Friday, April 17, 2009

CPA Firm Adopts 'Value Creation' Revenue Model

Oh, brother:
One Kansas accounting firm is attempting to rid itself of the traditional billable-hours revenue model in favor of one that its top executive said is based on the value the client thinks it's getting.

The new revenue model is called "value creation," and it is one Kennedy and Coe has slowly adopted starting more than a year ago and hopes to complete implementation of next year, said Kurt Siemers, the firm's CEO.

"When you talk about pricing you ought to be talking about value," Siemers said. "Pricing is really driven by what the customer thinks (a service) is worth."

Why do I get the sense that there were many meetings held about the adoption of this model, all of them concluding with the hearty endorsement of this new model of creating revenue?

Firms already use the "value creation" revenue model. They do it everyone time they perform a service for a client and bill for it. The client decides upon payment of the bill if they received good value for their money. If so, they stick around; if not, they walk.

Billing is an art, not a science. It's good to spend some time analyzing your billing practices but if it's taking you over a year to implement whatever method you use, well, maybe the problem isn't your billing practices.

But this could be the wave of the future. Firms may be turning to this kind of thing and I may end up eating my words. But for now, I've got services that I need to get done for my clients. That's where a firm's emphasis should be.

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