insights, as well as examples and explanations, into how certain pricing value and cost models are appropriate for particular industries.
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Why you have to check out today’s podcast:
- Learn why many companies in accounting and the automobile industry are switching to subscription pricing
- Discover how timesheets cause leaders to focus on the wrong metrics, especially in pricing and value setting
- No timesheets? Is it possible?
“If we took the time that we spend [or waste] doing timesheets and did after-action reviews instead. I think we’d be much further ahead.”
– Ronald J. Baker
Expand your pricing knowledge with our online course:
Accelerate Your Subscription Business: Your Blueprint to Packaging & Pricing for Growth
at https://www.championsofvalue.com
Topics Covered:
02:18 – Talking about four defenses for timesheets in relation to Pricing
03:34 – Taking into consideration the Cost of Goods Sold in setting the price
06:58 – Difference between a metric and measurement type of cost allocations
09:16 – Of Opportunity Cost and Sunk Cost
10:25 – Is time really considered in setting up pricing
14:23 – Project management as a way of making better decisions in the future
17:25 – The best advantage of niching your expertise on
20:01 – The start of subscription pricing in the accounting world
22:13 – Insurance classified as subscription pricing
25:11 – What’s the best thing about hiring an accounting firm rather than accounting staff for your business
28:34 – His thoughts on cars leaning towards a subscription model
Key Takeaways:
“Prices to me are like agents. Why do sports stars and actors and authors have agents not because they like to pay these people 15% of their gross revenue, but because these people can get them higher prices and your prices are your agents. So even if you’re a solo entrepreneur, have somebody else help you with pricing because it will put a spine in you and you won’t give yourself away because I think all of us are terrible at pricing ourselves.” – Ron Baker
“Keep in mind that I don’t need to see timesheets to know your firm’s costs. I need to know, I need to see your GL, your income statement and I need to know what your labor and all of that is. I’d much rather track revenue per person or labor cost per person, profit per person in a professional firm because that’s a true measurement.” – Ron Baker
“Even if they’re just starting out as a sole solo. Don’t have any employees. I still think they can put a price on things consistent with their opportunity cost and what they want, willingness to accept and function fine, and this is an integral part of this, as long as they step back after the job is completed and do an after-action review and learn from it.” – Ron Baker
“If you’re niched, if you specialize, it’s much easier to know what something’s going to take once you build up some experience.” – Ron Baker
“A subscription model is a way to lock customers in for life. So in value pricing to Oh you’re pricing, not the customer. And this is the subtle difference, but bear with me, you’re pricing the relationship and your pricing the portfolio because you’re looking at it as a portfolio rather than a project or just a customer. You’re actually looking at the entire portfolio.” – Ron Baker
“We’re too busy. I think we confuse being busy with being effective and being profitable. And I’ll see a correlation there.” – Ron Baker
Links and Resources Mentioned:
- Bain & Company
- Mckinsey and Company
- Porsche
- Canvas + Fair
- Ed Kless
- TSOE Episode #200: Interview with Reginald Lee
- Lies, Damned Lies, and Cost Accounting
Connect With Ron Baker:
Connect with Mark Stiving:
Full Interview Transcript
(Note: This transcript was created using Temi, an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
“If we took the time that we spend [or waste] doing timesheets and did after-action reviews instead. I think we’d be much further ahead.” – Ron Baker
[Intro]
Mark Stiving: Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the direct relationship between them. I’m Mark Stving and today our guest is Ron Baker. Here are three things you want to know about Ron before we start. He is the founder of VeraSage. It’s a think tank dedicated to helping professional knowledge firms bury the billable hour and trash timesheets. I’m sure he’s worked on that phrase, a lot, co-host of The Soul Of Enterprise Radio Show and Podcast, which is an amazing podcast and he’s a graduate from Disney University. Welcome, Ron!
Ron Baker: Thank you, Mark. Glad to be here finally.
Mark Stiving: Yeah. Hey, how long did you work on that tagline for VeraSage?
Ron Baker: A while, you know, it was controversial, so that’s why I liked it. It was evocative. That’s why I liked it.
Mark Stiving: And it’s got alliteration in there. I think it’s really well done.
Ron Baker: Thank you. It freaks out a lot of people. But maybe that’s what I like about it.
Mark Stiving: Yeah. So, just a quick background so everybody knows Ron is absolutely brilliant in pricing, especially for professional knowledge firms. How many books have you written by now?
Ron Baker: Seven.
Mark Stiving: Wow!
Ron Baker: I’m not sure I have enough to say to put in seven books.
Ron Baker: Well, somebody wants that I just took the same topic and created seven books out of it.
Mark Stiving: I’m sure that’s not true, but okay. Now I’m so excited to have you on because I really and truly listen to The Soul Off Enterprise, constantly.
Ron Baker: Thank you.
Mark Stiving: And there are two topics that I just struggle within my view of pricing versus your view of pricing or your view of the world.
Ron Baker: Sure.
Mark Stiving: And one of them is timesheets. Now, I have heard you rant about timesheets many, many times. So before I ask the hard questions, would you just rant about timesheets for a few seconds?
Ron Baker: Oh yeah. I mean there are four defenses that people put forth for timesheets. One, we need them for pricing. And I think Mark, you and I can agree that that’s not true. I think we can get that far. The second defense is we need them for project management.
And if you’ve listened to anything by Ed Kless on project management because he is an expert, you’ll see that that’s not true because using timesheets for project management is the equivalent of timing your cookies with your smoke alarm. By the time you see something on a timesheet, it is by definition no longer manageable. The third defense you’ll hear for timesheets is while we need them to track the efficiency of our team members, I need to know who’s efficient, who’s not, who’s taking twice as long and half as long and all of that. And the fourth is we need them for profit per job, per customer or per hour. I believe I have blown up all four of those defenses and replace them with superior processes or systems.
Mark Stiving: Okay. I think I’m going to lean more towards the fourth one. In my defense of timesheets. Okay. If that’s okay. But, but by the way, I’m not, trust me, I don’t really defend timesheets. I just don’t understand this concept.
Ron Baker: Sure, I understand.
Mark Stiving: So let’s take a step back for a second. C an accountant, if you’re going to do accounting for a firm, you want to know their cost of goods sold. Is that a true statement or not a true statement?
Ron Baker: That’s a true statement.
Mark Stiving: Okay. As a pricing person, and actually I wouldn’t even call it pricing, as negotiation or as a business strategy, I want to know what my customer’s willing to pay. So that’s really how I’m going to set my price. But I also want to know what I’m willing to accept because if their willingness to pay is below my willingness to accept, I don’t want to do the deal. So I have to have that someplace. And the cost of goods sold seems to drive this willingness to accept. Does that make sense? Or am I off base someplace?
Cost of goods sold, willingness to accept. Yes. I would say though, I mean this gets into a rabbit hole really fast, but if you’ve listened to our show with Dr. Reginald Lee who wrote a couple of great books, one is Lies, Damned Lies and Cost Accounting. The other is the Strategic Cost Transformation. His argument is that a business, its customers or its products or services don’t have costs. It’s the businesses that have costs, especially in a professional firm. Most of our costs are for capacity, talent, technology, right? And irrespective of how those resources are utilized.
So, when you allocate a cost to a service and a professional firm, you’re allocating a non-cash cost, you’re incurring the cost anyway, you’re paying your person, whatever it is, a hundred grand a year. And when I allocate five hours of their time, that’s completely arbitrary. It’s a non-cash cost.
In other words, if they weren’t working on that, I wouldn’t receive any cash or I wouldn’t save any cash. It’s a non-cash cost I’m allocating. So it’s completely arbitrary. So what we need to do and look at instead of cost allocation is capacity, allegations and cashflow impact. Because cash is king.
Mark Stiving: Okay. I want to say what I heard you say just a second ago, just to make sure I’m on this on the right page. You said that, let’s say that I’m paying somebody a hundred dollars an hour. They’ve got five free hours a week, they’re not doing anything. Meaning I’m making zero revenue on paying a hundred bucks an hour, so I’m paying 500 bucks. If I could get someone to hire my firm and I’m only going to get the revenue of $20 an hour for that work, that’s still worth it because it’s $20 an hour I wasn’t going to get before. So, that’s incremental revenue that has nothing to with my costs.
Ron Baker: Well, except from the pricing side, I would still want minimum prices. Mark, I rather have my team members sit idle and do maybe other things like invest in education or go to Disney University or read a book. Then you work below a minimum that is inconsistent with our pricing integrity. That’s inconsistent with our positioning and our brand in the marketplace. I’m not a believer in just adding marginal revenue because our people are idle. I actually want idleness. I want spare capacity at all times and professional firms so they can take on, you know, last-minute projects and sell that last-minute first-class seat at a very high price.
Mark Stiving: Nice. So, now we’re getting somewhere. I only want to take jobs where I’ve got a really good margin. How do you figure out the margin?
Ron Baker: Well first off, keep in mind that I don’t need to see timesheets to know your firm’s costs. I need to know, I need to see your GL, your income statement and I need to know what your labor and all of that is. I’d much rather track revenue per person or labor cost per person, profit per person in a professional firm because that’s a true measurement. I can’t gain that system. I count heads and that’s, that’s accurate. right? Whereas with hourly allocations, there’s a lot of games played. People eat time, they miss direct time. They put on the timesheet what they think it should read rather than what it actually was. I mean that’s the difference between a metric and a measurement, right? A metric is kind of an arbitrary, math formula that we have discretion over. That’s why a firm can manipulate its net income using, say, LIFO inventory method or FIFO. That’s a metric. But measurement is you and I go outside with a thermometer and it’s probably gonna read the same thing because it’s not based upon our choices.
Mark Stiving: Yeah. So, we can play with the numbers. There’s no doubt. Right. If we go to physical goods, we could use LIFO, or FIFO and manipulate the cost of goods sold for a physical products. And again, that’s backward-looking. I’ve probably fudge time sheets myself in the past.
Ron Baker: Shocking!
Mark Stiving: But that was not a confession.
Ron Baker: Okay. Fair enough. Excellent. The laughter is, but that’s okay.
Mark Stiving: I agree, it isn’t a perfect metric cause it certainly is a metric. It’s not a measurement, right? So it isn’t perfect, but, it comes down to I have to know something. Don’t tie it. And when you say, and when you say revenue per person, I assume you’re talking about average revenue per person, not how much revenue did Bob create.
Ron Baker: Correct. The way we analyze it for like when we look at Apple, you know we talk about revenue per headcount or revenue per person for these companies. But maybe, let me put it another way, Mark, that might resonate with you. We’ll see you tell me what you think of this like cause I totally agree with everything you said about when, when I’m looking at taking on a job, I hopefully have a minimum price in mind so I certainly wouldn’t, don’t want to go below that. Even if I have spare capacity, I’m not arguing for that at all because of what it does to the pricing integrity, how it trains your customers to try and negotiate during your slow season and all those perverse effects that we see.
But when I’m deciding whether or not to take a job, I’m analyzing an opportunity cost and you can only analyze an opportunity cost perspectively, right? Do I go down road A or road B? I can’t analyze that. opportunity costs after the fact by looking at timesheets because at that point I’m analyzing a sunk cost. I’ve already made the decision, right or wrong. I’ve already made the decision that’s not analyzing an opportunity cost at that point.
Mark Stiving: That makes sense, but it still doesn’t make me happy. Okay, here’s why I’m going to give you two different jobs to look at in the future. And it’s an opportunity cost and you have to decide between one or the other. And I happen to know because I am omnipotent. One job takes one man year, another job takes 20 man-years. But I’m omnipotent and I know that. How do you know that if you haven’t been watching the time allocated in the past?
Ron Baker: Well, first off, realize that as good as that sounds, we never go back and look at time. I know people say they do, but they don’t. I mean, that’s why if you look at typical firm, they underestimate every job based on hours upfront. They underestimate it. Why is that happening? We have a hundred years of timesheet data. We should know what everything takes down to the minute.
But, the other issue with that is these are professionals. They’ve been down this road before. They, you know, the last thing I want to hear from my surgeon being wheeled into the ORs. Wow, look at that. I’ve never seen that before. I’m going to you because you’ve done this a few thousand times, so you should know whether or not something’s going to take one year or 20 years or one hour or 200 hours just by looking at it. I mean that’s part of due care. If you don’t know that, and I’m serious about this and I’m speaking as a lawyer, as a CPA or as a professional, if you don’t know that, then maybe you shouldn’t be doing the work.
Mark Stiving: So a new accountant or a new lawyer shouldn’t be doing value-based pricing. They should be doing the work with someone else and learning how long it takes to do things, what the effort levels are so that someday in the future they can make these judgments themselves.
Ron Baker: Well, I mean certainly if they work in a firm, but if there are solo, I still think they can do this even if they’re just starting out as a sole solo. Don’t have any employees. I still think they can put a price on things consistent with their opportunity cost is, as you said, and what they want, you know, willingness to accept and function fine as long as, and this is an integral part of this, as long as they step back after the job is completed and do an after-action review and learn from it. Did they have the right pricing method? Did they create any unexpected value? Would they have done the project the same way knowing what they know now, how could they do it better in the future? There’s a wealth of knowledge in a closed file in a finished engagement. And we don’t sit there and analyze it after the fact and tap into it.
And that’s why I think a big replacement for timesheets. It’s not like I’m just saying get rid of your timesheets and we’ll have pure chaos and everybody will run around like a chicken with their head cut off. We’re replacing it with proper project management via Ed class and also after-action reviews, which will actually help you improve in the future. Because I think Mark, another problem with the timesheet is it doesn’t help me improve performance in the future. If I berate you and say, well gee, Mark, you know, the budget on this was 20 hours and you spent 50 how, how does that help you improve that? There’s not enough contextual and tacit knowledge in that data to know how to improve the next similar engagement.
Mark Stiving: Yeah. Okay, so I think Ron, you are 99% of the way of convincing me this and so here’s what. I know. I know it’s because you’re so darn smart here. Here’s the way I’m going to look at this is I think I agreed even before I walked into this conversation that timesheets are totally irrelevant for backward-looking anything, right? I really don’t care. What I care about is forward-looking things. How do I make judgments in the future? And the only way I do that is if I’ve learned from the past. And I love the after-action review and I had never tied that back to Oh, here’s why we get rid of timesheets. I’ve heard you talk about it many times, but I never linked those two together before. And I think that makes a beautiful transition to how do we deal with the future? How do we learn from the past so that we can make better decisions in the future?
Ron Baker: Right. And, one more, just quick clarification on this. Project management is about projecting resources into the future. Looking forward, do we have the capacity to do this work of by the promised deadline, those types of things. So we have no problem projecting hours into the future. What I kinda call facetiously doing your timesheet in advance. What I have a problem with Mark is trying to reconcile that to actual, that’s just an accounting mindset. You budget actual and then the variance, right? But there’s no need to do that if you’re doing the after-action review because the AAR will give you more contextual and better information about how to improve next time. So if we took the time that we spend for ways doing timesheets and did after-action reviews instead, I think we’d be much further ahead.
Mark Stiving: Okay. I’m with you. You’ve convinced me.
Ron Baker: One more point just empirically, cause I know you’re an empiricist, you like to actually go out there and look at the data and see what’s going on in the real world. Bain and Company, and McKinsey and Company no longer do timesheets and they transitioned out of them and if they can do it and any other professional firm is capable of doing it.
Mark Stiving: Yeah. My experience with McKinsey is, their margins are huge. They don’t need to track timesheets.
Ron Baker: Right. And, that’s part of their positioning, and their marketing and their branding and all of that. But other, you know, some of the big four have the same branding power and pricing power.
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Ron Baker: And one more thing I’ll say, and this kind of goes back to your being omnipotent and seeing the future. This is going to take 200 hours rather than a hundred or whatever it was. If you’re niched, if you specialize, it’s much easier to know what something’s going to take once you build up some experience. Like I have a colleague who does nothing but dentists, he can handle dental practices from literal womb to tomb. He starts in dental schools, he knows everything that could possibly happen to a dentist, a divorce, a bankruptcy, I mean everything. He’s seen it all. And when you have that level of deep expertise in one area, it’s pretty easy to estimate what something’s going to take.
Mark Stiving: Yes, I agree completely. And I also want to talk about the dentist, accountant in another way. And that is that when you can specialize to that level, you actually understand the value you’re delivering and dentists understand the value that you’re delivering and you’re gonna end up getting paid more for that.
Ron Baker: Absolutely. And you’re going to get better referrals to cause birds of the same feather flock together. This guy is the most profitable CPA firm in the world that I’ve ever encountered.
Mark Stiving: Nice. Not saying something and he’s only doing dentists.
Ron Baker: And in fact he gives anything. Anybody who’s not a dentist, he, he refers to my colleague and so he doesn’t do anything and he doesn’t take on every dentist that comes. He only probably takes on roughly 30% of the people that approach him. He husbands his capacity. He doesn’t work at full tilt.
Mark Stiving: Nice. That deserves a case study. It does.
Mark Stiving: Okay. Ron, thank you so much for timesheets. I am with you. I will never ever recommend a timesheet again.
Ron Baker: Okay, great. Now I’m worried about the second thing that we did. Now it’s your turn to convince me, Mark.
Ron Baker: I’m not sure that we disagree. I just don’t have my arms around it yet. Yesterday, I had a chance in office hours for the subscription pricing class, someone who happened to be one of your ex-mentees. She was talking to me about doing subscriptions in the accounting world and I was having a really hard time getting my arms around why we would do subscriptions in the accounting world. Now I could understand it if we talk about bookkeeping, right? Bookkeeping is a service I needed every month and they’re adding value to me constantly. And I get that completely. In my mind, I’m picturing accounting firms as doing projects more so than doing ongoing, we know what we’re doing every month and I’m adding value every month. Am I missing something?
Ron Baker: No, I mean it’s a really good question. And this does require a completely different mindset. And one of the ways I explain this is, you know, we started out with hourly billing, right? Which prices, the inputs, the hours that we spend. And then we kind of moved into value pricing. Or you could say there was a step in between of of fixed prices, but let’s just say we went to value pricing one which is really about pricing the customer based on the outcomes that you’re providing. Well, Mark, I think we’re moving into value pricing 2.0 and that is the subscription model. It’s, I think it’s a tectonic shift that you’re seeing in the economy. When I pull audiences and ask them how many things do you subscribe to, whether it’s Amazon Prime, whatever, Wine in a Box, Fruit of the Month, you know, you name it, at least 10 things probably you subscribe to and even automobiles are being subscribed to in 2023 it’s estimated that 50% of automobiles will not be bought or leased.
There’ll be subscribed to Porsche passports already got a program where you can subscribe for two or $3,000 a month depending on the models you want to drive. And you can drive these models as much as you want. There’s no mileage restriction and you can also swap them out. I’ve got, you know, friends coming over for the weekend. I need an SUV, they’ll white-glove me an SUV and take the old one away. That’s fascinating cause they pay everything except your gas. They pay insurance, registration, everything. And 80% of the people who have signed up for this program, the Porsche passport program are new to the brand. And so a subscription model is a way to lock customers in for life. So in value pricing to Oh you’re pricing, not the customer. And this is subtle difference, but bear with me, you’re pricing the relationship and your pricing the portfolio because you’re looking at it as a portfolio rather than a project or just a customer. You’re actually looking at the entire portfolio. And so the model for professional firms in my mind is the concierge medical practice.
Mark Stiving: Okay. I’m thinking hard about this. All right. First off, before I go there, let’s think about insurance. I think insurance is absolutely subscription. It’s something that gives us value on a monthly basis, even though we hope never use it. The value is the security of knowing that if we need it, we’ve got it. That’s, that’s wonderful. And so I think we could think of some of insurance that way. And now if I’m going to do the concierge medical service, what that really is, is it’s insurance on top of, I’m going to help you when something goes bad. And then I’m going to add to that the ability that says, let me help you with preventative maintenance. Let me help you with lifestyle or health issues. There’s an added service on top that’s constantly making me feel like I’m getting value from the service.
Ron Baker: Bingo. You nailed it. I’m, I’m sitting here looking at, the benefits of concierge healthcare just from a random website of one of these concierge practices. And that’s one of the third points is benefit from a proactive approach to your health, including preventative and integrative medicine. So in other words, there are 65,000 concierge medical practices in the United States, 93% retention rate. They have 56% fewer hospitalizations for their patients. The average length of the visit Mark, 30 to 60 minutes. Now, here’s the trade-off the panel of patients that have in, and I’m talking and there are different levels of this and we can go there if you want, but if you go to the premium concierge practice where, I mean literally your doctor will do house calls or come to your office, right? If there’s an issue, maybe even travel with you, I’ve read stories about, but if you do that, you can only have a patient panel of two to 400 the average doctor as a patient panel of somewhere between 1500 and 3000 so this does require fewer customers in a professional firm.
This model does because you have to spend more capacity for each customer and you always have to have spare capacity for those emergencies and what you’re doing is you’re telling your patient, Hey, anything we can do under our roof is covered by your annual subscription. However, that’s paid usually monthly, and by the way, just like Amazon Prime, those capabilities under that roof are expanding now. They include blood work, lab work, maybe MRIs or cat scans, other diagnostic tests that they can do in their office. If they have to refer out now that’s not covered, and that’s a separate issue. But anything they can do, including pharmacology, sometimes there’s some of these outfits dispense drugs is covered and therefore you’re buying insurance. And you know what I love about insurance Mark, we all pay for it to $3 trillion industry. And you know what? We’re thrilled when we don’t use it. Yup. I want to sell that. He knows, Ed says, I’d rather be a fire insurance salesman than a fireman. And if what we’re doing is turning projects and services, then we’re not thinking about that long term health and transformation to the customer. And that’s what concierge practice allows you to do. So it’s flowing through my mind here is, let’s say that I’m a firm that wants to hire an accounting firm. Why would I hire an accounting firm as opposed to hiring accountants and staff?
Ron Baker: Right. In other words, why would you outsource your accounting? Yes. Because they can do it probably better, probably faster, probably more effectively. You don’t have the risk of turnover and all the other burdens you have when you have employees. But if they’re smart, they can bring other value-added services to you based on the numbers that they’re generating.
They may be able to help you with HR or with your pricing or with dashboards, with budgeting, with cashflow, those types of things. But they can also be proactive. If they’re a large enough firm, they would also cover you if you were audited. They were also, they would all do, in other words, just like a concierge doctor, they would handle anything that came up that they, that they had the competence to do.
Now, if they don’t have the competence, just like a concierge doctor, if he has to refer you to an oncologist, he’s going to set that appointment up and he’s going to walk over there with you and sit in that appointment with that oncologist. And he may even be in the OR if a surgeon has to do surgery with you because he knows everything about you.
Mark Stiving: Okay. So I’m S I’m starting to see how this can work. When we look at the concierge medical field as an example, the big projects, we would say that’s almost like insurance policies. So the audit, right? That’s a great big project that hopefully we never have to do it, but once in a while, we do. Right. Well I’m assuming it’s a tax audit, right?
Ron Baker: Tax audit. That’s right. And if you think about it, and this is where we get into pricing the portfolio, maybe only one or 2% of your patients are going to get audited, right. Or have a big medical issue, but the other 98% won’t, they’ll probably just come to you for an annual, maybe, maybe send you some emails or you know, have some zoom consultations with you about the rash or whatever. Right? So just like in a concierge practice, when I’ve talked to doctors about this, they say 5% of my patients, drawn 70% of our resources in our capacity. So, that leaves a lot of space to do actuarial pricing on a portfolio.
Mark Stiving: Yes. And, and if we find that 5 % are really bothersome, we end up finding those customers.
Ron Baker: We could or get them healthy and move them back to the once a year patient. You know if that, if that’s possible. It concierge page. Doctors do fire patients, patients that don’t listen, you know, because apart, a big part of what they do is proactive medicine. Preventative medicine. Just like a personal weight trainer. If you’re not taking their advice, you’re going to be a terrible walking billboard. Advertisement forms. They’re going to get rid of you.
Mark Stiving: Yes. Okay, so let’s, let’s apply. Let’s go back to cars for just a second and you really liked the Porsche model and love it. Fascinating. Let’s say that I’m a relatively poor individual and I drive a used Honda. Am I ever going to subscribe to a car?
Ron Baker: I think it’s very possible. We’re starting to see other firms offer this such as Canvas is one. There is one out there called, I think it’s Fair. These companies do multiple brands, so they have a full line of cars from the low price point up to the high price point. They do have some mileage restrictions. You’re not going to be able to swap out different brands like you can with the different Porsche models. But I do think it’s easier to subscribe to a car than own one unless of course, we get to the point of autonomous cars where you just don’t have to even bother anymore. You can just call up an Uber and have it wherever.
Mark Stiving: Right, right. But I was thinking more along the lines of, I’ve got a used car. It’s a hundred thousand miles. You know, it breaks down often. I’m never going to subscribe because no matter what the subscription is, it’s more than it costs me today. Maybe.
Ron Baker: I mean, yeah, there’s still a reason for ownership, but I think for the middle class and the upper-class subscription might make more sense. And that’s why I think we’re seeing this from the analysts that 50% of cars will be subscribed to.
Mark Stiving: And by the way, the reason I pushed is cause when I think about these topics, it helps me apply them generally. And so if we were to say we’ve got these low-end clients, think of my company as a low-end client, am I ever going to subscribe to an accountant? I do subscribe to a bookkeeper.
Ron Baker: By the way, I think you might, if it was offered, it would certainly be amongst your choices. And look, I’m not saying the concierge practices for everybody because it’s, it does require fewer, customers. It requires you to really, uh, it’s, I don’t want to say it’s a lifestyle choice, but it is a different way to practice. And from what I’ve been reading about doctors who have made this transition, this is why they went into medicine to help people. And they felt in the old practice where they had two or 3000 patients and they were spending three minutes per patient or whatever, they were just not being a true professional. And so I think that’s a big part of this too. We, entered the accounting profession or the legal profession to help people. And yet when you get on that hamster wheel, whether it’s billable hours or not even value pricing, you still probably have too many patients and therefore you’re neglecting all the things you could be doing maybe for a smaller group.
Mark Stiving: Yeah, I think in the world of professional services, professional knowledge firms, that’s absolutely true, right? We, we could be much more proactive and effective if we had a set of clients that we were just serving.
Ron Baker: We’re too busy. I think we confuse being busy with being effective and being profitable. And I’ll see a correlation there.
Mark Stiving: Ron, this has just been amazing. Thank you so much. But I always end with this question. I’m going to ask you it. Um, what’s the one piece of pricing advice you would give our listeners that you think could have a big impact on their business?
Ron Baker: Prices to me are like agents. Why do sports stars and actors and authors have agents not because they like to pay these people 15% of their gross revenue, but because these people can get them higher prices and your prices are your agents. So, even if you’re a solo entrepreneur, have somebody else help you with pricing because it will put a spine in you and you won’t give yourself away because I think all of us are terrible at pricing ourselves.
Mark Stiving: Oh my gosh, that is so true. It is not uncommon for me to be coaching pricing consultants on how to price their offers.
Ron Baker: Beautiful. That’s right. We do it all the time, Mark. I think that’s one of the benefits of VeraSage. We’re each other’s pricing counsels and it works really well because when one of my colleagues sells me, they’re brave as a lion because they’re not worried about me losing the business. Do you know? They’re just brave as a lion and vice versa.
Mark Stiving: Right. It’s like, you’re really worth this. Charge it. It’s okay. That’s right. That’s right. An excellent episode in the bag. My favorite part of today, I have to say, coming to understand this concept of timesheets better was really good. Ron, what was your favorite part? Do you actually have a favorite part of today?
Ron Baker: Absolutely. Getting you to agree with me in such a short amount of time just blew my mind. So I’m thrilled with that because you’re a sharp guy and, you know, if you were struggling with this, and I was glad I could bring some clarity to it, I’ve been muddled by it for decades. Trust me.
Mark Stiving: Oh, I was 90% on the way there? It’s just like, Oh, I gotta get this willingness to accept things under control. So, to our listeners, what was your favorite part? Please let us know in the comments or wherever you downloaded and listened. And while you’re at it, would you please give us a five-star review? They’re very valuable to us. If you have any questions or comments about this podcast or about pricing in general, feel free to email me at [email protected]. Now, go make an impact!
**Note: Mark Stiving has an active LinkedIn community, where he participates in conversations and answers questions. Each week, he creates a blog post for the top question. If you have a question, head over to LinkedIn to communicate directly with Mark.
Tags: Accelerate Your Subscription Business, ask a pricing expert, pricing strategy
