1 00:00:02,200 --> 00:00:04,300 Hello and welcome to the profession. 2 00:00:05,200 --> 00:00:09,300 And he's podcast, I am Lisa Fischer, senior director with 3 00:00:09,300 --> 00:00:13,400 professional pricing society. Today, we will feature Ron Baker 4 00:00:13,400 --> 00:00:17,100 with various age Institute, visit various age at 5 00:00:17,100 --> 00:00:21,600 www.gross.com. Today's topic of discussion is 6 00:00:21,600 --> 00:00:24,200 an upcoming online. Pricing course, entitled 7 00:00:24,400 --> 00:00:28,000 introduction to pricing on purpose, creating and capturing 8 00:00:28,000 --> 00:00:31,600 value, featuring Ron Baker and His colleague ed class. 9 00:00:31,800 --> 00:00:33,700 Hello Ron. Thank you for joining us. 10 00:00:34,100 --> 00:00:35,600 Thanks, Lisa. Thrilled to be here. 11 00:00:36,900 --> 00:00:38,800 Great. We're happy to have you and we 12 00:00:38,800 --> 00:00:41,000 look forward to all that you're going to share today. 13 00:00:41,300 --> 00:00:44,200 Please, why don't you for our listeners introduce yourself and 14 00:00:44,200 --> 00:00:46,900 speak about how your career and pricing came to be? 15 00:00:48,000 --> 00:00:52,500 Well, I started my life as a CPA in the Big 8, accounting firm. 16 00:00:52,500 --> 00:00:57,800 So I'm a recovering CPA. And when I open, when I left the 17 00:00:57,800 --> 00:01:01,200 big eight, I open my own practice, and I realized very 18 00:01:01,200 --> 00:01:05,099 quickly that the billable hour, cost-plus pricing was a pretty 19 00:01:05,400 --> 00:01:07,200 crummy customer. Variance. 20 00:01:07,600 --> 00:01:11,200 So we started to experiment. This was back in 1989 with value 21 00:01:11,200 --> 00:01:15,300 pricing in my firm and I was so excited by the results and the 22 00:01:15,300 --> 00:01:19,400 customers loved the certainty so much that I started teaching it 23 00:01:19,400 --> 00:01:23,000 to my colleagues and then I wrote a book in 1998, while 24 00:01:23,000 --> 00:01:26,800 somebody in the PPS Community, read that book and Eric Mitchell 25 00:01:26,800 --> 00:01:31,500 got a hold of me and invited me to do a first keynote at a PPS 26 00:01:31,500 --> 00:01:34,800 conference. This was back in 2000 and so I 27 00:01:34,800 --> 00:01:37,900 got to deliver that keynote and And, of course, from there, the 28 00:01:37,900 --> 00:01:40,600 rest is history. I met all, the pricing Legends, 29 00:01:40,600 --> 00:01:45,200 Tom Nagel, Andre Holden and Bob cross and Tim Smith and been 30 00:01:45,200 --> 00:01:50,300 with ppps ever since. And in 2006, I published pricing 31 00:01:50,300 --> 00:01:52,800 on purpose creating and capturing value. 32 00:01:52,800 --> 00:01:55,400 And the, my latest book on pricing is implementing value 33 00:01:55,400 --> 00:01:58,400 pricing, which was published in 2011. 34 00:01:59,900 --> 00:02:02,700 Awesome. Well we are excited to get this 35 00:02:02,700 --> 00:02:05,700 course up and running and get promoted for all of the 36 00:02:05,708 --> 00:02:08,500 individuals out, individuals out there, waiting to get some 37 00:02:08,500 --> 00:02:11,300 awesome information. Why don't you tell us a little 38 00:02:11,300 --> 00:02:14,000 bit about this course? And why, this topic is so 39 00:02:14,000 --> 00:02:17,800 important, Ron. This course is, I did it with my 40 00:02:17,800 --> 00:02:20,700 colleague ed class and we do a radio show together and we kind 41 00:02:20,700 --> 00:02:23,100 of did it in a little bit different format rather than 42 00:02:23,100 --> 00:02:27,900 just, you know, us lecturing. We actually have a discussion 43 00:02:27,900 --> 00:02:30,600 about the slides and the Various topic. 44 00:02:30,600 --> 00:02:35,600 So it's a much more informal type program that you'd probably 45 00:02:35,600 --> 00:02:40,100 normally get in in a typical webinar and we have found that 46 00:02:40,100 --> 00:02:43,300 to be very effective learning tool because we both come from 47 00:02:43,300 --> 00:02:47,000 different Industries and and have different experiences. 48 00:02:47,000 --> 00:02:49,100 So I think that works really well. 49 00:02:49,300 --> 00:02:52,600 But the course is really about the theory of value, you know, 50 00:02:52,600 --> 00:02:55,800 creating and capturing value. And we think it's really 51 00:02:55,800 --> 00:02:59,200 important to have a clear theory of what value is. 52 00:02:59,200 --> 00:03:02,700 And We cut we kind of go back to the Austrian School of economics 53 00:03:02,700 --> 00:03:05,500 and think that value is completely subjective. 54 00:03:05,500 --> 00:03:09,100 So value is really a feeling more than it is a number. 55 00:03:09,400 --> 00:03:12,300 And so we talked a lot about behavioral economics. 56 00:03:12,700 --> 00:03:17,300 And also why Cost Plus pricing is such a sub optimal pricing 57 00:03:17,300 --> 00:03:23,300 model and tell me a little bit about in this is kind of All Off 58 00:03:23,300 --> 00:03:27,300 Script. If cost-plus pricing is, is not 59 00:03:27,300 --> 00:03:29,500 as palatable. Why do you think so many firms 60 00:03:29,500 --> 00:03:32,700 still currently use it? It's a great question. 61 00:03:32,700 --> 00:03:36,400 I thought a lot about that. I think first off bad ideas have 62 00:03:36,400 --> 00:03:40,400 a long shelf, life, bad ideas can hang around quite a while 63 00:03:40,700 --> 00:03:45,200 and especially in Industries or professions and also Cost Plus 64 00:03:45,200 --> 00:03:48,800 pricing is easy. Everybody understands it and 65 00:03:49,300 --> 00:03:52,800 Great Economist by a guy named Herbert Simon coined, a term 66 00:03:52,800 --> 00:03:56,300 called satisfice which is northumbrian term. 67 00:03:56,300 --> 00:04:00,200 It means it's combination of sufficient and satisfy. 68 00:04:00,600 --> 00:04:04,000 In other words, we do good, enough business people really 69 00:04:04,000 --> 00:04:08,000 aren't out to optimize or maximize profits, they're out to 70 00:04:08,000 --> 00:04:12,700 do good enough satisfice and I think that's part of it as well 71 00:04:13,000 --> 00:04:15,800 because although cost-plus pricing can certainly be 72 00:04:15,800 --> 00:04:20,600 profitable, it's suboptimal because it It is completely 73 00:04:20,600 --> 00:04:23,800 silent with respect to Value to the customer. 74 00:04:23,800 --> 00:04:27,400 It looks inside of a business and looks at costs and desired 75 00:04:27,400 --> 00:04:31,200 profit wishes and it doesn't explain how the real world 76 00:04:31,200 --> 00:04:33,500 works. Because if cost-plus pricing was 77 00:04:33,500 --> 00:04:37,100 it was a real theory of value. No business would ever go 78 00:04:37,100 --> 00:04:40,700 bankrupt because it's pretty easy to put a price above cost 79 00:04:40,800 --> 00:04:45,100 at that's not rocket surgery, so exactly right. 80 00:04:45,100 --> 00:04:46,800 So why don't we tell our listeners? 81 00:04:46,800 --> 00:04:49,100 What key takeaways? They will learn. 82 00:04:49,300 --> 00:04:52,100 From this course and how it will benefit them in their day-to-day 83 00:04:52,100 --> 00:04:54,700 roles. Well, we start out by explaining 84 00:04:54,700 --> 00:04:57,500 the theory of value and there's been many, many theories about 85 00:04:57,500 --> 00:05:00,400 you throughout history, economic history, and even back to 86 00:05:00,400 --> 00:05:04,500 theologians and others. And we kind of go through that 87 00:05:04,500 --> 00:05:07,600 and land on the subjective theory of value, which dates 88 00:05:07,600 --> 00:05:11,700 back to 1871 the 1874. And then we talked a lot about 89 00:05:11,700 --> 00:05:16,700 why businesses need to price the customer and not the product or 90 00:05:16,700 --> 00:05:19,400 the service. If value is indeed, He'd 91 00:05:19,400 --> 00:05:24,000 subjective then were pricing is really going as we're talking 92 00:05:24,000 --> 00:05:28,500 about pricing customers and in some sectors, this is easier 93 00:05:28,500 --> 00:05:32,200 than the easier done than in other sectors, but it's still 94 00:05:32,200 --> 00:05:35,000 possible especially in the professional or the service 95 00:05:35,000 --> 00:05:37,600 sector. And then we also talked a lot 96 00:05:37,600 --> 00:05:41,300 about how behavioral economics influences pricing. 97 00:05:41,500 --> 00:05:45,400 That businesses should think of themselves as price Searchers 98 00:05:45,700 --> 00:05:49,000 rather than price takers and there's a big difference. 99 00:05:49,300 --> 00:05:51,600 Are we also discussed? There's no such thing as a 100 00:05:51,600 --> 00:05:54,600 commodity. I think what one word I'd like 101 00:05:54,600 --> 00:05:57,700 to banish from the business? Vocabulary would be the word. 102 00:05:57,700 --> 00:06:00,000 Commodity there is no such thing as a commodity. 103 00:06:00,000 --> 00:06:04,100 In fact, Lisa told me that was the first keynote presentation I 104 00:06:04,100 --> 00:06:07,800 did for PPS. And it was very well received. 105 00:06:07,900 --> 00:06:10,800 And then, we actually also talked a little bit about the 106 00:06:10,800 --> 00:06:14,200 fairness and ethics of price discrimination, because it's a 107 00:06:14,207 --> 00:06:16,200 topic. I'm very, very interested in, 108 00:06:16,200 --> 00:06:19,600 since I teach ethics. And we talked about this Social 109 00:06:19,600 --> 00:06:22,300 welfare benefits of price discrimination. 110 00:06:22,500 --> 00:06:25,800 And I don't think it's widely understood that price 111 00:06:25,800 --> 00:06:29,800 discrimination allows for things like children's pricing and poor 112 00:06:29,800 --> 00:06:33,300 countries to get you know, types of drugs that they wouldn't get. 113 00:06:33,300 --> 00:06:37,700 So all of those things are combined into into this program. 114 00:06:39,000 --> 00:06:42,400 Well, it sounds amazing. I am actually looking forward to 115 00:06:42,400 --> 00:06:46,700 it myself. The takeaways seem like they can 116 00:06:46,700 --> 00:06:50,300 run the gamut of Industries. It's not really geared towards 117 00:06:50,300 --> 00:06:53,900 one particular but in your opinion what industries and or 118 00:06:53,900 --> 00:06:56,400 individuals will benefit the most from this course. 119 00:06:57,300 --> 00:07:00,600 Well, when PPS approaches to do this, they kind of wanted us to 120 00:07:00,600 --> 00:07:04,000 focus on the Professional Services industry. 121 00:07:04,000 --> 00:07:08,000 So accounting and law and advertising Consulting any 122 00:07:08,000 --> 00:07:10,300 business. It sells a service or even 123 00:07:10,300 --> 00:07:13,000 combine services with their products. 124 00:07:13,300 --> 00:07:17,200 I think will benefit the great thing about a lot of the stuff 125 00:07:17,200 --> 00:07:19,400 that had night. Teach is it's all rooted in 126 00:07:19,400 --> 00:07:23,000 economics, and economic theory and marketing Theory as well. 127 00:07:23,500 --> 00:07:26,900 But economics, when you when you boil it all down, it's really 128 00:07:26,900 --> 00:07:30,100 just about human behavior that you know, there's nobody here 129 00:07:30,100 --> 00:07:33,000 but us humans and humans by things and humans, bring their 130 00:07:33,000 --> 00:07:38,000 own biases and perceptions of value, and their own, you know, 131 00:07:38,500 --> 00:07:41,300 Active biases to making decisions and their own 132 00:07:41,300 --> 00:07:44,300 confirmation biases, and all these different things and this 133 00:07:44,300 --> 00:07:48,400 is why behavioral economics is so important. 134 00:07:48,400 --> 00:07:51,700 So we're just trying to study human behavior here. 135 00:07:51,700 --> 00:07:55,200 And since it is grounded in economic theory, I think any 136 00:07:55,200 --> 00:07:59,600 business will pick up lessons from this from this course. 137 00:08:00,400 --> 00:08:03,800 That's awesome. And in your opinion, we at PPS 138 00:08:03,800 --> 00:08:07,500 do a lot of Live Events as you know, but we also devote a lot 139 00:08:07,500 --> 00:08:10,900 of time into Dating content that we can share online in your 140 00:08:10,900 --> 00:08:14,900 opinion, talk about some of the benefits and maybe some of the 141 00:08:14,900 --> 00:08:16,900 not so good, things about learning online. 142 00:08:17,900 --> 00:08:21,000 Well, I do a lot of both. I do live instruction a lot and 143 00:08:21,000 --> 00:08:23,500 I've been doing a lot of webinars because that's just, it 144 00:08:23,500 --> 00:08:26,900 seems to be growing at an incredible clip and I'm thrilled 145 00:08:26,900 --> 00:08:29,300 to see PPS from doing more and more of these. 146 00:08:29,700 --> 00:08:32,600 I think it's great, if you're already an expert or you're 147 00:08:32,600 --> 00:08:35,700 already got some knowledge about a topic online. 148 00:08:35,700 --> 00:08:37,400 Learning allows you to go deeper. 149 00:08:37,600 --> 00:08:40,500 I think it because You can, you can learn at your own pace. 150 00:08:40,500 --> 00:08:44,100 You can stop things, and go back and take notes at your own 151 00:08:44,100 --> 00:08:46,900 Leisure and listen, when you, when it's convenient for you. 152 00:08:46,900 --> 00:08:50,000 So I think there's an enormous benefits to that. 153 00:08:50,100 --> 00:08:52,900 Some of the drawbacks obviously with live instruction, you 154 00:08:52,900 --> 00:08:55,300 obviously get that interaction with the audience, you get to 155 00:08:55,300 --> 00:09:00,100 network with your peers in the audience and and the instructor. 156 00:09:00,100 --> 00:09:04,000 And so it doesn't have some of the rich context of that human 157 00:09:04,000 --> 00:09:07,200 interaction. But from a pure learning 158 00:09:07,200 --> 00:09:10,300 standpoint, I think. Be very, very effective. 159 00:09:10,300 --> 00:09:12,700 If you are already familiar with the topic and you just want to 160 00:09:12,708 --> 00:09:15,100 dive deeper. And so we kind of structured our 161 00:09:15,100 --> 00:09:18,400 course with that. In mind, that these people are 162 00:09:18,400 --> 00:09:22,000 going to have some knowledge of pricing and we wanted to, we 163 00:09:22,000 --> 00:09:25,200 wanted to dive even deeper. Excellent. 164 00:09:25,200 --> 00:09:28,300 And I think that's why we kind of focus on both streams of 165 00:09:28,300 --> 00:09:31,800 learning, because we still have audiences that prefer online. 166 00:09:31,800 --> 00:09:34,700 And then we still have audiences that want the live interaction. 167 00:09:34,700 --> 00:09:38,900 So we're going to keep giving our audiences both and Bring 168 00:09:38,900 --> 00:09:41,600 that they will continue to come back to us for all their pricing 169 00:09:41,600 --> 00:09:44,000 training. Well Ron is there anything else 170 00:09:44,000 --> 00:09:46,900 you'd like to share with? We thank you for joining us. 171 00:09:46,900 --> 00:09:50,300 I know now is the time we leave for you to kind of give a little 172 00:09:50,300 --> 00:09:52,300 pitch for your business and your company. 173 00:09:52,300 --> 00:09:54,500 And we'd love to hear all about what you have going on on your 174 00:09:54,500 --> 00:09:57,300 side. Well, you can contact me, I'm on 175 00:09:57,300 --> 00:10:01,900 Twitter at at Ronald Baker, I'm one of the LinkedIn influencer 176 00:10:01,900 --> 00:10:04,600 bloggers, so you can follow me on LinkedIn. 177 00:10:04,600 --> 00:10:07,900 I have a some hundred articles up there, a lot of them deal 178 00:10:07,900 --> 00:10:14,700 with And measuring what matters and and other types of issues 179 00:10:14,900 --> 00:10:16,700 surrounding the knowledge economy. 180 00:10:17,000 --> 00:10:21,500 And you can find me also at Vera Sage.com the website you already 181 00:10:21,500 --> 00:10:25,000 mentioned, which is the think tank that I run that's got 20 182 00:10:25,000 --> 00:10:28,600 fellows spread out around the world that engage in pricing 183 00:10:28,600 --> 00:10:30,700 education or practice it everyday. 184 00:10:31,100 --> 00:10:34,700 And then the other thing is I do a radio show every week with my 185 00:10:34,700 --> 00:10:38,700 colleague ed class. Who did this course with PBS And 186 00:10:38,700 --> 00:10:43,100 you can find all of our shows at the soul of Enterprise.com. 187 00:10:43,200 --> 00:10:46,800 We've been on the air for four years and we've actually had 188 00:10:46,900 --> 00:10:50,600 people like Kevin Mitchell on from PPS and Tim Smith and and 189 00:10:50,600 --> 00:10:54,100 read Holden, and Bob cross. And, you know, other pricing 190 00:10:54,300 --> 00:10:56,600 people. And also, a lot of Behavioral 191 00:10:56,700 --> 00:10:59,600 economists, we've had Dan ariely, we've had Rory 192 00:10:59,600 --> 00:11:03,700 Sutherland on who is Ki noted for PPS, a couple times I 193 00:11:03,700 --> 00:11:06,800 believe. And so it's a very fun show. 194 00:11:06,800 --> 00:11:10,200 It does run live at 1 p.m. But you can also find it at 195 00:11:10,200 --> 00:11:14,400 iTunes on podcast or wherever you get your podcast. 196 00:11:14,400 --> 00:11:17,600 So again, it's the soul of Enterprise.com. 197 00:11:18,800 --> 00:11:21,200 Awesome Ron. Thank you so much for joining us 198 00:11:21,200 --> 00:11:23,800 and sharing your Insight. We really enjoy talking with you 199 00:11:23,800 --> 00:11:25,800 and hope to have you back again very soon. 200 00:11:26,300 --> 00:11:29,400 Visit our website, a professional pricing Society 201 00:11:29,600 --> 00:11:33,600 pricing Society.com for additional information on all of 202 00:11:33,600 --> 00:11:36,900 our offerings. Also, PPS is headed to Chicago 203 00:11:36,900 --> 00:11:40,800 for our 29th annual dual spring pricing workshops and Comforts 204 00:11:41,000 --> 00:11:44,100 May first through the fourth, go to our website, to get all the 205 00:11:44,100 --> 00:11:46,300 details. And our speaker line-up is 206 00:11:46,300 --> 00:11:49,200 published. As we speak also get social with 207 00:11:49,200 --> 00:11:54,800 us on Facebook, and Twitter and our blog pricing Authority.com 208 00:11:55,000 --> 00:11:58,900 Twitter is at pricing society and Facebook is the professional 209 00:11:58,900 --> 00:12:01,300 pricing Society. We're very active and engaging. 210 00:12:01,300 --> 00:12:06,000 We love to hear your thoughts. We typically or Thursday 211 00:12:06,000 --> 00:12:10,000 question have engaged with us. So the professional pricing 212 00:12:10,000 --> 00:12:13,600 Society has over 15,000 members on our LinkedIn group. 213 00:12:13,600 --> 00:12:17,000 That's another form where individuals from all Industries 214 00:12:17,500 --> 00:12:19,400 are sharing knowledge and asking questions. 215 00:12:19,400 --> 00:12:22,200 So a great way to find out information and connect with 216 00:12:22,200 --> 00:12:25,100 others that are doing the same things that you are and stay 217 00:12:25,100 --> 00:12:28,700 tuned for our monthly pricing podcasts where other industry 218 00:12:28,700 --> 00:12:32,500 experts join us to share their pricing best practices and 219 00:12:32,500 --> 00:12:35,000 knowledge Ron. It was awesome speaking with you 220 00:12:35,000 --> 00:12:37,300 and I hope to see you soon in Chicago. 221 00:12:39,000 --> 00:12:43,400 Take care. All right.