By Paul Dunn and Ronald J. Baker
*A Book Review*
by Michael C. Gray
© 2023 by Michael C. Gray
Ronald Baker continues his campaign against the timesheet in Time's Up!
As a "recovering" former CPA, Ron was initially raised in the culture of billing time, including tracking billable hours, realization (billings divided by billable time X billing rate), and "productivity" (chargeable hours divided by total hours).
Ron has also had a lifelong passion for economics, and was puzzled by this approach to valuing professional services and tracking results. He recognized that value does not depend on costs (labor for professional firms.) It lies between the two ears of the customer/client. The customer doesn't care about what the service costs. The customer cares about results, or the benefits received from the work performed.
The previous model that Ron developed to try to capture that value was value pricing. Many professional firms have incorporated some aspects of value pricing in how they charge clients, including getting stock options from clients for whom they don't audit financial statements.
Now Ron is proposing another model, the subscription model, for charging for professional services. Instead of valuing the service, the relationship is valued.
The subscription model is widely used for things like software as a service. The customer pays a monthly fee for access to the software.
We also pay monthly fees for services like cable television and cell phone services.
Some companies are even using a subscription model for physical products. For a monthly fee, Apple Computer will automatically provide the latest iPhone. Porsche offers Porsche Passport, providing and servicing the latest model Porsche automobile for a monthly fee.
Ron suggests offering a conscribed group of services from a professional firm for an annual or monthly fee, with the customer's option to cancel the subscription at any time.
Personally, I think it would be very difficult for a traditional professional services firm to convert to a subscription model. It requires a big mind shift for the team members in the firm and for its customers. It would be much easier to start a new firm, or possibly spin-off a firm, using this concept.
Ron admits that other models for charging professional services might evolve in the future.
The co-author of Time's Up! is Paul Dunn, who was a cofounder of Results Accountants Systems, proselytizing accountants to become business development specialists. In his part of the book, Paul tells how to become the kind of firm customers will want to subscribe to.
Ron Baker and Paul Dunn are cutting-edge thinkers about creating evolutionary and revolutionary professional service practices. It's well worth studying what they have to say.
Buy it at Amazon: Time's Up!: The Subscription Business Model for Professional Firms.
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