The Professional's Guide to Value Pricing 2000 - Softcover

Ronald J. Baker

Softcover

ISBN 10: 0156069938 ISBN 13: 9780156069939

Publisher: Harcourt, 2000

Synopsis

Chapters 1 through 5 of the book cover a history of the accounting profession and move into why people buy what they buy, and how much they will pay.

Chapters 6 and 7 challenge the 40-year-old practice of hourly billing.

Chapter 8 looks at price psychology and at why professionals suffer from write-downs.

In Chapters 9 through 13 you will find alternative to the hourly billing method that are superior in obtaining the value for the services provided.

Chapter 14 reinforces the importance of customer service and loyalty. Chapter 15 is about making the transition from a compliance CPA to a consultant.

Chapter 16 discusses the morality of hourly billing vs. Value Pricing, along with some of the ethical quandaries that attorneys are struggling with as they shift away from hourly billing.

In Chapter 17 the critical link between a professional's level of self-esteem and the ability to Value Price is explored.

Chapters 18 and 19 are for those who want to delve deeper into theory and law and cover anti-trust policy and price theory.

Chapter 20 concludes with some thoughts regarding the death of the Almighty Hour and whether or not Value Pricing is a fad that will disappear or a portentous "paradigm shift" that will permanently alter the way in which professionals price their services.

About this title

About the Author

Ronald J. Baker started his accounting career in 1984 with KPMG Peat Marwick's Private Business Advisory Services in San Francisco. Today, in Corte Madera, California, he is a partner in Baker & Barnett, CPAs--the firm he co-founded in 1988. He is a Contributing Editor in PARTNER-TO-PARTNER ADVISORY, published by Harcourt Professional Publishing. He travels across the United States as a frequent speaker at CPA events and conferences and as a consultant to CPA firms on implementing Total CPA Education Foundation and has authored four courses for them: HOW TO BUILD A SUCCESSFUL PRACTICE WITH TOTAL QUALITY SERVICE; THE SIFT FROM HOURLY BILLING TO VALUE PRICING; VALUE PRICING, PART II; and ALTERNATIVES TO THE FEDERAL INCOME TAX. He graduated in 1984 from San Francisco State University with a Bachelor of Science degree in accounting and a minor in economics. He is also a graduate of Disney University. Mr. Baker currently resides in Petaluma, California.

Excerpt. © Reprinted by permission. All rights reserved.

A BRIEF HISTORY OF THE ACCOUNTING PROFESSION

"Nothing stops an organization faster than people who believe that the way they worked yesterday is the best way to work tomorrow. To succeed, not only do your people have to change the way they act, they've got to change the way they think about the past." --John Madonna, Chairman, KPMG International

Italian Fra Luca Pacioli published his SUMMA DE ARITHMETICA GEOMETRIA, PROPORTIONI ET PROPORTIONALITA in 1494, representing the collected knowledge of mathematics at that time. In the portion of the work titled PARTICULARIS DE COMPUTIS ET SCRIPTURIS, he introduced double-entry bookkeeping, a creation for future accountants that was as big as the Arabs' invention of zero for mathematicians. Unfortunately, one could also make the argument that it was significant for being the last revolutionary idea to come from the accounting profession. In INTELLECTUAL CAPITAL, David Wilson, CPA and partner at Ernst & Young, wrote: "It has been 500 years since Pacioli published his seminal work on accounting and we have seen virtually no innovation in the practice of accounting--just more rules--none of which has changed the framework of measurement" (Stewart, 1997:58).

The balance sheet dates from 1868, the income statement from before World War II. Generally Accepted Accounting Principles(GAAP) fit an industrial enterprise, not an intellectual one. Currently, GAAP measure the cost of everything, and know the value of nothing. As Robert K. Elliott pointed out in an essay titled "The Third Wave Breaks on the Shores of Accounting":

[GAAP] focuses on tangible assets, that is, the assets of the industrial revolution. These include inventory and fixed assets: for example, coal, iron, and steam engines. And these assets are stated at cost. Accordingly, we focus on costs, which is the production side, rather than the value created, which is the customer side(Stewart, 1997:58).

ACCOUNTING TODAY

The profession of public accounting as it is known today came into existence in Great Britain in the 1850s with the introduction of the Companies Acts and the Bankruptcy Acts, legislation designed to protect shareholders and promote capital accumulation during the early stages of the Industrial Revolution. In the decades following the American Civil War, British chartered accountants came to the United States to monitor the capital investments of the Old World in the New World.

The city directories of New York, Chicago, and Philadelphia showed an increase in the number of pubic accountants, from 81 in 1884 to 322 in 1889. During the 1890s, the predecessors of at least three of the Big Eight were established, and on April 17, 1896, New York became the first state to pass legislation establishing the title of certified public accountant. By 1899, the New York Exchange had initiated steps to require financial statement reports on a regular basis from listed companies.

After the turn of the century, the Progressive Era ushered in another wave of growth for the pubic accounting profession. This was a natural fit for the public accountant, as the profession gained considerable visibility and recognition through its work in the governmental sector. As the "disinterested expert," the public accountant would command a central role for many of the Progressive reformer's policies: Increased efficiency in government and business, regulation of large businesses and trusts, and the passage of the income tax in order to redistribute and equalize wealth.

The United States' adoption of the income tax, along with the announcement of official accounting standards and guidelines by the Federal Trade Commission and the Federal Reserve Bank, led to an increased demand for accounting services. In the aftermath of the stock market crash of 1929, the most significant legislation was the Securities Act of 1933 and the Securities Exchange Act of 1934, which produced the largest growth in demand for public accounting. Subsequently, the rules promulgated by the American Institute for CPAs were known as ARBs(Accounting Research Bulletins).

Edition details

• Publisher: Harcourt
• Publication date: 2000
• Language: English
• ISBN 10: 0156069938
• ISBN 13: 9780156069939
• Binding: Paperback
• Number of pages: 460