Hello and welcome to the profession. And he's podcast, I am Lisa Fischer, senior director with professional pricing society. Today, we will feature Ron Baker with various age Institute, visit various age at www.gross.com. Today's topic of discussion is an upcoming online. Pricing course, entitled introduction to pricing on purpose, creating and capturing value, featuring Ron Baker and His colleague ed class. Hello Ron. Thank you for joining us. Thanks, Lisa. Thrilled to be here.
Great. We're happy to have you and we look forward to all that you're going to share today. Please, why don't you for our listeners introduce yourself and speak about how your career and pricing came to be? Well, I started my life as a CPA in the Big 8, accounting firm. So I'm a recovering CPA. And when I open, when I left the big eight, I open my own practice, and I realized very quickly that the billable hour, cost-plus pricing was a pretty crummy customer. Variance.
So we started to experiment. This was back in 1989 with value pricing in my firm and I was so excited by the results and the customers loved the certainty so much that I started teaching it to my colleagues and then I wrote a book in 1998, while somebody in the PPS Community, read that book and Eric Mitchell got a hold of me and invited me to do a first keynote at a PPS conference. This was back in 2000 and so I got to deliver that keynote and And, of course, from there, the
rest is history. I met all, the pricing Legends, Tom Nagel, Andre Holden and Bob cross and Tim Smith and been with ppps ever since. And in 2006, I published pricing on purpose creating and capturing value. And the, my latest book on pricing is implementing value pricing, which was published in 2011. Awesome. Well we are excited to get this course up and running and get promoted for all of the individuals out, individuals out there, waiting to get some
awesome information. Why don't you tell us a little bit about this course? And why, this topic is so important, Ron. This course is, I did it with my colleague ed class and we do a radio show together and we kind of did it in a little bit different format rather than just, you know, us lecturing. We actually have a discussion about the slides and the Various topic.
So it's a much more informal type program that you'd probably normally get in in a typical webinar and we have found that to be very effective learning tool because we both come from different Industries and and have different experiences. So I think that works really well. But the course is really about the theory of value, you know, creating and capturing value. And we think it's really important to have a clear theory of what value is.
And We cut we kind of go back to the Austrian School of economics and think that value is completely subjective. So value is really a feeling more than it is a number. And so we talked a lot about behavioral economics. And also why Cost Plus pricing is such a sub optimal pricing model and tell me a little bit about in this is kind of All Off Script. If cost-plus pricing is, is not as palatable. Why do you think so many firms still currently use it? It's a great question.
I thought a lot about that. I think first off bad ideas have a long shelf, life, bad ideas can hang around quite a while and especially in Industries or professions and also Cost Plus pricing is easy. Everybody understands it and Great Economist by a guy named Herbert Simon coined, a term called satisfice which is northumbrian term. It means it's combination of sufficient and satisfy.
In other words, we do good, enough business people really aren't out to optimize or maximize profits, they're out to do good enough satisfice and I think that's part of it as well because although cost-plus pricing can certainly be profitable, it's suboptimal because it It is completely silent with respect to Value to the customer. It looks inside of a business and looks at costs and desired profit wishes and it doesn't explain how the real world works. Because if cost-plus pricing was
it was a real theory of value. No business would ever go bankrupt because it's pretty easy to put a price above cost at that's not rocket surgery, so exactly right. So why don't we tell our listeners? What key takeaways? They will learn. From this course and how it will benefit them in their day-to-day roles. Well, we start out by explaining the theory of value and there's been many, many theories about you throughout history, economic history, and even back to
theologians and others. And we kind of go through that and land on the subjective theory of value, which dates back to 1871 the 1874. And then we talked a lot about why businesses need to price the customer and not the product or
the service. If value is indeed, He'd subjective then were pricing is really going as we're talking about pricing customers and in some sectors, this is easier than the easier done than in other sectors, but it's still possible especially in the professional or the service sector. And then we also talked a lot about how behavioral economics influences pricing. That businesses should think of themselves as price Searchers rather than price takers and there's a big difference.
Are we also discussed? There's no such thing as a commodity. I think what one word I'd like to banish from the business? Vocabulary would be the word. Commodity there is no such thing as a commodity. In fact, Lisa told me that was the first keynote presentation I did for PPS. And it was very well received. And then, we actually also talked a little bit about the fairness and ethics of price discrimination, because it's a topic. I'm very, very interested in,
since I teach ethics. And we talked about this Social welfare benefits of price discrimination. And I don't think it's widely understood that price discrimination allows for things like children's pricing and poor countries to get you know, types of drugs that they wouldn't get. So all of those things are combined into into this program. Well, it sounds amazing. I am actually looking forward to
it myself. The takeaways seem like they can run the gamut of Industries. It's not really geared towards one particular but in your opinion what industries and or individuals will benefit the most from this course. Well, when PPS approaches to do this, they kind of wanted us to focus on the Professional Services industry. So accounting and law and advertising Consulting any business. It sells a service or even combine services with their products.
I think will benefit the great thing about a lot of the stuff that had night. Teach is it's all rooted in economics, and economic theory and marketing Theory as well.
But economics, when you when you boil it all down, it's really just about human behavior that you know, there's nobody here but us humans and humans by things and humans, bring their own biases and perceptions of value, and their own, you know, Active biases to making decisions and their own confirmation biases, and all these different things and this is why behavioral economics is so important. So we're just trying to study human behavior here.
And since it is grounded in economic theory, I think any business will pick up lessons from this from this course. That's awesome. And in your opinion, we at PPS do a lot of Live Events as you know, but we also devote a lot of time into Dating content that we can share online in your opinion, talk about some of the benefits and maybe some of the not so good, things about learning online.
Well, I do a lot of both. I do live instruction a lot and I've been doing a lot of webinars because that's just, it seems to be growing at an incredible clip and I'm thrilled to see PPS from doing more and more of these. I think it's great, if you're already an expert or you're already got some knowledge about a topic online. Learning allows you to go deeper. I think it because You can, you can learn at your own pace.
You can stop things, and go back and take notes at your own Leisure and listen, when you, when it's convenient for you. So I think there's an enormous benefits to that. Some of the drawbacks obviously with live instruction, you obviously get that interaction with the audience, you get to network with your peers in the audience and and the instructor. And so it doesn't have some of the rich context of that human interaction. But from a pure learning
standpoint, I think. Be very, very effective. If you are already familiar with the topic and you just want to dive deeper. And so we kind of structured our course with that. In mind, that these people are going to have some knowledge of pricing and we wanted to, we wanted to dive even deeper. Excellent. And I think that's why we kind of focus on both streams of learning, because we still have audiences that prefer online. And then we still have audiences that want the live interaction.
So we're going to keep giving our audiences both and Bring that they will continue to come back to us for all their pricing training. Well Ron is there anything else you'd like to share with? We thank you for joining us. I know now is the time we leave for you to kind of give a little pitch for your business and your company. And we'd love to hear all about what you have going on on your
side. Well, you can contact me, I'm on Twitter at at Ronald Baker, I'm one of the LinkedIn influencer bloggers, so you can follow me on LinkedIn. I have a some hundred articles up there, a lot of them deal with And measuring what matters and and other types of issues surrounding the knowledge economy.
And you can find me also at Vera Sage.com the website you already mentioned, which is the think tank that I run that's got 20 fellows spread out around the world that engage in pricing education or practice it everyday. And then the other thing is I do a radio show every week with my colleague ed class. Who did this course with PBS And you can find all of our shows at the soul of Enterprise.com.
We've been on the air for four years and we've actually had people like Kevin Mitchell on from PPS and Tim Smith and and read Holden, and Bob cross. And, you know, other pricing people. And also, a lot of Behavioral economists, we've had Dan ariely, we've had Rory Sutherland on who is Ki noted for PPS, a couple times I believe. And so it's a very fun show. It does run live at 1 p.m. But you can also find it at iTunes on podcast or wherever you get your podcast.
So again, it's the soul of Enterprise.com. Awesome Ron. Thank you so much for joining us and sharing your Insight. We really enjoy talking with you and hope to have you back again very soon. Visit our website, a professional pricing Society pricing Society.com for additional information on all of our offerings. Also, PPS is headed to Chicago for our 29th annual dual spring pricing workshops and Comforts May first through the fourth, go to our website, to get all the
details. And our speaker line-up is published. As we speak also get social with us on Facebook, and Twitter and our blog pricing Authority.com Twitter is at pricing society and Facebook is the professional pricing Society. We're very active and engaging. We love to hear your thoughts. We typically or Thursday question have engaged with us. So the professional pricing Society has over 15,000 members on our LinkedIn group.
That's another form where individuals from all Industries are sharing knowledge and asking questions. So a great way to find out information and connect with others that are doing the same things that you are and stay tuned for our monthly pricing podcasts where other industry experts join us to share their pricing best practices and knowledge Ron. It was awesome speaking with you and I hope to see you soon in Chicago. Take care. All right.