Value Pricing in the PR Profession | ODwyer’s

So, what’s value pricing in the PR business, or the accounting business for that matter? I once asked the late Al Croft if he ever used value pricing when he was in the agency business. He told me he had three billing rates: administrative, tactical and strategic. This does meet the definition of value pricing; however, it’s still tied to hours and a service rate. Regardless, consider it and use it. While it doesn’t capture the value surplus that a client may be willing to pay, it’s better than an agency rate per hour for all services. Develop different rates for different services.

What’s value pricing anyway?

According to Ronald Baker in his book “Professional Guide to Value Pricing,” a successful professional firm will price its services according to external value, as perceived and determined by the customer — your clients are customers! — rather than by internal costs. By doing so, they will restore pricing to the strategic marketing tool that it is.

So, what’s value pricing anyway? According to Baker, value pricing can be defined as the maximum amount a given customer is willing to pay for a service, before the time of delivery. It doesn’t mean a percentage markup on your standard rate, or a contingency arrangement based upon a certain result, or a bonus added to the agreed price, though any price negotiations may include these factors. Value pricing requires that you price on the margin for each customer, for each service, disregarding the following: what you charge other customers for the same service, what you have charged the customer in the past, what your competition is willing to charge the customer, what your competition used to charge the customer.

More on this next month. I trust the topic will provide value and food for thought! If you do nothing else, consider the three-tier pricing strategy used by Al Croft.

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Value Pricing in the PR Profession – Fri., Jul. 6, 2018.