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Implementing Value Pricing: A Radical Business Model for Professional Firms by Ronald J. Baker

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CHAPTER 14

Value Pricing and Self-Esteem

A man had better overvalue than undervalue himself. Mankind in general will take his own word for his own merit. … [K]now your own value, whatever it may be, and act upon that principle; but take great care to let nobody discover that you do know your own value. Whatever real merit you have, other people will discover; and people always magnify their own discoveries, as they lessen those of others.

—Lord Chesterfield

When Larry Page and Sergey Brin were students at Stanford they developed technology that was designed to search Stanford University’s Web pages, which immediately became popular among the students and faculty. This was 1996, and everyone thought that Yahoo! was the dominant search engine and there could never be another one. Larry and Sergey did not think their technological innovation was the basis for the company they wanted to start, so they put it on the market—at a price of approximately $1 million.

Fortunately for the rest of us, there were no takers. Had they found a buyer, Google probably never would have been born. It is an excellent example of how overpricing can have salutary effects.

Unfortunately, most professionals underprice their intellectual capital. They justify this with a variety of excuses:

  • We do not have enough quality customers.
  • Customers view what we do as a commodity.
  • Customers do not understand the value we provide.
  • Our people do not understand their worth.
  • When customers engage in hardball negotiation tactics, ...

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