Price is NOT the determining factor in your success or otherwise. Most people leave their advisers and go elsewhere because of a poor customer experience rather than a lower-price opportunity! This transcends economic cycles.

I've just completed research of buyers into professional services and 57% of people admit that they have higher "service expectations" than five years ago. They are expecting better quality customer service from their accountants, bankers, lawyers, consultants, financial planners and recruiters.

If that doesn't snap you out of the limited thinking around pricing, consider this:

38% admit they have higher service expectations than they did just one year ago. So, customer service expectations are higher than they were last year.

Your clients perceive there is better service being offered elsewhere than what they are receiving from you currently. Only 40% of the buyers we surveyed believe they are receiving an appropriate level of service. This means that three out of every five of your clients believe they will get better service from one of your competitors.

Forget about competing on price and immediately move to increase customer service, improve communications and develop stronger relationships with your existing clients. The majority of them are reviewing your competitors to determine if they will get better quality service from them.


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Ric Willmot
Improving Organisational Performance
Providing Strategy Consulting & Mentoring

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A sanguine Ric Willmot was interviewed by journalists at the CPA Australia Congress - Canberra in 2009 after his two days of MasterClass presentations. Back in 2009 Ric was very upbeat about the future of Australian business when most pundits were remaining pessimistic. How interesting it is to look back and consider of whom you would rather take note: Ric Willmot or the naysayers.

Pricing is one of the most important keys to the success or otherwise of an enterprise. Yet it is frequently overlooked, understated or just done really poorly. Ric Willmot gives a brief insight into how we can think differently when engaging with prospective customers. At the start of this clip, Ric's client, the CEO of Bradnam's Windows & Doors speaks about the approach of one of his best franchise owners.


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Ric Willmot
Improving Organisational Performance
Providing Strategy Consulting & Mentoring

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Here is a video of Ric live in front of an audience, where in just 60 seconds he brings great clarity to the incorrect thinking of price sensitivity.

Price Versus Value: Pricing Excellence from Ric Willmot.

Ric Willmot
Professional Speaker | Management Consultant | Author

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Warren Buffet (billionaire CEO of Berkshire Hathaway Inc.) gave an interview to Bloomberg in late February 2011 where he explained that he rates businesses on their ability to raise prices and sometimes doesn't even consider the people in charge.

"The single most important decision in evaluating a business is pricing power. If you've got the power to raise prices without losing business to a competitor, you've got a very good business. And, if you have to have a prayer session before raising the price by 10%, then you've got a terrible business."

Here is another example of the smartest people in the world agreeing with me that pricing strategies and ongoing educational development of your internal people around pricing is the key to your organisation's profitability and growth.


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Ric Willmot
Improving Organisational Performance
Providing Strategy Consulting & Mentoring

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There is an enormous amount of myth and mistaken thinking in the professional services arena around pricing and fee structures.

Myth: It's a price sensitive market
Reality: It's a value sensitive market

Myth: Start cheap to enter the market and capture your share
Reality: You have now set the benchmark low and customers will always want you to be that cheap

Myth: The competition will charge less than me and I will lose the business
Reality: Someone will always be able to charge less than you; and if all you do is allow yourself and your clients to focus on price - then you will have no business

Stand out from the crowd, forget about what everyone else is charging and deliver a service to your customers based upon reaching their objectives successfully and attributing both the tangible and intangible values you have brought to the client.

Focus on making the client significantly better because they have you. Bentley, Cartier, Ferrari and other quality brands do not lower prices when times are hard or the economy hiccups. They continue to position themselves in the market to those who appreciate good value. Position yourself and market to quality prospects who will treat you like a peer and respect you for the good work you bring to the table. Then charge appropriately so that you get paid well and the client receives great value.

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Ric Willmot
Improving Organisational Performance
Providing Strategy Consulting & Mentoring

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The Boston Globe newspaper ran a front-page article on October 8th, 2007 entitled: Beat the Clock. Here are some excerpts from that article written by Sacha Pfeiffer.

The comments are particularly relevant if you are questioning whether your income truly reflects the real value, you have delivered to your clients; and if clients are reluctant to consult you for legal advice because of the issue of fees.

I have noted key points through the article and provided my footnotes.

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It has been called the cockroach of the legal world. It has been labeled a "villain" by a justice of the US Supreme Court. Its impact has been described as "corrosive" by the American Bar Association.
 
The target of this vitriol: the billable hour, which is used by most law firms to calculate how much they charge clients, and which detractors say encourages bill-padding, promotes quantity over quality, and forces lawyers - who are typically required to bill 2,000 hours a year in six-minute intervals - onto a speeding treadmill that drives many of them out of the profession.[1]
 
Now a Boston law firm has banned the billable hour, refusing to take clients who insist on paying on an hourly basis. And both the firm and its clients say the alternative works in their favor.
 
Several major law firms have been pressured by large international clients, such as Cisco Systems Inc. and Pitney Bowes Inc., to accept fixed-fee arrangements for certain types of legal work.[2] But the Shepherd Law Group is one of the few firms to voluntarily abandon the billable hour system entirely.
 
Shepherd, a firm that specializes in employment law, charges its clients a flat annual fee or flat price per task. Clients can call the firm as often as they want to discuss legal issues, although some services, such as training and litigation, cost extra. The new approach helps clients determine legal costs in advance and often prevents legal problems from escalating because clients are no longer reluctant to seek advice out of fear of incurring a hefty bill, said Jay Shepherd, the firm's founder.
 
"Hourly billing is wrong and it's anti-client," Shepherd said. "There's a disincentive to be efficient since you get paid more if you take longer to finish a matter - even though the client wants it to be finished as fast and efficiently as possible."
 
The American Bar Association concluded in a 2002 report that hourly billing is at the root of much that is wrong with legal practice: brutal hours, lack of collegiality (since time spent chatting with colleagues is time not spent billing), fraudulent billing, lawyers who intentionally stretch the time it should take to finish a matter, unpredictable costs for clients, little time for friends and family, little time for community service, and a system that rewards lawyers for quantity over quality.
 
"Nobody is happy with it," said Robert E. Hirshon, the former ABA president who commissioned the 2002 report. "The attorneys who are practicing law don't like it. The clients don't like it. And yet everybody seems to believe that they're stuck with it."
 
Law firms did not always bill hourly. For most of their history, lawyers considered the difficulty of a matter and the results obtained when charging clients, and often sent bills for an unitemized dollar amount marked "for services rendered." In the 1950s and 1960s, timekeeping became routine[3] and hourly billing was promoted as a way to increase profits; to make more money, firms could increase hourly rates or increase hours worked.
 
Hirshon, the former ABA president, also acknowledges that the current system is entrenched in law firm culture. Many lawyers benefit handsomely from hourly billing, he noted, especially senior partners whose paychecks are fattened by hours logged by young associates. And some clients are wary of trying a new system, despite being dissatisfied with the existing one.
 
Still, Hirshon said, "clients, especially clients of the megafirms, are saying, 'We have to control these costs, and the only way we're going to control them is with fixed fees.' "
Shepherd, too, thinks change is possible.
"Can it be done? Yes," Shepherd said. "Will it be done? I think other firms will be dragged along kicking and screaming."
 
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When enough groundswell rises, systems change. The ocean swell is gaining momentum; the question is: who will be ready to ride the waves and who will get dumped by the breaker? Those who catch the breaks and surf the face will always be in front of the game. Successful business people are not jelly fish floating aimlessly, at the mercy of the tides and winds. We have propulsive power to not get left behind.

Hourly rates are not what the client buys, as hourly rates only measure inputs, tasks, activities; but not what matters most for the client … results. There is a maximum to how many hours you can work in a day. Fees should be based upon the value delivered.

Deliverables, time and materials are low-value commodities. ‘Perceived value’ by the client is the foundation of professional fees. Ric Willmot has pioneered Value-Based Billing in the professional services arena in Australia. Ric consults to and assists transition legal firms, accountancy firms, financial planning practices, recruitment & HR firms; all around Australia and in New Zealand, Dubai, Jakarta, Kuala Lumpur and the USA.

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[1] These comments are by leading authorities within the profession, not by outside detractors. - R.W.

[2] When organisations such as these are driving their legal advisers to change the fee methodologies, you can be assured that other corporations will take notice and follow suit. – R.W.

[3] The six-minute increment time sheets also form an administrative burden on law firms, which inevitably increases the overhead costs of running the practice. – R.W.


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Ric Willmot
Improving Organisational Performance
Providing Strategy Consulting & Mentoring

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The rising cost of fuel (gasoline) has had a major impact on the transport and logistics industry. Diesel (distallate) is reaching record levels, especially here in Australia. Transport and logistics is critical to business. Nothing much happens in commerce without a truck being involved in some manner, at some time.

A transport operator telephoned me and said he had been referred to me as someone who sees problems differently to most and that he needed my help. "Ric, here are my credit card details, charge me what you will, so we can talk."

He asked, "How do we handle these crippling diesel prices? Our costs are rising such that our margin is almost non-existent! What can we do in our business to cut costs and survive?"

I could almost feel the pain in his voice. "Are there currently any departments within your organisation that are not running lean and should quite easily curb unnecessary expenditure?"
"No. We have cut costs to the bone."
"Then, pass on the increased fuel costs."
"We couldn't possibly do that. Our competitors won't and we will lose business to them."
"You don't have to accept my advice, but here's your decision: pass the operating cost increases on, and yes maybe you will lose some business. Or, take the hit yourself and before long - you will go broke and be out of business all together."

Your competitors should not dictate your pricing policies. They're probably making some really poor choices, so why emulate someone else's bad management?

The transport operator is now a fully-paid member of my Target Mentor Program for the next six months. And, at least I know he will still be around in six months, even though some of his competitors won't.

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Ric Willmot
Improving Organisational Performance
Providing Strategy Consulting & Mentoring

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