According to Baker, there has been little innovation in the accounting profession since Fra Luca Pacioli’s introduction of double-entry bookkeeping in the 1400s. He also makes the point that the accounting profession is less profitable today than in the early days of the 20th century—before the days of hourly billing. Baker claims—and many would agree—that the CPA profession is in the mature stage of the product lifecycle, if not in its declining stage with respect to traditional services. Baker also provides details concerning recent trends in the industry that support his position, such as consolidation, brand-name recognition, price competition, and increased marketing. The AICPA’s Vision Project shows how the focus has shifted significantly to the customer.

Baker uses his background in economics to explain why people are in business, what people buy and how they buy it, and the economics of human behavior. He painstakingly explains consumer buying habits and how certain industries have capitalized on these habits. These areas are pivotal to the book and prime the reader to see beyond hourly billing, even before Baker analyzes the concept.

Baker breaks down the billable hour and disproves the notion that it is the only option for billing practices. He discusses hourly billing’s advantages and disadvantages—which are far greater in number—and immediately dismisses the short list of advantages with better reasons to not use hourly billing. The book also discusses the effects that hourly billing has had on the number of write-offs. Baker describes fixed-price agreements (FPA), which provide a way for the CPA to inform customers up-front about the fee arrangement and eliminate the possibility of surprise fees or write-offs.

The chapters dealing with value pricing and FPAs are a how-to guide to implementing such agreements. Baker also discusses the advantages and disadvantages of other pricing methods and provides a checklist breaking down a variety of CPA services and suggested pricing methods for each. Any firm that has started to view pricing differently will find this to be a useful reference.

Some CPAs may have a difficult time relating to the theories proposed in the book because Baker suggests viewing pricing externally rather than internally. His methodology is based on providing the public with value rather than internal profitability. Baker also discusses total quality service, consulting, ethics, and the role that self-esteem has played in pricing. The switch from billable hours to value pricing will not be successful if these components aren’t also addressed.

Next, Baker summarizes the history of antitrust law and how it affects pricing. Although the law does not specifically apply to the service industries, it is used as a basis for discussing advanced pricing theories within the open market. In order to recommend different pricing strategies to customers, one must be aware of the legal aspects of pricing. Baker provides adequate information for CPAs to learn more about how price sensitivity affects customers and to analyze customer price sensitivity using an FPA.

The book then discusses timesheets and the shift to a timeless culture. Baker debates with Ric Payne, president and cofounder of Results Accountants’ Systems, on the necessity of timesheets. Baker’s position is that after successfully implementing value pricing and changing performance measures from billable hours to another performance measurement, timesheets can be thrown away. Payne takes a more conservative approach, arguing for the value of timesheets for cost accounting purposes. He maintains that value pricing does not require abandoning cost accounting.

Baker discusses the internal effects of value pricing and preparing a firm for a timeless culture. Once again, he provides powerful tools to assist in the transition by giving the reader key performance indicators that can be implemented to measure performance. Finally, Baker includes an appendix of frequently asked questions, checklists to help firms implement his ideas, suggested reading, references, and a four-hour self-study CPE program.

The 2001 Professional’s Guide to Value Pricing can help the accounting profession in many ways. If we start to put a value on our work and charge reflectively for it, we may be able to—