Hello and welcome to the profession.
And he's podcast, I am Lisa Fischer, senior director with
professional pricing society. Today, we will feature Ron Baker
with various age Institute, visit various age at
www.gross.com. Today's topic of discussion is
an upcoming online. Pricing course, entitled
introduction to pricing on purpose, creating and capturing
value, featuring Ron Baker and His colleague ed class.
Hello Ron. Thank you for joining us.
Thanks, Lisa. Thrilled to be here.
Great. We're happy to have you and we
look forward to all that you're going to share today.
Please, why don't you for our listeners introduce yourself and
speak about how your career and pricing came to be?
Well, I started my life as a CPA in the Big 8, accounting firm.
So I'm a recovering CPA. And when I open, when I left the
big eight, I open my own practice, and I realized very
quickly that the billable hour, cost-plus pricing was a pretty
crummy customer. Variance.
So we started to experiment. This was back in 1989 with value
pricing in my firm and I was so excited by the results and the
customers loved the certainty so much that I started teaching it
to my colleagues and then I wrote a book in 1998, while
somebody in the PPS Community, read that book and Eric Mitchell
got a hold of me and invited me to do a first keynote at a PPS
conference. This was back in 2000 and so I
got to deliver that keynote and And, of course, from there, the
rest is history. I met all, the pricing Legends,
Tom Nagel, Andre Holden and Bob cross and Tim Smith and been
with ppps ever since. And in 2006, I published pricing
on purpose creating and capturing value.
And the, my latest book on pricing is implementing value
pricing, which was published in 2011.
Awesome. Well we are excited to get this
course up and running and get promoted for all of the
individuals out, individuals out there, waiting to get some
awesome information. Why don't you tell us a little
bit about this course? And why, this topic is so
important, Ron. This course is, I did it with my
colleague ed class and we do a radio show together and we kind
of did it in a little bit different format rather than
just, you know, us lecturing. We actually have a discussion
about the slides and the Various topic.
So it's a much more informal type program that you'd probably
normally get in in a typical webinar and we have found that
to be very effective learning tool because we both come from
different Industries and and have different experiences.
So I think that works really well.
But the course is really about the theory of value, you know,
creating and capturing value. And we think it's really
important to have a clear theory of what value is.
And We cut we kind of go back to the Austrian School of economics
and think that value is completely subjective.
So value is really a feeling more than it is a number.
And so we talked a lot about behavioral economics.
And also why Cost Plus pricing is such a sub optimal pricing
model and tell me a little bit about in this is kind of All Off
Script. If cost-plus pricing is, is not
as palatable. Why do you think so many firms
still currently use it? It's a great question.
I thought a lot about that. I think first off bad ideas have
a long shelf, life, bad ideas can hang around quite a while
and especially in Industries or professions and also Cost Plus
pricing is easy. Everybody understands it and
Great Economist by a guy named Herbert Simon coined, a term
called satisfice which is northumbrian term.
It means it's combination of sufficient and satisfy.
In other words, we do good, enough business people really
aren't out to optimize or maximize profits, they're out to
do good enough satisfice and I think that's part of it as well
because although cost-plus pricing can certainly be
profitable, it's suboptimal because it It is completely
silent with respect to Value to the customer.
It looks inside of a business and looks at costs and desired
profit wishes and it doesn't explain how the real world
works. Because if cost-plus pricing was
it was a real theory of value. No business would ever go
bankrupt because it's pretty easy to put a price above cost
at that's not rocket surgery, so exactly right.
So why don't we tell our listeners?
What key takeaways? They will learn.
From this course and how it will benefit them in their day-to-day
roles. Well, we start out by explaining
the theory of value and there's been many, many theories about
you throughout history, economic history, and even back to
theologians and others. And we kind of go through that
and land on the subjective theory of value, which dates
back to 1871 the 1874. And then we talked a lot about
why businesses need to price the customer and not the product or
the service. If value is indeed, He'd
subjective then were pricing is really going as we're talking
about pricing customers and in some sectors, this is easier
than the easier done than in other sectors, but it's still
possible especially in the professional or the service
sector. And then we also talked a lot
about how behavioral economics influences pricing.
That businesses should think of themselves as price Searchers
rather than price takers and there's a big difference.
Are we also discussed? There's no such thing as a
commodity. I think what one word I'd like
to banish from the business? Vocabulary would be the word.
Commodity there is no such thing as a commodity.
In fact, Lisa told me that was the first keynote presentation I
did for PPS. And it was very well received.
And then, we actually also talked a little bit about the
fairness and ethics of price discrimination, because it's a
topic. I'm very, very interested in,
since I teach ethics. And we talked about this Social
welfare benefits of price discrimination.
And I don't think it's widely understood that price
discrimination allows for things like children's pricing and poor
countries to get you know, types of drugs that they wouldn't get.
So all of those things are combined into into this program.
Well, it sounds amazing. I am actually looking forward to
it myself. The takeaways seem like they can
run the gamut of Industries. It's not really geared towards
one particular but in your opinion what industries and or
individuals will benefit the most from this course.
Well, when PPS approaches to do this, they kind of wanted us to
focus on the Professional Services industry.
So accounting and law and advertising Consulting any
business. It sells a service or even
combine services with their products.
I think will benefit the great thing about a lot of the stuff
that had night. Teach is it's all rooted in
economics, and economic theory and marketing Theory as well.
But economics, when you when you boil it all down, it's really
just about human behavior that you know, there's nobody here
but us humans and humans by things and humans, bring their
own biases and perceptions of value, and their own, you know,
Active biases to making decisions and their own
confirmation biases, and all these different things and this
is why behavioral economics is so important.
So we're just trying to study human behavior here.
And since it is grounded in economic theory, I think any
business will pick up lessons from this from this course.
That's awesome. And in your opinion, we at PPS
do a lot of Live Events as you know, but we also devote a lot
of time into Dating content that we can share online in your
opinion, talk about some of the benefits and maybe some of the
not so good, things about learning online.
Well, I do a lot of both. I do live instruction a lot and
I've been doing a lot of webinars because that's just, it
seems to be growing at an incredible clip and I'm thrilled
to see PPS from doing more and more of these.
I think it's great, if you're already an expert or you're
already got some knowledge about a topic online.
Learning allows you to go deeper.
I think it because You can, you can learn at your own pace.
You can stop things, and go back and take notes at your own
Leisure and listen, when you, when it's convenient for you.
So I think there's an enormous benefits to that.
Some of the drawbacks obviously with live instruction, you
obviously get that interaction with the audience, you get to
network with your peers in the audience and and the instructor.
And so it doesn't have some of the rich context of that human
interaction. But from a pure learning
standpoint, I think. Be very, very effective.
If you are already familiar with the topic and you just want to
dive deeper. And so we kind of structured our
course with that. In mind, that these people are
going to have some knowledge of pricing and we wanted to, we
wanted to dive even deeper. Excellent.
And I think that's why we kind of focus on both streams of
learning, because we still have audiences that prefer online.
And then we still have audiences that want the live interaction.
So we're going to keep giving our audiences both and Bring
that they will continue to come back to us for all their pricing
training. Well Ron is there anything else
you'd like to share with? We thank you for joining us.
I know now is the time we leave for you to kind of give a little
pitch for your business and your company.
And we'd love to hear all about what you have going on on your
side. Well, you can contact me, I'm on
Twitter at at Ronald Baker, I'm one of the LinkedIn influencer
bloggers, so you can follow me on LinkedIn.
I have a some hundred articles up there, a lot of them deal
with And measuring what matters and and other types of issues
surrounding the knowledge economy.
And you can find me also at Vera Sage.com the website you already
mentioned, which is the think tank that I run that's got 20
fellows spread out around the world that engage in pricing
education or practice it everyday.
And then the other thing is I do a radio show every week with my
colleague ed class. Who did this course with PBS And
you can find all of our shows at the soul of Enterprise.com.
We've been on the air for four years and we've actually had
people like Kevin Mitchell on from PPS and Tim Smith and and
read Holden, and Bob cross. And, you know, other pricing
people. And also, a lot of Behavioral
economists, we've had Dan ariely, we've had Rory
Sutherland on who is Ki noted for PPS, a couple times I
believe. And so it's a very fun show.
It does run live at 1 p.m. But you can also find it at
iTunes on podcast or wherever you get your podcast.
So again, it's the soul of Enterprise.com.
Awesome Ron. Thank you so much for joining us
and sharing your Insight. We really enjoy talking with you
and hope to have you back again very soon.
Visit our website, a professional pricing Society
pricing Society.com for additional information on all of
our offerings. Also, PPS is headed to Chicago
for our 29th annual dual spring pricing workshops and Comforts
May first through the fourth, go to our website, to get all the
details. And our speaker line-up is
published. As we speak also get social with
us on Facebook, and Twitter and our blog pricing Authority.com
Twitter is at pricing society and Facebook is the professional
pricing Society. We're very active and engaging.
We love to hear your thoughts. We typically or Thursday
question have engaged with us. So the professional pricing
Society has over 15,000 members on our LinkedIn group.
That's another form where individuals from all Industries
are sharing knowledge and asking questions.
So a great way to find out information and connect with
others that are doing the same things that you are and stay
tuned for our monthly pricing podcasts where other industry
experts join us to share their pricing best practices and
knowledge Ron. It was awesome speaking with you
and I hope to see you soon in Chicago.
Take care. All right.