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Index
Cover
Table of Contents
Series page
Half title page
Title page
Copyright page
Dedication
Foreword
Preface
Acknowledgments
About the Author
Part I: A Radical Business Model
CHAPTER 1 The Firm of the Past
CHAPTER 2 The Firm of the Future
The Business Model of the Firm of the Future
Revenue Is Vanity—Profit Is Sanity
Businesses Have Prices, Not Hourly Rates
Why Intellectual Capital Is the Chief Source of Wealth
Negative Intellectual Capital
Why Effectiveness Trumps Efficiency
What, Exactly, Is Productivity?
There’s No Such Thing as Generic “Efficiency”
Where Do Profits Come From?
If Only I Knew Then What I Know Now
Summary and Conclusions
Part II: Foundations of Creating Value
CHAPTER 3 Why Are We in Business?
The Economist’s Definition of Profit
The Marketing Concept and Total Quality Service
Summary and Conclusions
CHAPTER 4 A Tale of Two Theories
The Labor Theory of Value
Karl Marx, False Prophet
The Marginalist Revolution of 1871
Why Are Diamonds More Expensive Than Water?
Wrong Theory, Suboptimal Results
CHAPTER 5 Four Ps and Five Cs
The Five Cs of Value
You Are What You Charge
CHAPTER 6 What People Buy
The Dynamics of Customer Expectations
CHAPTER 7 How People Buy
Relative, Not Absolute, Price Matters
Price Psychology
Search, Experience, and Credence Attributes
Understanding Customer Risk
The Four Ways to Spend Money
CHAPTER 8 Your Firm’s Value Proposition
Moments of Truth
What Is Beyond Total Quality Service?
CHAPTER 9 The Consumer Surplus and Price Discrimination
Price Elasticity
Consumer Surplus
Price Discrimination
Requirements to Price Discriminate
CHAPTER 10 Macro Pricing Strategies
Skim Pricing
Penetration Pricing
Neutral Pricing
Two More Curves for Value
Implications of the Curve
CHAPTER 11 Price the Customer, Not the Service
Ten Factors of Price Sensitivity
CHAPTER 12 There Is No Such Thing as a Commodity
The Perils of Benchmarking
Purging the Commodity Word
CHAPTER 13 Baker’s Law: Bad Customers Drive Out Good Customers
Customer Grading Criteria
The Adaptive Capacity Model
Firing Customers
The Forced Churn
CHAPTER 14 Value Pricing and Self-Esteem
There Is No Standard Price for Intellectual Capital
CHAPTER 15 Ethics, Fairness, and Value Pricing
The Morality of Price Discrimination
Prospect Theory
Is Hourly Billing Ethical?
Part III: The Genesis and Consequences of Hourly Billing and Timesheets
CHAPTER 16 A Brief History of Hourly Billing and Timesheets
The Father of the Billable Hour and Timesheet— in the Legal Profession
Summary and Conclusions
CHAPTER 17 The Deleterious Effects of Hourly Billing
The Advantages of Hourly Billing
What about the Customer?
The Disadvantages of Hourly Billing
Summary and Conclusions
Part IV: What Replaces Hourly Billing and Timesheets
CHAPTER 18 Why Carthage Must Be Destroyed
What, Exactly, Replaces Hourly Billing and Timesheets?
CHAPTER 19 Price-Led Costing Replaces Hourly Billing
Wisdom Is Timeless
Summary and Conclusions
CHAPTER 20 The Wrong Mistakes
The Almighty Hourly Rate
Making the Wrong Mistakes
CHAPTER 21 Who Is in Charge of Value?
The World’s First CVO
Leadership
Attitude
Commitment
Experimentation
Youth
Not Final Thoughts
CHAPTER 22 Measure What Matters to Customers
The McKinsey Maxim
Developing a Theory
Pantometry versus Theory
A Gedanken
CHAPTER 23 Firm-wide Key Predictive Indicators
KPIs for a Professional Knowledge Firm
KPIs Equal Customer Accountability
CHAPTER 24 Knowledge Worker Key Predictive Indicators
A Model for Knowledge Worker Effectiveness
Key Predictive Indicators for Knowledge Workers
CHAPTER 25 After Actions Reviews
We Know More Than We Can Tell
The Economics of Structural Capital
Knowledge Lessons from the U.S. Army
Summary and Conclusions
CHAPTER 26 O’Byrne & Kennedy: A Firm of the Future
Part V: Eight Steps to Implementing Value Pricing
CHAPTER 27 The Eight Steps at a Glance
Three Different Kinds of Problems
Eight Steps to Implementing Value Pricing
CHAPTER 28 Step One: Conversation
The Conversation
Naïve Listening
Focus on Wants, Not Needs
Starting the Conversation
Conversations Lower Asymmetrical Information and Adverse Selection
Questions You Should Ask the Customer
Ordinal Value, Not Cardinal Value
Discussing Risk with the Customer
Summary and Conclusions
CHAPTER 29 Step Two: Pricing the Customer: Questions for the Value Council
Questions to Ask before Establishing a Price
Factors of Price Sensitivity
Pricing Questions
CHAPTER 30 Step Three: Developing and Pricing Options
The Psychology of Price
Seven Generic Customer Segmentation Strategies
Pricing Options
Pricing Complex Projects
FORD—A Model for Consulting
Dipping Your Toe in the Water
Formula for Calculating Reservation Price
Summary and Conclusions
CHAPTER 31 Step Four: Presenting Options to the Customer
Handling Price Objections
Summation: Presenting Your Price to the Customer
CHAPTER 32 Step Five: Customer Selection Codified into the Fixed Price Agreement
Date of the FPA
Professional Services
Unanticipated Services
Service and Price Guarantee
Payment Terms
Revisions to the FPA
Termination Clause
Other Issues Regarding the FPA
CHAPTER 33 Step Six: Proper Project Management
CHAPTER 34 Step Seven: Scope Creep and Change Orders
CHAPTER 35 Step Eight: Pricing After Action Reviews
Part VI: Inflection Point
CHAPTER 36 No One Can Forbid Us the Future
Business Model Innovation
The Diffusion of Theories
Firm of the Future or Firm of the Past?
CHAPTER 37 Declaration of Independence
Bibliography
Index
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