Understanding the Product Pricing Life Cycle

Chart of a product life cycleWhich of the 4 phases do your products fall into? Here's how to tell.

By August J. Aquila
Price It Right

There is an important concept in marketing that provides companies with tremendous insight as to what they can expect for their products or services in the marketplace. It's called the product life cycle and, sooner or later, all products and services will go through the complete cycle. As they do, several external and internal factors change.

MORE: Marketing and the 5 P’s | How to Shift from Production to Marketing Orientation | How Traditional Fee Methods Hurt Firms | 6 Questions for Planning Your Succession | Underperformers Come in Many Shapes and Sizes
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The accounting industry and the services it provides are no different. The figure above displays the life cycle of a typical service or product.
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Pricing Strategies: The Real World vs. The CPA World

Businessman and tablet with the word "pricing" above.7 types and how they work.

By August J. Aquila
Price It Right

Pricing in the real world is much different than in the accounting profession.

MORE: Marketing and the 5 P’s | How to Shift from Production to Marketing Orientation | How Traditional Fee Methods Hurt Firms | 6 Questions for Planning Your Succession | Underperformers Come in Many Shapes and Sizes | 6 Focuses for Managing Partners | 10 Steps to Transitioning to a New MP | What Managing Partners Should Be Doing
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Usually, wholesalers and retailers set their prices by using markups as the product moves through a distribution channel. Producers or manufacturers usually set a list price. Think of the manufacturer’s suggested list price on the window of a new car. Car dealers will use various methods to price the new vehicle.
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Why Pricing Is the Fifth ‘P’ in Marketing Plans

Not 4. That's old thinking.

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By August J. Aquila
Price it Right: Valuing Accounting Services

Forty years ago, in 1977, the landmark U.S. Supreme Court decision in Bates & O'Steen v. State Bar of Arizona, 433 U.S. 350 (1977) changed the accounting profession forever.

MORE: How to Shift from Production to Marketing Orientation | 4 Ways a Production Orientation Can Harm a Firm | Price to Get the Maximum Fee | 7 Issues in Partner Retirement Planning | Is It Time for a Partner Compensation Checkup? | 13 Points of a Good Compensation Plan | 5 Ways to Keep Your Edge | The Toughest Job in the World: Managing an Accounting Practice | How to Become the Firm of Choice
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That decision prompted accountants to pursue a wide range of marketing activities. And, ever since that eventful day, accountants have been struggling with the meaning of marketing and the impact of marketing on their practices.
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The 12-Step Plan for Embracing a Growth Mindset

Stack of cards labeled with question marksWhen the 'production' mindset fails.

By August J. Aquila
Price It Right

There is no quick way to change from a production orientation to a marketing orientation.

MORE: 4 Ways a Production Orientation Can Harm a Firm | Why Choose a Marketplace Orientation? | Why Value Pricing? | Solving Underperforming or Dysfunctional Partners | The 3 Types of Partners You Need | How MPs Can Make a Real Difference
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Firm leaders need to embrace this new orientation and reward partners accordingly. To help you evaluate your firm see the table below.
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4 Ways a Production Orientation Can Harm a Firm

Men doing precision work on a production lineWhat kind of partner is more valuable?

By August J. Aquila

A pure production orientation can have negative consequences for an accounting firm.

MORE: Why Choose a Marketplace Orientation? | How Traditional Fee Methods Hurt Firms | 6 Questions for Planning Your Succession | Underperformers Come in Many Shapes and Sizes | 6 Focuses for Managing Partners | 10 Steps to Transitioning to a New MP | What Managing Partners Should Be Doing
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These consequences include a focus on internal measures, billable hours and technical aspect of tasks, and inhibit the development of a marketing orientation.
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Why Choose a Marketplace Orientation?

Smiling businesswoman offering a handshake5 basic principles to follow.

By August J. Aquila

Let's look at the different focuses or orientations that firms can take toward managing and running their practices and see which ones the traditional pricing methods encourage.

MORE ON GREAT PARTNERSHIPS: How Traditional Fee Methods Hurt Firms | Price to Get the Maximum Fee | 7 Issues in Partner Retirement Planning | Is It Time for a Partner Compensation Checkup? | 13 Points of a Good Compensation Plan | 5 Ways to Keep Your Edge | The Toughest Job in the World: Managing an Accounting Practice | How to Become the Firm of Choice
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Any organization, whether an accounting firm or not, usually tends to have one of four focuses. They are either selling-oriented, product-oriented, production-oriented or marketing-oriented.
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How Traditional Fee Methods Hurt Firms

A road sign depicting falling dollarsRule of Three and cost-plus overlook some key considerations.

By August J. Aquila

The time has come for the accounting professional to rethink the paradigm on which pricing has been based. Let's discuss the traditional methods of price setting and how they can have a negative impact on a firm.

MORE: Price to Get the Maximum Fee | Why Value Pricing? | Solving Underperforming or Dysfunctional Partners | The 3 Types of Partners You Need | How MPs Can Make a Real Difference | 5 Reasons That Leaders Fail | 11 Things All Partners Must Do | Why Partners Need Written Goals | The 6-Step Plan for Transitioning Clients

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