How to Apply Value Pricing to Bundled Services

Don’t confuse it with value billing.

By Ed Mendlowitz
The CPA Trendlines Practice Doctor

QUESTION: I tried value billing and it didn’t work. I would rather bill my business clients on a fixed fee for my services.

RESPONSE: Actually, you are value pricing when you do the fixed fees. You confused value pricing with value billing. Value pricing is where you sit down with the client and you jointly determine the price before any work is done.

MORE PRACTICE DOCTOR Q&A: 18 Ways to Blow a Partnership Opportunity | 8 Times When Hourly Billing Trumps Value Pricing | 10 Do’s and Don’ts for Making Small Business Clients Happy | 10 (Nearly) Painless Ways to Keep Up to Date with Technology | 23 Reasons Clients Really Need YOU for Taxes | Running an Accounting Business | 14 Ways to Switch to Value Pricing | Pricing, Billing, Costing: Don’t Blame Clients

Value billing is where you try to get an extra payment after the work is done. I believe the best way to determine a fee for recurring services is to set the fee with the client in advance of performing any work. I’ll explain.

Posted on December 8, 2014

Edward Mendlowitz

About the Author

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Edward Mendlowitz, CPA, ABV, PFS, is a partner at Withum, a forward-thinking, technology-driven advisory, and accounting firm. Ed has over 40 years of public accounting experience, is recognized as one of the Top 100 Most Influential People in Accounting by Accounting Today, and is the CPA Trendlines "Practice Doctor."

His latest handbook is 77 Ways to Wow! The Handbook for Small-Business Advisory Services.

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He is a licensed certified public accountant in the states of New Jersey and New York and is accredited by the American Institute of Certified Public Accountants (AICPA) in business valuation (ABV), certified in financial forensics (CFF) and as a personal financial specialist (PFS). Ed is also admitted to practice before the United States Tax Court and has testified as an expert witness in federal and state court regarding business valuations, and twice at the House Ways and Means Committee on tax reform, fairness, and reduction. A graduate of City College of New York, Ed earned his bachelor of business administration degree.

He is a member of the AICPA, the New Jersey Society of Certified Public Accountants (NJSCPA) and the New York State Society of Certified Public Accountants (NYSSCPA). In addition, Ed was a founding partner of Mendlowitz Weitsen, LLP, CPAs, which merged with Withum in 2005. Currently, he serves on the NYSSCPA Estate Planning Committee and was chairman of the committee that planned the NYSSCPA’s 100th Anniversary. The author of 19 books, Ed has also written hundreds of articles for business and professional journals and newsletters.

He is the contributing editor to the Practitioners Publishing Company’s 706/709 Deskbook, and the AICPA’s Management of an Accounting Practice Handbook, Corporate Controller’s Handbook and Wiley’s Handbook on Budgeting and is on the editorial board of Bottom Line/Personal newsletter and the Journal of Accountancy Member Panel on Business Valuation. Appearing regularly on television news programs, Ed has also been quoted in numerous major newspapers and periodicals in the United States. He is the recipient of the Lawler Award for the best article published during 2001 in the Journal of Accountancy.

Ed is a frequent speaker to many professional and business groups, including the AICPA, NJSCPA, NYSSCPA, American Management Association, the National Committee for Monetary Reform, University of Medicine and Dentistry in N.J., and many more. For 11 years, he taught courses on financial analysis, corporate financial policy and theory, monetary and fiscal policy, and managerial accounting in the MBA program at Fairleigh Dickinson University.

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