Ron Baker is the Founder of VeraSage Institute, dedicated to helping professional knowledge firms bury the billable hour and trash timesheets. He has published seven books around the topics of business and pricing, and also is a radio talk-show host for The Soul of Enterprise.

In this episode, Ron engages in a pricing metric discussion with Mark as they share their insights on cost-plus, hourly pricing, and subscriptions.

Why you have to check out today’s podcast:

• Deep dive into discussions about different pricing metrics, focusing on cost-plus, hourly, and subscriptions
• Find out why putting time in your service and charging by the hour isn’t an ideal way to charge clients
• Understand why providing value is better than charging hourly or using cost-plus pricing

“There's always going to be people and businesses that use cost-plus and other inferior methods like hourly. They're going to be out there, but they're just not where my focus is. My focus is on the other end, trying to help people price and create more value so they can capture more value. I'm not interested in working for people that want to price in an inferior manner, because I think that means they're not providing enough value to you.”

– Ron Baker

Topics Covered:

01:17 – Mark’s five top reasons/times when cost-plus pricing makes sense

04:36 – Reacting to Mark’s five reasons / doing value-based pricing along with cost-plus pricing

08:13 – Pricing in micro and macro level businesses: cost-plus vs value-based

11:37 – Why Ron refuses to pay by hourly billing + how auto mechanics price their work

16:24 – Talking about Ron and Colin’s difference in perspectives

18:04 – How Mark charges clients ‘hourly’ and what Ron has to say about it

23:04 – Discussion around subscription + today’s topic in general: pricing metric

27:25 – Mark’s tax guy + why hourly billing isn’t ideal for Ron

31:17 – On announcing a price increase: Do something nice for your customers

Key Takeaways:

“The billable hour is what I'm crusading against, but on a larger perspective, the billable hour is cost-plus pricing.” – Ron Baker

“At a macro level, there's no way that costs justify price or determine price. Can't be. Otherwise, no business would ever go bankrupt.” – Ron Baker

“If somebody really did abuse you, then why would you ever work with that person?” – Ron Baker

People / Resources Mentioned:

• The Soul of Enterprise:https://www.thesoulofenterprise.com/
• Colin Jasper:https://www.linkedin.com/in/colin-jasper-7a401213/
• Win Keep Grow:https://www.amazon.com/Win-Keep-Grow-Accelerate-Subscription/dp/1631954784
• Time’s Up:https://www.amazon.com/Times-Up-Subscription-Business-Professional/dp/1119893526
• Marco Bertini:https://marcobertini.com/
• The Ends Game:https://marcobertini.com/book/

Connect with Ron Baker:

• LinkedIn:https://www.linkedin.com/in/ronbaker1/

Connect with Mark Stiving:

• LinkedIn:https://www.linkedin.com/in/stiving/
• Email: mark@impactpricing.com