I was privileged to give a presentation at the The Institute of Practitioners in Advertising publish (IPA) in London in June on Value Pricing. Specifically, I discussed the model Tim Williams and I have been working on, tentatively known as LIVE (Leading Indicators of Value).
Subsequently, the IPA published an article Tim and I wrote on LIVE. I’m happy to report that the advertising profession is making progress converting from cost-plus pricing to Value Pricing. Though we still have a long way to go, and the large agencies are just now beginning to show serious interest, there has been lots of discussion on this topic.
One of the differences between the advertising world and the accounting and legal world is the clients of agencies have an enormous influence on the process. And so far, clients are very interested in moving to a value compensation agreement with their agencies.
That said, the ultimate responsibility still rests with the agencies themselves to make the change. It is not the customer’s job to innovate pricing strategies, it’s the sellers.
We at VeraSage, under the leadership of Tim Williams, look forward to achieving a “tipping point” in the advertising sector of Professional Knowledge Firms, ridding it of the antiquated practice known as hourly billing and cost-plus pricing.