Value pricing is not a new concept. The partners at Klein, Rowe, & Co (KRC) understand the necessity of pricing based on value over billable hours. Yet, to date, they have not implemented a strategic pricing strategy. Instead, they continue to take on any client that comes their way, which had led them down the path to random, unstructured billing. At the root of the firm’s inconsistent pricing model is an undefined pricing ecosystem.
Join Klein, Rowe & Co, our fictional case study firm, as they learn from our Automating Success webinar series. In each webinar, our thought leaders will share their expertise on how this firm might address those challenges. In each KRC follow-up, we'll share with you what our fictional firm has learned and the next steps they might take to reimagine their firm. Please note: our case study and follow-up articles are fictional and intended for entertainment and educational purposes only.
In this week’s Automating Success webinar, “Pricing – Part one: Principles,” KRC partners were thoroughly schooled on the primary principles of pricing and the components of a winning pricing ecosystem.
What KRC learned…
The main takeaway from this session was the concept of a pricing ecosystem. Over the course of the firm’s life, the partners had never considered pricing beyond simply billing clients. The notion that pricing could be part of an organized and intentional ecosystem was foreign.
Partners stated: ”It made so much sense once we saw pricing mapped out in a linear workflow format. There’s a lot that needs to happen before you even get to pricing, like vetting leads to make sure we bring in qualified clients in the first place. There’s also the need to prepare clients for pricing so they know exactly what they’ll get and the value we bring to the table—and all before they ever see an invoice.”
Partners also learned that the pricing ecosystem must also include the work to be done after pricing is negotiated. This calls for KRC to have a solid project management (workflow) and service delivery plan in place as well. This is where the firm delivers on the value promised.
The overall pricing ecosystem is broken down into three distinct parts:
- Leads and Preparation—This marks the first two points on the pricing journey where you gauge desire for your service (qualified leads) and build faith in the value you’ve defined (preparation). This requires having deeper conversations as you move a lead through the nurture process and up to the point of assigning a value-based price.
- Pricing—This signals the value created and captured. If you’ve done the work at the leads and preparation points, pricing should be a much easier conversation because the prospect already understands the economic value you’ll deliver.
- Project Management and Delivery—At this point, you’ve converted your prospect to a client. This is where the rubber meets the road. It’s the point in the pricing ecosystem where “value” becomes a living reality and where you deliver the value promised during the preparation stage.
With a solid understanding of what a sound pricing ecosystem looks like, KRC partners are better equipped to repair the firm’s broken pricing model.
KRC action items…
As the partners continue to focus on firm improvement, the following list represents the next set of action items to tackle in order to adopt a structured, successful pricing model, including:
- Define a strategy for qualifying leads, including reviewing and cleaning up current leads lists and identifying areas of improvement in the firm’s existing marketing communications program.
- Define a set of ideal client characteristics to help the firm properly vet leads before moving them forward in the pricing ecosystem.
- Map out KRC’s overall pricing ecosystem and identify all steps required to create a structured, repeatable process at each point in the client journey.
- Define a “task force” to help define and consistently monitor the project management and delivery points within the ecosystem. Determine which partner will lead this task force for the foreseeable future.
- Schedule regular all-staff quarterly meetings to update employees on changes to the firm’s pricing ecosystem. This promotes ongoing buy-in and collective support among employees.
Check back regularly to learn how KRC is progressing. In the meantime, feel free to use any of the ideas listed above to help implement a sound pricing ecosystem in your firm.