This article explains an eight-step method for establishing a price, including the now infamous Nienbach model (a nine square thought experiment to aid in setting pricing options).
There is also a sidebar on price psychology.
There are eleven exhibits that accompany the article on the Website version—you’ll find the links at the end of the article.
There are 3 exhibits included in the print version article. The other eight are:
- Disadvantages of hourly billing
- The Five Cs of Value
- Pricing Council and CVO Purpose and Criteria
- Sample Fixed Price Agreement (FPA)
- Explaining the the Sample FPA
- Sample Change Order
- After Action Review for the CVO/Pricing Council
- A Lesson in Value Pricing Ice Cream—From an Accountant!
Once again, I’d like to thank my VeraSage colleagues who helped me with this article, especially Ed Kless (who informs me one of his ancestors actually knew Barron Joseph von Nienbach).
Also, Loanna Overcash, my editor at the Journal of Accountancy. This is the second article she has had the herculean task of getting through peer review, all the while maintaining a great sense of humor in dealing with an incredibly controversial topic, not to mention author. Just wait until the next article, Loanna!
Thank you Mark Koziel, AICPA’s Senior Technical Manager, Specialized Communities—Firm Practice Management/PCPS, for your indefatigable support.
We’d love to hear feedback on what you think of this new approach to pricing.