Who Should Set Prices?

As Blair continues to encourage expert practice owners to price the client and not the service, he and David discuss the pros and cons of four levels of pricing authority they should be thinking about within their firm, instead of just assuming pricing responsibility automatically defaults to a specific role or job title.

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“Who Should Set Prices In Your Firm?” written by Blair Enns for WinWithoutPitching.com

Transcript

David C. Baker: I'm David, just to make that clear.

Blair Enns: Today you be David. I like where this is going.

David: I'm on my medication, so I'm still David. I'm interviewing you, Blair, on who should set prices. One little asterisk here is we are giving advice to not the people who sell their services to us, and we're both a little tired of people taking the advice.

Blair: This is a good point.

David: We would like you to set prices very poorly when you are selling something to us, but in general, you know what's so odd? I'm going to let you talk in a minute. Just relax. I got a note from somebody on LinkedIn thanking us both for the work on 2Bobs, and he advises funeral home owners, and I'm thinking-

Blair: Wow.

David: -we have so many people listening that are not in the direct target that you and I specify, which leads me to my question. Then we'll get to your note. You're going to be talking in a minute. Is this pricing thing a problem across all professional services, or is there something unique about the area that you and I serve that makes it more of an issue?

Blair: Do you mean just the general issue of pricing in general, or the specific topic of today, this question of who should set price in the firm?

David: Not so much who should, but like setting low prices and leaving money on the table. Is that unique to the industries that you and I serve, or is it pretty much across professional services? I've just been curious about that.

Blair: I think it's not unique. I think it's common across all services, not just professional services. I often say to our clients, pricing is the lowest hanging fruit on the profit tree, and it's the first place you should look. It's the place where you can do two or three things and start to improve profits more. Certainly, revenue, the top line, and usually profit comes with it.

Although, as we have talked about it before, trying to remember the name of the episode, there are some complexities that get in the way, but bump to the top line just by doing a few things differently on the pricing front should accrue to the bottom line.

David: Everywhere.

Blair: Yes. I don't think enough firms look at pricing.

David: Funerals should be more expensive. No, but there's lots of different elements of the whole pricing discussion, but today we're going to talk more about the who should set prices. This is interesting to me. I've got actually more questions than normal about how this goes. Who should set prices, right?

Blair: Yes.

David: Anything else you want to say about that? That was your cue to speak.

Blair: Are you loving my energy and enthusiasm today? Why, yes, David, I'm glad you brought this up. I think most firm owners don't actually think about this. When I think of the firms that I worked in as a young man and then the firms that I have advised for years, I would say this generally holds true across most of these firms, that the pricing role was never seen as a distinct role unto itself.

It was just assumed that whoever was doing a certain function, pricing tagged along with that function. In the first full-service marketing communication firm I ever worked in, those prices were set by the production manager. In each subsequent agency I worked in, I as the account manager or new business person had the authority to set price, and I probably should not have.

David: Right. I wonder if maybe we started paying attention to price as a reaction to clients pushing prices in the opposite direction with procurement. That's when we started to think more about it. I don't know. That's a new thought to me. We don't think about what we should charge clients very scientifically. We don't think too much about what we should pay our suppliers very scientifically either. Anyway, you're just saying that we don't take this very seriously. Part of the evidence for that is that there isn't a professional pricing person or function.

Blair: Yes. There are businesses that have people whose sole function is pricing, but those tend to be large businesses. There are large professional services firms, design firms, consulting firms that I have worked with that had people dedicated to the function of pricing. One in particular whose job was just a pricer, I think they had worked with Tim Williams and he had put that person in place. Then I've worked with a handful of organizations that had created a pricing council.

Given certain people pricing responsibility in addition to their other responsibilities. Then we've advised a bunch of firms on structuring pricing roles and creating pricing councils as well. I think the default assumption is, oh no, whoever is in this role, whether that role is account manager, consultant, production manager, traffic manager, whatever you call them, what you would call a resourcer. I think that's what you call them.

David: Yes. Right.

Blair: Client-facing personnel, what do you call them?

David: An engaging person, engagement.

Blair: An engagement person?

David: Yes.

Blair: It's one of those two roles that the assumption is that with the role comes the requirement to set price. Usually, it's my team and I bring it up to our clients, ask the question, "Who sets price?" They look at us quizzically like, "Well, it's a person in this role." The times when a client says to us, points out on their own that they have a pricing problem is usually when they're comparing the performance of their engagement people. Their client-facing people, the consultants or the account managers.

They look at what these different people bill or what the gross margin, if they're tracking gross margin. Some might try to track, assign a net profit to not exactly fully net, but some form of net profit to accounts and individuals. Certainly on a gross margin basis in a typical firm with multiple client-facing people, you will see a huge disparity in performance. Skipping ahead a little bit, there are signs in that performance disparity about who should be allowed to set price and who should not.

David: Yes, I know. I'm going to bring up a study I did in a few minutes about that. When you think across sort of adjacent industries, you can see how there's either a function person who does it, a department who does it like at printing firms, or there's an algorithm that does it. If you're buying digital ads, there's no question about the pricing. It's a system, it's algorithm-driven. One of the points you're making about our topic today is that these comments don't apply to those kinds of settings. You're talking about pricing in a customized setting where the difference is very stark.

Blair: Yes. Not every business represented by the audience here would have customized pricing. We talked about this in a recent episode on standardizing versus customizing, where I made the point that you can standardize or customize both your delivery and your pricing. In businesses that customize pricing, that price the client rather than the service, there's the freedom of the consultant or the frontline person. Or anybody in the organization, whoever's setting price, quite frankly, there's the freedom of that person to set price based on whatever variables.

In some businesses, they'll set it based on cost. In more ideal scenarios, they're setting price based on the value to be created. Now we're in the domain of value pricing, but whether it's value pricing or there's some mathematical method and some more rigor to the basis of the price, the individual has some leeway and you just see huge disparities in performance.

David: Which is often why the leeway is taken away.

Blair: Yes. If the listener has productized their services and they are pricing the services, then obviously this doesn't apply. I said in that recent episode on standardizing versus customizing that I believe the most lucrative combination of models is to standardize your delivery into productized services, but continue to customize the price, continue to price the client.

In a business like that, where you're customizing the price, you're pricing the client, not the service. Pricing is an almost invaluable skill. It is so valuable. It is so important to the top and bottom line performance of the firm that's got to be taken seriously. Part of taking the pricing role seriously is getting serious about answering the question, who should set price?

David: Yes. I'm going to ask you in a second to sort of list the four levels of pricing authority, and then we'll dive into the pros and cons of each one. As I was reading through that, I was thinking, "Wow, I'm not sure how I would assign one of these four to specific clients I raised in my head, just privately, because it seems like they bounce around all the time." It's like, if things are going great, price it right, and we don't care if we get it or not. We're feeling our oats about this thing.

It's like we're really good and don't fight with us about this. If you want to go somewhere else to get the work done, fine. Then that very same firm when things are not going great, it's like whatever it takes to get the work because I know this is less than what we should get paid to do it, but it's better than just sitting around. These are four levels. Are you implying that people stick with one generally or do they bounce around like I was wondering?

Blair: No, they really should arrive at the model. It's a model with four levels to be specific, four levels of pricing authority going from the spectrum of fully centralized to fully decentralized. I think as we go through the four levels and then we'll talk about the pros and cons of each after we summarize them, I'd like the listener just to try this on. Find out where you are now and then ask yourself the question, is the way that you are assigning pricing authority, is it the right one for your firm or should you consider a progression to maybe the next level?

David: These four, which I'll ask you to share in just a minute, are in a particular order. As your firm gets more mature, you might be able to climb to the next one. List these four for us. The first is fully centralized. Summarize that one for us.

Blair: Yes. Before I do, I need to talk about attribution. I didn't come up with this model. I read it in one of the many pricing books I own. I flipped through all the pricing books. I couldn't find it anywhere. I just asked ChatGPT who came up with this model. It told me Toby Brown, co-author of the book Law Firm Pricing. I didn't think it was him because I'd never read that book. I emailed Ron Baker. He and I spent hours trying to figure out who originated this model. The LLMs don't seem to know. Toby Brown wouldn't reply to me. For now, we're giving Toby credit, but I'm not sure the true origin.

David: You reserve the right to withdraw it.

Blair: [chuckles] I'm not sure the true origin of this model.

David: You're not giving me a lot of confidence in LLMs at the moment, by the way.

Blair: Yes. It's another story. All right. Four levels of pricing authority. The first one is fully centralized. It is what it sounds. The pricing authority is centralized in a small center, and that center can be as small as one individual, like the production manager in the first agency I ever worked with. She set price. You might consider that person a chief pricing officer, or more likely, there will be some form of small committee, usually known as the pricing council. I think Ron Baker may have invented that term. Maybe not, but let's give Ron credit. He doesn't get enough credit for the pricing influence he's had on me.

David: If it's fully centralized, that shines a spotlight on, it better be the right person.

Blair: Yes.

David: Fully centralized is the first one. Second one is center-led.

Blair: Yes. You still have a center. You have a chief pricing officer or some form of pricing or value council. The center really just sets the guidelines and the strategy, and the individuals or the teams they have discretion in applying the guidelines and the strategy. This centralized pricing authority. Back in my first job, it was Heather Coleman, shout out Heather. I would go to her with the job and she would say, "This number of hours for this person, this number of hours for this person, and then everybody had a rate, and then here's the price, put the price on the estimate, et cetera."

Maybe I had some ability to offer some input, but it was a fully centralized pricing authority. One step down from that is you start to give some discretion to the people on the frontlines like a young, stupid 22-year-old Blair Enns. Where in this case, the production manager, she's setting out guidance for how I am to set price. It's my job to basically follow the guidelines, follow the strategy, follow the guidance, but I did have some discretion. That's center-led.

David: Then center-supported, there's more discretion even than the one you just described.

Blair: Yes. It's just more discretion. As we move away from centralization to the people on the front lines and we give them more discretion, the idea is we have a higher confidence in their ability, probably because they've had some training. There's still information coming from the center, but the chief pricing officer or the pricing or value council, now they're just more like a resource to the individuals on the front line.

It's like, all right, you know what the frameworks are, you know what we're trying to achieve, you know what the benchmarks are that you need to stay above or below. You've had a little bit of training on this, go do it. We're here to answer any questions that you might have.

David: I want to jump in and say, if other people's minds, as they hear this, are sort of going where mine are, they're thinking, okay, a compromise from whatever that center support, that chief pricing officer or the committee or whatever, that the deviation is going to be lower. That's not necessarily the case. The deviation might be higher, right?

Blair: The deviation might be higher as we get further away from centralization? Is that what you're saying?

David: I mean, there's a recommendation, this is what we think it ought to be. If the person on the front lines changes it, it's not always lower. It may be higher.

Blair: Yes. That's a great point.

David: Anyway, I just wanted to correct people's minds about that. It's not always lower when somebody changes it. It could very well be higher. The first fully centralized, center-led, center-supported, and the last one is fully decentralized. That looks like chaos.

Blair: Yes, it does on the surface, doesn't it? When you think about it right, and I think the school of thought here, and again, I don't know if this originates from Toby Brown. I think at least he has put this forward in his work, is this idea that you should actually move from fully centralized to fully decentralized. We'll come back to that. I'm not sure-- I can see the case for it, but I think that you can make the case for it as you're sure the skills are there.

Fully decentralized, each client-facing team member, including a young 22-year-old Blair Enns, sets price independently with minimum guidance or oversight. It would have been ridiculous, when I think of my 23-year-old self, for me to have the authority to set price back then because I didn't have the training, I didn't have the skills, I didn't have the frameworks.

David: These four, again, is your assumption that we're moving up or down in terms of sophistication? Fully centralized, center-led, center-supported, fully decentralized. Is that last stage, if it's implemented well, the most mature or the least mature?

Blair: It's a good question. Here's how I think about it. I start working with the firm, it is pricing chaos, and the first thing I want to do is to find the one or two or three people in the firm who are good at setting price. I want to take pricing responsibility back from everybody. Now this is what I want, it's not necessarily what happens or even what's ideal, but in my mind, I think, okay, as the advisor, clean slate. Let's centralize the authority to a small number of people.

Let's get their skills up. They already have the aptitude for it, they've demonstrated it. Let's work on them. Let's enforce the frameworks and the standards, what always needs to happen, what you never do, et cetera, or what the proposals look like, et cetera. You centralize that, you create the standard, and then now you start to work out, you start to work towards decentralization. I don't know that full decentralization is ever the goal.

I think if you get to full decentralization, I think there are implications on compensation models for those individuals, which have implications on the business model and the culture of the organization. I think fully decentralized pricing is when you basically have an army of independent advisors building their own book of business under your banner. I don't think it's ideal in the typical firm listening to this.

David: It starts out fully decentralized where everybody's doing everything, it's not much of a system. What you want to do is at least centralize it so that we can learn from the people who are better at pricing. Those are two given sort of steps. Then the third step, whether we decentralize it using everything we've learned, that's sort of optional, but you want to centralize it to focus on the people that are better at pricing.

Blair: Yes. Then as you start to decentralize, you move from fully centralized to center-led, where you're starting to give the people in the front line some discretion. You're going to run into the reality that some of these people can't do this and shouldn't do this. It's going to lead you back to maybe going no further than center-led, like you need to sign off on everything they do. They have some discretion, but the centralized pricing authority needs to sign off on everything they do. If it is your ambition to push pricing back to everybody in the front lines, you're going to have to replace some people who can't do this.

David: I was curious about this years ago, and I haven't updated this, but every firm I worked with, which is usually a different firm every week, I described a project sufficiently specific so that somebody could put a price on it. Without seeing each other's work I asked an account manager who was good, at least on the surface, a project manager, somebody internally who didn't interface with clients but was driven by objectivity, and a principal. Those three places, what do you think we should charge for this?

This is across 20 firms, and with very few exceptions, the highest price was the project manager, production manager, who really cared more about profitability and having enough time for the work to be done than they cared about anything else. The middle were the account people, and the principals were the worst, because when they stepped in to sort of kill whatever the system was, it was, we need to get this job.

Blair: Yes, I would have guessed that order. The project manager is easy. They're very pragmatic. They know what it's going to take to get it done.

David: Yes.

Blair: They're not having the conversation where they're delivering the price to the client. That's the account manager, or maybe it's the principal. They're being really pragmatic. They're not being swayed by imagining how that conversation's going. Then the founder or the principal is last, because they're prey to white knight syndrome. I'm going to be the person riding in on the white horse to save the deal, and often that means cutting price.

David: To make payroll next week, too.

Blair: Yes. Right. Okay.

David: The four, fully centralized, center-led, center-supported, and then the fourth is fully decentralized. Give us the pros and cons of these.

Blair: All right, fully centralized. Obviously, the benefit is you have this uniform pricing and control. I said, I like this as the beginning, because I just I'm raising my hand in the air and clenching my fist. It feels like me taking control of pricing. We're going to get it down to the smallest core unit. We're going to implement some systems and some training. We're going to get these people good at it. That's the benefit. It's a uniformity control, and you can get everybody aligned on this. Now, the cons or the costs should jump out too.

The biggest one is bottleneck. Your centralized pricing function, you look at it as a pricing council. Everybody else looks at it like the pricing bottleneck. If you have high deal flow in your firm, you have to make sure that the pricing people have enough capacity to vet the proposals, vet the jobs that are coming through, and also do whatever else it is that they're supposed to be doing. That is a real issue. It does create-- doesn't have to, but it often creates bottlenecks that can do a lot of damage in terms of people's willingness to buy in.

David: I think one of the most insurmountable obstacles to this is the fact that a lot of people on the front lines with clients do not sufficiently record the requirements, the mandates, everything the client is telling them to give somebody, some central pricing authority, the information they need to do a good job. Sometimes when there's AM resistance, which is another con that you've listed here, it's because this forces them to work differently. They now have to pass along more information to somebody else to do the job.

Blair: Yes, which is increasing their workload a little bit. You're giving them more work to do, plus you're adding a bottleneck. It's nice and easy to say, "Hey, let's centralize pricing," but it does come with some drawbacks. Another one that we didn't talk about yet is it's limiting their autonomy, the account manager or the people on the front line, and that leads to resistance. I will point out that some of these people have pricing authority or autonomy and they never should have to begin with. In some cases, you're taking back from people something they shouldn't be doing.

David: Not that makes it any more welcome to somebody that's losing that authority, but there's resistance.

Blair: No, it doesn't matter at all to them.

David: The pros, mainly it's uniform. The cons, there's some resistance and possible bottlenecks for fully centralized. The second is center-led. What are the pros and cons of that?

Blair: Yes, center-led and center-supported, I think these are the ones in the middle. There's just more balance here. A balance is a firm-wide pricing strategy with some local discretion. You achieve some level of consistency, not through enforcement, but through guidelines. Just being clear about guidelines and maybe what things cost and therefore what the minimum price needs to be.

Then the discretion for the person on the front lines is to increase price. It leverages the centralized expertise without being restrictive. The cons, there's still some bureaucracy. Then the biggest one is just confusion over, if I'm the person on the front lines, how much freedom do I have? Really the way I think about it is, you on the front line, you would have freedom to add margin, to increase prices.

David: We're never going to slap your hand for raising it.

Blair: Yes. The centralized authority is essentially setting the bottom line. You have to get at least this. Now go get what you can.

David: Those people on the front line that are interfacing with clients, even if their compensation isn't variable, they love winning. They don't love ripping off clients, but they love charging what the market will bear because they are proud of the work that the firm does. They don't want to be selling stuff too cheap either. There's some weird little reputational thing that happens inside the heads of the people that are on the front line. Even though their compensation isn't tied to it, they really like seeing holes in pricing. At least the ones that are good at it like seeing holes. That's part of your point, I guess.

Blair: Plus they often find themselves in stressful situations where jobs were underpriced and they're under pressure. They're over on the job. I remember this feeling. You feel pretty good about yourself when you put a big price on something and your people actually have the time and resources to do the job and you're not writing off time if you are in fact billing time, which I was early in my career.

David: That's such a great point. I hadn't thought about that. This person that we're describing, their role is to straddle the fence with one foot firmly planted on each side more than any other role at the place. You have to keep the client happy, but they want to give the team the amount of time, just restating what you just said, the amount of time to do good work too. Yes, it's a great point. Any other pros and cons for this middle stuff, the center-led and center-supported?

Blair: Center-supported pros, high AM autonomy, but with experts. I really like center-supported, but I think it's a place that you have to get to by going through center-led and maybe even fully centralized when you're trying to renovate your pricing structure. I like it. High account manager or frontline personnel autonomy, and then they're backed up by people with some expert resources that they don't have. They're able to make quick decisions. You remove the bottlenecks and it encourages voluntary use of training resources and tools. I like that. As somebody who's in the training business, you can't force this stuff on people, right?

David: Yes.

Blair: I like that in center-supported, you provide people with the tools and the training, and then you see who steps up. You get this self-sorting mechanism that's fair. It's one thing to make an assessment of people's performance when nobody's been trained and nobody has the resources. Some people are just better at winging it than others. Some people really benefit from the strict frameworks and structures that don't have to be overly strict. I think there's a lot of pros here.

The cons are, we're still open to inconsistency depending on individual application of the tools and limited oversight of discounts. When you start to get closer to decentralized as we are now, the big thing that you don't want your people doing is cutting price. We're not fully decentralized. We're one step away here at center-supported. I would just have the owner think twice about ability to discount or to price below certain thresholds.

David: Right. These people like autonomy. One thing you can do is set, hey, for this year, every time you sell it higher, we're going to give you that as a credit. You could eat away at that if you enter a situation where you need to give a discount or something, or you could just gamify it a little bit. That's not your advice. That's mine.

Blair: Yes. We haven't talked about incentives because that's not part of this. I really wanted to talk about roles. You want certain behavior, just look at your incentives and craft the incentives to support that behavior. We can talk about that maybe a little bit more in a minute. If we move to fully decentralized, just finishing the pros and the cons, the pro is maximum autonomy and speed. Things get done quickly.

In this environment, you actually have a strong entrepreneurial culture. You're more likely to have people on leveraged compensation plans where there's a variable component to their compensation. Some of that is tied to top-line price or gross margin. You get this more entrepreneurial place and you get tailored solutions for each client, tailored prices for each client. Some people, it's just part of their makeup.

The idea of charging different clients, different prices seems unfair to them. In terms of personality makeup, I'm at the opposite end of the spectrum. It seems grossly unfair to me to charge the same price for a service to different organizations where the value of that service is significantly different across the organizations. That's just a personality thing.

David: You could sort of hang a banner across this one and say this works best when the people doing it are thinking like owners and some element of their pay is sort of like how an owner would be paid. In other words, it's variable. They have more skin in the game and they're more skilled. They might not have entered this phase more skilled, but through the modeling and training and the tools that you gave them, now they're equipped to better. They had the right personality from the beginning. They just didn't understand exactly how it all worked.

Blair: Let's just finish on the cons of decentralized. It's easy to imagine what they are, right, chaos.

David: Yes.

Blair: Every person for themselves. There's little knowledge sharing between individuals or little strategic alignment. Then obviously you can't control or it's very hard to control the discounting or other forms of risk like somebody deciding to put compensation at risk in some sort of performance pay. If you're fully decentralized, you're exposing yourself to that level of risk unless you've got some hard policy lines around that. When you get to the extremes of fully centralized and fully decentralized, there are strong benefits and there are strong trade-offs that you make. I tend to like the two levels in the middle.

David: Right. Summarize this, we've talked about the four layers, the levels, the pros and cons. Where's your thinking on this? How would you summarize it?

Blair: I think for firms that systematically enterprise or over-serve, which is the other side of that, or just struggle with profit generally, I think you should think about doing a roles reset and follow largely what I said, which is have a look at centralizing the function for a little bit. If your firm is smaller, maybe this isn't necessary to go fully centralized, but have a look at centralizing. If you really have a big problem and you have somebody on the team who is great at setting price, you just say for the foreseeable future, you can write up the proposals, you can scope it all out.

This person is going to put the price on it. Then we're going to move away from this as we set some standards and elevate everybody else's skills. That's how I would think about it. I would look at centralizing in the beginning. This is me again, thinking of, I've got a problem firm. We have a pricing slash profit problem and we're going in to solve it. We're going to centralize first and we're going to centralize based on aptitude, not based on title, not based on seniority.

Then we're going to move to center supported when certain targets or thresholds are met, like price, margin, or profit. Then we're going to train everybody on the front lines and we're going to let the top performers rise to the top. Then at some point when the bottom people can't keep up, they may have to be marshaled onto other roles or other organizations. That's how I would think about it.

David: What about involving some pricing screening during the employee hiring process? I've never heard of anybody doing that, but you described the client and given the project and say, "How would you price this? How would you think about pricing this?"

Blair: That's really interesting. Even I hadn't thought about that. Where do what you did in that study where you'd say, "Here's a scenario, here's the client. What price would you put on that?" The approach I'm describing is really renovating the pricing structure of an existing firm with existing personnel. You need to optimize or solve for the current problem with the resources that you have.

Then moving forward, if you're going to have somebody on the front lines, who's got some pricing authority, something short of fully centralized pricing authority. They have at least some input, maybe even fully decentralized. You want to make that part of the hiring criteria. You want them to understand in the application and interview process, what their role and responsibility is in pricing. Then as best you can try to figure out how good they are at it.

As I'm saying that, beyond your example of posing a question, I'm not sure how I would test for this. I think that's exactly what I do. Here's a proposal. There's no price on it. Let me explain the client. Here's a proposal. Maybe it's a three-option proposal, three different ways we can help this client. The prices are missing at the bottom. What do you think they should be? You have to deliver this proposal. What prices do you want to put on it?

David: Even just how they react to the question, I think would be interesting.

Blair: Yes. Do they smile or lean back in horror.

David: Or walk out, yes. You're saying we shouldn't assign pricing to a role. We should assign pricing in the second step of centralizing it. We should assign pricing to people who are good at it. Let's say that you have an account person who's really good at it naturally. Fine. All right. Then you have another account person who's not very good at it, and you give them the framework and the support tools and so on, and they still don't learn it.

My philosophy is, okay, if somebody, even after that help, is not good at pricing and handling objections and growing an account, if that person is in an account management role, then they're probably not good at that role. They shouldn't be in that role. Even if they require training in an account-facing role, do they need to be good at this?

Blair: Yes. This is two parts. There's the act of setting price. Just take 22-year-old Blair. My project manager, Heather, let's say she was value pricing instead of pricing based on cost, which is how we were working, and she's working out. I'm downloading to her the value conversation that I never had. She does her cost. She figures out what it's going to cost, and then she listens to my assessment of the situation.

Then she takes the cost-based price and she triples it. She says, "This is really valuable to this client. This should be a worthwhile investment for them to make." Now she still has to hand that back to me, and I have to go sell it. There's the act of setting the price, and there's the act of communicating the price. If you are poor at the latter, it doesn't matter how good you are at the former.

David: Yes, but see, half of the account managers just lost their jobs. I don't know. I'm just guessing. It's not probably half, but half of them are order-takers who basically let the client dictate the price. You said to start this podcast episode that this is the low-hanging fruit, pricing. If you have an issue at your firm with profitability, this is the easy one to fix.

Now I'm seeing that because I think a lot of people who are setting prices are bad at it, and I don't think even with training they would be good at it. Some of them would be good at it. This is not just a passing thing. This is very fundamental to how your firm operates, how you think about this, hearing this episode.

Blair: I think you might be surprised how little training is required to turn somebody from a bad pricer into an actually okay average pricer.

David: Where can they get that training, by the way?

Blair: [laughter] Well, I'm glad you asked. If the listeners goes back, and I don't remember the episode titles, but when Pricing Creativity came out many years ago, we did at least a couple episodes on various pricing topics, and they could just look through the back catalog and listen. The idea of three-option proposals, it solves so many problems. One simple technique, just putting forward three different options. Let's say you've got a client, let's say you're uncomfortable. You're the junior account person. You're uncomfortable putting this proposal in front of somebody.

You should take solace and comfort in knowing that big expensive price is really just one of three different options that you're putting in front of the client. It's not your job to talk the client into selecting that price. It's your job to present three different ways to do business together or three different engagements at three different price points. It's your job to walk the client through the pros and cons of each and then let the client choose.

When you start structuring your proposals correctly, because you start thinking about the engagement a little bit differently, and you allow yourself to be more creative and expansive in thinking about how you might create value for the client. It aligns in a three-option proposal where you're actually all of a sudden quite comfortable putting this in front of the client, because it's not a take-it-or-leave-it situation, as I've talked about before, where it's your job to talk them into yes.

Your role now changes. You're simply facilitating a discussion and a choice between three legitimate options at different, sometimes dramatically different price points, and you let the client choose. When the proposal is structured and priced properly, you remove the stress of what I alluded to earlier, of the function of communicating the price. You let the framework, the structure, the proposal do the heavy lifting on that front.

David: That's very good. We've gone long, but this is one of those episodes where we just need to let it go long because it was a great discussion. Any last words for us, Blair?

Blair: Just the one point I probably didn't hammer enough that I would double down on is pricing responsibility should not be tied to title or seniority. It really should be tied to aptitude. Some people have an aptitude for this and some don't. Again, those missing the aptitude, I think a little bit of training goes a long way on this front.

I don't want the owner of a firm who's listening to this to think that so-and-so who's been with you for 15 years should keep setting price if they have demonstrated that they're not good at it. Give them the training, give them the resources to get better at it, but everybody, yourself included, should not see pricing as tied to a specific function, or role, or level of seniority necessarily.

David: All right. We'll end on that. Thank you, Blair.

Blair: Thanks, David.