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183 - What makes something valuable? — with Ron Baker

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Apr 6, 2022

Guest

Ron Baker

Ron Baker, a prolific author and educator on value and pricing, delves into the intricacies of value-based pricing versus traditional billing methods. He shares his journey from CPA to thought leader and emphasizes the significance of understanding consumer perceptions of value. The discussion highlights innovative ideas like subscription-based pricing transforming various industries, advocating for professionals to align their services with client needs for enhanced satisfaction and profitability.

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INSIGHT

Subjective Value

Labor theory of value ties value to labor input, but doesn't reflect real-world spending.
True value is subjective, determined by utility to the consumer, not labor.

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ANECDOTE

Diamond vs. Rock

A diamond and a rock found beside it have equal labor value, but vastly different market values.
This illustrates that value is not intrinsic but determined by consumer perception.

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ANECDOTE

Coat vs. Hat

The price of a coat versus a hat reflects consumer value, not manufacturing cost differences.
Consumers' willingness to pay justifies production costs, not the other way around.

Get the Snipd Podcast app to discover more snips from this episode

From Barber's Chair to CPA: A Journey of Passion and Innovation

03:11 • 2min

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Rethinking Value in Pricing Strategies

05:00 • 24min

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Understanding Value Pricing Through Landscaping Choices

28:56 • 5min

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The Importance of Value Conversations in Professional Services

34:02 • 4min

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Creating Value Beyond Pricing

38:17 • 16min

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The Subscription Economy: Transforming Business Models

54:07 • 21min

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Adapting to the Subscription Economy and Engaging with Listeners

01:14:52 • 2min

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Implementing Value Pricing

Ronald J. Baker

The membership economy

Robbie Kellman Baxter

Robbie Kelman Baxter's "The Membership Economy" explores the shift from transactional business models to recurring revenue models based on membership. The book delves into the strategies and tactics for building successful membership businesses, covering topics such as pricing, community building, and customer retention. It provides a framework for understanding the unique challenges and opportunities of this business model, offering practical advice for entrepreneurs and business leaders. Baxter emphasizes the importance of creating value for members and fostering a sense of community to drive long-term success. The book is a valuable resource for anyone looking to build a sustainable and profitable membership-based business.

The Automatic Customer

John Warlow

The Forever Transaction

Robbie Kellman Baxter

Robbie Kelman Baxter's "The Forever Transaction" builds upon the concepts introduced in "The Membership Economy," focusing on creating long-term relationships with customers. The book emphasizes the importance of building trust and loyalty to foster recurring revenue and sustainable growth. It explores strategies for creating a sense of community and belonging among customers, encouraging repeat purchases and referrals. Baxter provides practical advice on how to design products and services that encourage ongoing engagement and loyalty. The book is a valuable resource for businesses seeking to cultivate lasting relationships with their customers and build a resilient business model.

All Marketers Are Liars

Seth Godin

Subscribed

Why the Subscription Model Will Be Your Company's Future—and What to Do About It

Tien Tzuo

Gabe Weisert

In 'Subscribed,' Tien Tzuo explores the transition from product-driven to service-driven businesses, highlighting companies like Netflix and Spotify as pioneers. The book provides insights on how businesses can pivot to recurring revenue models and build lasting customer relationships through subscription services.

Professional's guide to value pricing

Ronald J. Baker

The firm of the future

Ronald J. Baker

Paul Dunn

The Win Without Pitching Manifesto

Blair Enns

Blair Enns's "The Win Without Pitching Manifesto" challenges the traditional sales approach for creative professionals. It emphasizes the importance of clearly defining value and communicating it effectively to potential clients. The book guides professionals on how to position themselves as experts and attract clients who are a good fit. It encourages a shift from pitching to a more consultative sales process, focusing on understanding client needs and presenting solutions that align with those needs. The book's principles can be applied to various creative fields and beyond, helping professionals command higher fees and build sustainable businesses.

Value Pricing 2.0

Conceptual Evolution of Value Pricing

Ronald J. Baker

Value Pricing 2. 0 is an updated approach to value pricing that emphasizes the relationship between firms and clients, similar to subscription models like Netflix or Amazon Prime. It moves away from charging for specific services and instead focuses on providing ongoing access to expertise. This concept is discussed by Ron Baker in various interviews and podcasts but is not a specific book title.

Mind Over Matter

Why Intellectual Capital is the Chief Source of Wealth

Ronald J. Baker

Mind Over Matter: Why Intellectual Capital is the Chief Source of Wealth is a story detailing the triumph of human spirit, imagination, and creativity. It explains what the 'knowledge economy' really means and highlights the importance of intellectual capital as a primary source of wealth. The book is part of Ronald J. Baker's Intellectual Capitalism Series.

Subscription Marketing

Strategies for Nurturing Customers in a World of Churn

Anne Janzer

Subscription Marketing offers insights and strategies for businesses to thrive in the subscription economy by focusing on nurturing customer relationships rather than one-time sales. The book provides updated research, case studies, and practical advice for businesses of all sizes.

Measure What Matters to Customers

Using Key Predictive Indicators

Ronald J. Baker

This book by Ron Baker provides a roadmap for businesses to shift from traditional metrics to Key Predictive Indicators (KPIs) that align with customer values. It emphasizes the importance of focusing on activities that impact customers and offers strategies to enhance profitability by working smarter in the knowledge economy.

Pricing on Purpose

Creating and Capturing Value

Ronald J. Baker

In 'Pricing on Purpose', Ronald J. Baker presents a strategic approach to pricing, emphasizing the importance of understanding customer value and capturing it effectively. The book challenges traditional cost-based pricing methods and offers practical strategies for optimizing pricing in today's knowledge-based economy.

Ron Baker is a writer, speaker, educator, and recovering CPA. He is the author of seven best-selling books, most of which cover economic topics—specifically, value and pricing.

Throughout history, value has always tied itself to labor. These many work hours cost this many dollars, also known as billable hours.

The counter to this method is value-based pricing. This thing costs this many dollars because it is valuable to you.

So, which is correct? Which is fair?

In this episode, Ron and Chris dive deep into value, pricing, and the relationship between the two. Ron shares some great stories that clearly illustrate why value is determined by the utility it provides the consumer.

They also discuss the concept of subscription-based pricing and why that model may find its way into everything from cars to creative services.

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