Subscription Model for Professionals
Professional firms typically bill by the hour, as any accountant or lawyer knows all too well. But, as you’ll discover in this episode, today’s guest argues strongly for implementing a subscription-based model. Meta-consultant and business iconoclast, Ed Kless is the Senior Director of Partner Development and Strategy for Sage in North America and a Senior Fellow at the VeraSage Institute, a think tank dedicated to the elimination of the billable hour. He is also an author, speaker, and co-host of The Soul of Enterprise, a business podcast designed to champion the insight that wealth is created by intellectual capital. As you’ll learn from our conversation, Ed has noticed a significant shift towards the subscription-based business model, where you have control over how you price the relationship you have with your customer. In this candid and thought-provoking discussion, Ed shares his expertise and advice when it comes to subscription-based pricing models for professional knowledge firms and best practices for firms looking to transition to this approach. We also touch on the difference between a client and a customer, the notion of serial transformations, and why Ed believes that pricing is an art, not a science. This episode will challenge the way you think about pricing and encourage you to consider the value proposition of a subscription-based model.
Professional firms typically bill by the hour, as any accountant or lawyer knows all too well. But, as you’ll discover in this episode, today’s guest argues strongly for implementing a subscription-based model.
Meta-consultant and business iconoclast, Ed Kless is the Senior Director of Partner Development and Strategy for Sage in North America and a Senior Fellow at the VeraSage Institute, a think tank dedicated to the elimination of the billable hour. He is also an author, speaker, and co-host of The Soul of Enterprise, a business podcast designed to champion the insight that wealth is created by intellectual capital.
As you’ll learn from our conversation, Ed has noticed a significant shift towards the subscription-based business model, where you have control over how you price the relationship you have with your customer. In this candid and thought-provoking discussion, Ed shares his expertise and advice when it comes to subscription-based pricing models for professional knowledge firms and best practices for firms looking to transition to this approach. We also touch on the difference between a client and a customer, the notion of serial transformations, and why Ed believes that pricing is an art, not a science. This episode will challenge the way you think about pricing and encourage you to consider the value proposition of a subscription-based model.
Key Points From This Episode
- Ed shares some insight into his role at Sage, as well as his ‘why.’
- A look at why he believes that professional firms sell knowledge, not service.
- Why the business model that best serves this transfer or access to knowledge is not the hour.
- An understanding of the difference between clients and customers.
- The value proposition of a subscription-based model and how it serves customers better.
- Defining subscription-based pricing and what Ed calls ‘serial transformations.’
- The Disney concept of ‘plussing’ and the mindset shift that comes with subscription models.
- Ed debunks some common misconceptions about subscription models.
- What Ed means when he says that subscriptions should be frictionless.
- Ed’s belief that pricing is an art, not a science, and a look at his ‘ensurance’ model.
- Learnings from one of the biggest subscription success stories that Ed has seen.
- Where to start educating yourself, including Ed’s recommended reads.
Ed Kless on LinkedIn
Ed Kless on Twitter
The Soul of Enterprise (TSOE)
TSOE Episode 296: Subscription Pricing at Summit CPA — Jody Grunden
Managing the Professional Service Firm
[00:00:01] ANNOUNCER: Welcome to Branch Out, a Connection Builder’s podcast. Helping middle-market professionals connect, grow and excel in their careers. Through a series of conversations with leading professionals, we share stories and insights to take your career to the next level. A successful career begins with meaningful connections.
[00:00:22] AD: Hey, everyone. Welcome to Branch Out. I’m your host, Alex Drost. Today, we welcome Ed Kless, Senior Director of partner development and strategy at Sage. He is also the host of The Soul of Enterprise and Sage Advice Podcasts. Ed and I discussed subscription-based service models for professionals and best practices for firms looking to transition to this approach. I hope you all enjoy!
[00:00:45] ANNOUNCER: Connect and grow your network. We are on LinkedIn. Search for Connection Builders.
[00:00:53] AD: Ed, welcome to the Branch Out Podcast. Excited to have you here today.
[00:00:55] EK: My pleasure, Alex. Thanks for having me.
[00:00:57] AD: Why don’t we start off and just share a little bit about yourself, your background and what you do today for our listeners.
[00:01:02] EK: I have the best job in the world. I work for Sage software. My job is to actually help the people who either resell or sell or recommend our products make their businesses better. I’m not transactional in any way. I’m not how much you’re going to sell for me this month, this quarter, this year. I’m about helping them make their businesses better. I have, in a sense, it’s almost like having an academic job within a business, because what I think about every day is how do I help these folks do their job better? Which is a direct outgrowth of my personal why, where I think many listeners are probably familiar with the Simon Sinek ‘why’. Why do you do what you do?
Upon seeing that video, almost 10 years ago, I got serious about it and tried to reflect on what is my why. My why is: I believe that entrepreneurs continue the work of creation. I don’t care. Whatever creation thing you’ve got going works for me, whether it’s an explosion out of nothing, that’s 13.7 billion years ago, a small garden and six days of work and one day of rest, coming in on the back of a turtle. It doesn’t matter to me what that creation story is, but entrepreneurs continue the work of creation. I’m excited to, every day, be able to do that for Sage and for the partners that I serve. It’s a great gig. It’s a great gig.
[00:02:22] AD: That’s really awesome. Who are the primary folks that you’re working with? Just to give our listeners a sense.
[00:02:27] EK: Sure. They’re on the referral side, the people who refer our products. It would be accountants and bookkeepers, even to a certain extent, small business consultants. Then on the midmarket side, it would be the partners who sell Sage Intacct or Sage 100, Sage 300 in those areas, then not only resell the software, but implemented at the customer’s organization as well.
[00:02:48] AD: You’re primarily working with some level of consultant professional service provider. Is that fair to say?
[00:02:55] EK: Yeah. I would say professional firms would be a good way to short handle it.
[00:02:58] AD: Okay, awesome. I’m saying that I’m asking a little bit of leading questions. [Inaudible 00:03:01] and talking to the listeners for a minute. Ed and I actually met out in Las Vegas a number of weeks, months ago at this point. I was watching a presentation that Ed was giving at the AICPA Engage Conference. It was really focused on subscription-based billing, subscription-based pricing models for CPAs, in that case, but really for professional services as a whole. I think much of it is applicable. That’s really what I want to dive into.
I guess, maybe my first question to you – and this goes back to – you’re very fortunate to work in a role where your job is to help those folks think about how to run their business better. One of the things that has become very clear to you along the way, it sounds like, is the opportunity and the value proposition of a subscription-based model. Can you just share a little bit more about that and then peel it back a little bit?
[00:03:49] EK: Yes, I can. I want to back up just a quick second on something and pick up on something that you said and why – and even in the language that we just used. I say, professional firms and then you added in professional service firms. I think one of the problems is the word service, because I think, that far too often people who are in what I’ll call professional firms believe that that what they’re selling is service, but they’re not. Let’s talk about the evolution of the notion of service, right? What a service firm is. We all understand what a product is, people who are buying a product. Apple sells products, right? Then, they have services too, but for the most part, they’re selling actual products, it’s physical in nature.
The next level would be the service organization. Now a service organization is a hotel, is an airline, is package delivery. They sell a service, getting you from A to B, a room at a hotel, getting the package where it needs to be on time, that kind of thing. But what, primarily, I think most professional firms sell is not actually service, because in a service organization, you still have to go to the physical location in order to provide the service. Pilots still have to go to the airport and fly the planes. You still have to go – McDonald’s really can be considered a service company, you have to go to the food service. You have to go to the McDonald’s to serve.
Well, in a knowledge organization, and Peter Drucker coined the term “Knowledge Worker” in I believe, the late 50s. One of the things I think is important about knowledge is that knowledge is taken with the person who has it. Our brain matter is what causes the knowledge. So, what I believe that most professionals, as we think of them in this sector that we’re talking about, sell is not service, but access to or transfer of knowledge. If you buy into that premise, that foundational idea, and that it’s different from service, well, then it requires looking at things significantly differently. It requires a new business model. The business model that best serves this transfer or access to knowledge is not the hour. It’s actually insane, when you think about it.
[00:05:56] AD: It is.
[00:05:56] EK: Because to purchase knowledge by the hour or even measure knowledge by the hour is akin to putting a ruler into a turkey on Thanksgiving to try to judge the doneness of it. Well, what is it? Four inches. It’s the wrong measure. It’s completely – four inches, it doesn’t matter. You’re using the wrong measurement and, in some cases, the metric and the hour is that metric. Who cares if it’s one hour or 10 minutes? What I want is the knowledge. That’s what I want and whether that is 10 minutes, 10 hours, or 10 days, that’s what the customer is really purchasing.
Because of that, it requires a new business model, because of that, that leads, I think, into what your original question was, and sorry to give all that background about it, is this notion of the subscription model for pricing is a far superior model for professional knowledge firms. So if you want to use an adjective in between professional and firms, knowledge is the way to go.
[00:06:53] AD: I like that. I want to come back in a moment and dig into subscriptions for a second. I appreciate you going down and explaining that, because I think, that is a really insightful way of looking at it. There was another very insightful statement you made when I listened to your presentation. It was the differentiation between clients and customers. Again, as professional knowledge workers, professional service providers, as I think many people think of themselves, that the word is always client. It’s always, I’m serving a client. I understand where that came from some of the meaning in many ways, but I’d love to hear your thoughts on that and peel it back the way that I heard you do this before.
[00:07:29] EK: Sure. The quick backstory on that is, and I won’t go into details, but my dad was a Latin teacher. He taught Latin part time. So, in my household, it was fairly common to talk about the origin of words, the etymology of words. I’ll always remember when we talked about the word mortgage, which is a concatenation of two Latin words mort and gage. Mort everyone recognizes his death, but gage is pledge. A mortgage is a death pledge. So it makes total sense once you understand the history of the word.
But the word client is also originally from Latin. It goes back to the Roman days where the lawyers in ancient Rome had these clients. The word client means one who leans, they were a leaner. In fact, the words incline, decline, recline, all come from that same Latin root. In those words, we clearly see the hypotenuse of the triangle, so to speak, the leaning that’s taking place in those. The client was somebody who was leaning and they needed to be fixed, they needed to be propped up and straightened up and realigned back into alignment. I think, in fact, social work still continues to this day to have that same patron benefactor thing, right? Social workers have clients. It’s a great unwashed thing. We have to fix them. We have to fix them in some way.
I think we’ve progressed beyond that in professional knowledge firms. We’re not just fixing them, although there’s still a lot of work out there that’s about fixing, make sure that people’s books are up to snuff, etc. But what we’re really looking for now is, instead of clients, we’re looking for customers. Customer is an Anglo-Saxon word. It means one whose custom it is. When people would come into town, it was their custom to come into your store. That’s I think the type of relationship that we want to begin to define with those that we serve right now, is this one of, it’s not we fix you when you’re broken and we wait for you to be broken in order to engage.
No. It’s we want it to be the custom to be engaged with this person, more about the longer term relationship rather than the individual transaction. One of the ways that subscription serves that is that subscriptions really are about a set of serial transformations, where what we’re doing is we’re making this customer better with each interaction that we have with them. It’s not just about fixing them when they’re broken, but how can we even do things for them that they don’t even know are necessary? Or that they have some inkling of, but we want to help them make that transition.
[00:10:00] ANNOUNCER: This is Branch Out, a Connection Builder’s Podcast.
[00:10:08] AD: You said serial transformations.
[00:10:11] EK: Yes.
[00:10:11] AD: One after another, right? That’s the premise of making a subscription approach work for a knowledge firm. Talk a little bit more about that. When you think about that, what does that mean? How have you seen that come into play for those folks that you’ve helped think through this?
[00:10:26] EK: Sure. This is interesting, because it’s only been in the last week that some of this language has involved at a radio show with Ron Baker. He’s the co-host, and we have conversations all the time. It was only in our last episode that we released last Friday that we’ve stumbled across our first attempt at a working definition of what subscription-based pricing model is. I still have to read it too, because I haven’t committed to memory, but is –
[00:10:51] AD: We’re getting this –
[00:10:52] EK: Yeah, it is. This is brand new stuff. It even evolved since the AICPA, but a subscription business model is a periodic recurring payments for ever increasing value and serial transformations. I’ll say that one more time. It’s periodic recurring payments. Recurring as supposed to re-occurring and we can talk about that if you want. Periodic recurring payment for ever increasing value and serial transformations, so it’s not just about re-occurring revenue, meaning stuff that, well I do your tax return this year, and then I do your tax return next year, and I do your tax return next year. That’s re-occurring.
Recurring is, okay, we’re not only doing your tax return, but we’re doing all of this other stuff that’s making your life better. I’m not just talking about tax planning here. I’m talking about, “Oh, we know that your kid is turning 18-years-old this year, 17-years-old this year. We’re going to help you fill out or to give you the information for your financial aid form.” You don’t even have to ask us, we just know that that’s how old they are now, right? Ever increasing provision of value and those serial transformations, that transformation of perhaps going from someone who’s got a kid that is going from high school to college, and now you’re becoming an empty nester. That’s an example of these transformations that we’re helping people with in their lives, not just about what can we do from an accounting perspective.
[00:12:18] AD: If I’m hearing it right. I think, it’s so much that this is around the mindset, the way of thinking about it, and the way of doing business and understanding that the mentality that I think you’re advocating for is one in which the focus is about continually adding value, continually looking for ways to be, if you will, ahead of the curve in terms of what the client needs in driving that value forward. Then, ultimately, the byproduct of that is you build a relationship in which you can bill in such that it is, it’s recurring, continuous payments behind it.
Again, focusing on the work side of it, this is about thinking ahead and looking for ways to drive value that’s more than just solve the one-off challenge or the one-off requirement once a year or once a quarter or whatever it might be, and rather looking how to create a continuous value add circle. Is that a fair way to look at it?
[00:13:09] EK: Yeah. That’s a fair way to look at it. I mean, think of it in terms of – you can do some research on this and the term is out there, but Disney has this concept called plussing. Disney, they talk about plussing the experience. What is it that you’re doing to plus the experience that you have with those you serve? That’s what we want to do. When we talk about subscription, and here’s a quick example of it. Now, it’s a subscription about a product, which makes it even that much more interesting.
Porsche has a thing, this thing called the Porsche Drive program now. Where you subscribe not to a Porsche, in other words, it’s not a lease. You don’t subscribe to a Porsche, you subscribe to Porsche. You subscribe to the company. They will change out whatever model you want. If you want to drive a Cheyenne on the weekends and the Boxer during the week, you can do that. They’ll make that happen for you. You are subscribing to the company and to the experience, not to the car.
[00:14:08] AD: It’s the mentality shift, it’s back to, I’m not just getting a car, in the example used, I’m not just getting a car, I’m getting the experience of having the vehicle I want and it’s so much more than that, right? Again, back to bringing it back to the professional knowledge worker, what the objective here is to maybe reframe and reposition how you’re communicating to clients and how you’re working with client –
[00:14:31] EK: Customers.
[00:14:32] AD: Customers, sorry. Working with customers to really focus on what they’re subscribing to, is you in the value you drive, however that may be defined, but it’s not just the one-off, it’s not the single solution. It’s not the single product. It is the continual value that’s being driven because they’re subscribing to you, to your firm, to your organization.
[00:14:55] EK: Correct. Most often that’s around the phrase “peace of mind.” What most of your customers I think will subscribe to in professional firms is peace of mind. They don’t want to have to worry about it, just handle it. If you can handle it, you just do. That’s the way it’s supposed to work.
[00:15:11] AD: Assuming you do that, I like the peace of mind. I think it’s a really good way to frame it. If you have a solution that you feel like that is you have peace of mind over, you are comfortable and confident knowing that it’s being accomplished in the right way, and that you don’t have to worry about it, why would you change anything? That is the perfect reoccurring type model.
[00:15:32] EK: Yeah. Yep, yep, yep.
[00:15:33] AD: Now, let me turn the tables for on this just a minute. I’m sure you’ve seen pushback. I’m sure you’ve heard people say, “Well, there’s no way we could do that,” or “That’s just so different than how it’s done.” What are the common pushbacks do you hear? What are the ways to help someone that might be listening and saying, “Well, yeah. That’s great, but that will never work for us?” How do you help think through some of that?
[00:15:51] EK: There’s a couple of things, probably two major pushbacks and they’re related. One is, let’s call it the one-off, the one-off situation. You have a customer that comes to you that says, alright, if you’re an accounting firm, let’s say, “We need to sell our business, I’d like you to help me to do that.” So, that’s the “one-off” and, in the past, people say, “Well I can’t have them subscribe to us, because if they subscribe to us, then we’re going to give away all that work.” Well, first of all, you’re misunderstanding what the subscription is about then, because the subscription is not about just taking your current price and dividing it by 12. That’s not what it’s about at all.
If you’re doing that, you’re doing it wrong, because it’s about offering this continuously increasing value for a higher price. In fact, sometimes, my rule of thumb is to think that you’re probably going to have three to four times the pricing power that you have now, but half the customers, because you’re not going to see – you’re not going to be able to – if you have a firm, let’s say has 100 customers, right now, and you moved to this model, I would say try to move only 50 of them to the model, but at a significantly higher price.
[00:16:53] AD: If you move 50 of them to this model at double the price, your net effect is nothing and with less work.
[00:16:59] EK: That’s right. I’m saying three to 4x, which is work less, make more, actually.
[00:17:03] AD: Yeah, absolutely.
[00:17:06] EK: That’s the even better part, but things that should be included. Well, first of all, if you’re doing the pricing that way and then somebody comes to you to say, “I’m going to sell my business,” here’s the thing. Are you the right person to help them sell their business? Because if the answer is yes to that. Well, then you include it. If you have experience doing that and it falls within you as an organization to be able to handle that you’re covered under the canons of the profession by saying it, we are going to give that customer due care, because you have the capability to do it. If you do one assist with selling a business every decade, you shouldn’t do it.
[00:17:41] AD: Yeah, yeah. Don’t take it just to take it.
[00:17:43] EK: You should say, “I will be your quarterback. I will find you someone who will help you do this and you’re going to have to pay them separate, but I don’t have the capability of doing that.” I think it’s what it’s really important here is to understand that what you should draw the box around is, this is the thing that I am extraordinarily capable of doing. Now, I might be constantly adding to that offering and increasing your skillset and knowledge set. Yes. But what is it that you, if you can handle it, you do it for the customer. Period. End of story. So the pushback that I often get is this whole, what about the one-off?
The other one that we often get is when we say, “What we really want you to do is say make these monthly payments, but it’s only a 30-day commitment.” What we don’t want to see is, oh, well, they have to commit for a year. No, they don’t have to commit for a year. We want it to be as frictionless as possible. Easy on, easy off. By the way, this goes both ways. If you find that there is a customer who you’ve on boarded and you find is not really a good fit for a variety of reasons could be that you really can’t serve them properly or they could be quote taking advantage of you, then you can say, “Look, this is not, your gone, too.”
[00:18:52] AD: You’re saying, why not ask for a one-year commitment. I hear the easy on easy off. Well, is that really driving behind that? Can you just talk a little bit more about that?
[00:19:01] EK: I think the important notions of subscription, is that we want it to be frictionless. No friction on or off. Putting a cancel button upfront and saying you can cancel at any time with 30-day’s notice is the equivalent of offering a guarantee, a guarantee of your value. If we can’t provide you value in the first 30 days, you’re going to quit and you probably should.
[00:19:28] AD: It makes it easier to get the customer across that finish line oftentimes, but it also to your point, it’s really driving back to it. If you’re truly adding value, if it truly makes sense and if your goal is not to get as many customers as possible, but to get as many of the right customers as possible, then that one-year commitment is doing nothing but setting yourself up for the potential of getting the wrong customer that you’re now stuck with for the next nine months as you get 90 days in and realize this isn’t going to work and you’ve got to figure out how to get out of that or deal with it for the next nine months, right?
[00:20:01] EK: That’s correct. This is research that goes back decades. I mean, David Maister, who is one of the originals, and he wrote about Professional Service Firms, by the way. He’s one of the coiners of that term, Professional Service Firm. This continues to this day. There’s plenty of professionals out there who think that 50 percent of the work they do is boring, they hate it, and 50 percent of the customers that they serve, they don’t like, particularly.
[00:20:25] AD: But they just do it.
[00:20:26] EK: They just do it.
[00:20:27] AD: They just keep doing it for some silly reasons.
[00:20:29] EK: To me, that is not a great existence, to say that 50 percent of the work I do is boring and for 50 percent of people that I don’t particularly like all that well.
[00:20:36] AD: Yeah. What you’re, again, really advocating for behind all of this, if done right. It really allows you to eliminate that to focus on what you do enjoy doing, what you are good at, where you do have unique value proposition in, and focusing your time and effort in and around that and finding the right customers to work with that support that model, versus the take everything that’s available, do it all just because someone asked you. A little bit more of a scarcity-type mindset in that way of just focusing on everything you could possibly get. Which I think, unfortunately, is how a lot of firms at least historically run. I see more and more shifting, but that tends to be the ultimate thinking behind it.
[00:21:12] EK: Right. Well, there’s an old saw in the accounting profession that customer selection processes this. Do they have a checkbook? Can they fog a mirror? Even if they can’t fog a mirror, maybe I can get the estate work.
[00:21:25] AD: Oh, it’s good. I’ve never heard that one. But yeah, no, you’re right. That’s not necessarily a good way to do business, but I definitely, I see the mentality.
[00:21:33] ANNOUNCER: This is Branch Out, bringing you candid conversations with leading middle market professionals.
[00:21:41] AD: Let me ask you another question. Without going into any specifics, but how do you think about pricing? Just say, I’m listening to this, I’m doing tax work, I’m doing audit work, or whatever it might be, broadly speaking, how do you think about pricing it?
[00:21:53] EK: I think, I mean, there’s a lot of thought that has to go into pricing. First of all, quick back on pricing. Pricing is the number one driver in profitability, hands down. Far too many people either ignore that or don’t understand it. This is why we have this obsession with efficiency in organizations, because that’s really the mantra: how can we eliminate variable cost? Now, if I’m a better pricer, I can blow away good variable cost analysis, because it’s goes right to the bottom line, usually.
How you go about pricing is art, not science. There even continues to be some debate in this, especially along the subscription model is, is should you have a set of prices that is out there and say, “This is our prices. End of story. This is what you do.” Or is your firm more bespoke? Do you have what is called a value conversation with every single customer and then, from that value conversation, then begin to set a price based on that perceived value of that customer.
Now, I think this has to do really with math, right. That is how many people do you serve? Because one of the – in value pricing, which is where Ron Baker and I both started the notion of value pricing. Our mantra was, price the customer, not the services. You’re creating an individual price for that customer based on the perceived value of the customer, but in subscription, we really want you to look beyond that and our mantra has become price the portfolio, not the customer, and not the services. In other words, it’s more – and I’m going to use ensurance, ‘en’, it’s an ensurance model, right? Ensuring the customer. You’re spreading the risk pool across.
Let me give a quick example of what I mean by it. If you happen to do individual tax returns, one of the things that we want you to try to perhaps include in your subscription offering is to every customer say, audit insurance. If you’re audited, we handle it. It’s included. You pay us, it’s done, but you have to price it actuarially. You have to then spread that price across a risk pool. How many of your customers get audited on a regular basis? Now, it might increase because of the new 87,000 people who have been hired by the world, about to be hired by but that’s a whole another conversation. But what percentage are? Because not every customer is going to be audited every year. Did you price it appropriately across your risk pool? I think that’s another thing and it’s required some analysis. This requires some deep thought. It’s art not science.
[00:24:15] AD: But you’re offering peace of mind, in the example you’re using. So, you’re offering peace of mind and what you’re doing goes back to there isn’t a art versus science in this, but you are stepping back in understanding where can you offer that additional peace of mind, where can you offer additional value drivers, and understanding that just because you offer it, not everyone is going to take advantage of it. It’s more about figuring out what the right offering is and how that blends with the customer base that you have, the subscription customer base that you have to support that.
[00:24:45] EK: Absolutely the case. Yep, you’ve nailed it.
[00:24:47] AD: Now let me ask you that maybe just one final question about this. If you look back, and I’m sure there’s a number of folks and individuals in firm as you, you’ve talked about this, what are maybe some of the biggest success stories you’ve seen or heard? Not necessarily specific names, but where have you said you’ve seen this, where a firm or an individual embraces this shift in thought and what happens because of that?
[00:25:11] EK: One that I will point to, and they were just recently acquired. I know that this particular podcast might not be evergreen. I know the website is still up to date as of 2022, but it is Summit CPA, Jody Grunden, his organization. Now get this. Their subscription is weekly. Weekly.
[00:25:29] AD: Weekly. Wow.
[00:25:30] EK: Yeah. Yeah. He’s done it exceptionally well. He was a guest on The Soul of Enterprise with us. One of the stories that he told was he used to hate Mondays as a CPA, because of the drudgery of going into the office. He says, “Now I love Mondays, because that’s when a big pile of money hits my bank account every Monday.”
[00:25:49] AD: Really? How do they use weekly billing? Weekly subscription? We just talked
[00:25:54] EK: It’s not billing. It’s ACH or credit card.
[00:25:57] AD: Okay, subscription, yeah. Re-occurring payment.
[00:26:00] EK: Every Monday there’s a big pile of money. He loves going in on Mondays now.
[00:26:04] AD: Obviously not speaking for him, but what’s the mentality difference? How is that changed his approach? Obviously being happier going to work, but it’s it made life easier or is it just game, or give us a little –
[00:26:12] EK: No. You can listen to the episode where he talks about the transformation that happened inside his firm too, because what completely changes about, especially inside the organization, is it’s no longer about, oh, my gosh, I got to fill out my timesheet correctly. I’ve got to make sure that I’ve cut every customer. I’ve got to account for a six minutes of my day for eight hours, five days a week. If the customer has got got a problem, I do it. I fix it. If there’s no problems, I’m working on the stuff that I’m working on day-to-day, because we’ve got to get this done every week or every month or whatever, every quarter. We’ve got to serve these people. So, let’s just get it done.
[00:26:47] AD: I guess, if we talk through a little bit that the changes to just staff mentality in general, obviously, as a business owner. I can see some of the value of your partner in my firm and owner of a firm. You can see where, okay, well, this might make more stable business. It might help boost cash flow if you can bump your pricing right. But really, the staff changing it’s the team mentality, the culture behind it, where versus under the hourly model, efficiencies aren’t necessarily rewarded, getting your stuff done faster.
[00:27:13] EK: In fact, they’re penalized.
[00:27:15] AD: Yeah, yeah.
[00:27:16] EK: It’s not necessarily rewarded. That’s an understatement, Alex. They’re penalized. Let’s be frank.
[00:27:22] AD: You’re spot on. This changes it, right? This changes the cultures. It is the view around. It makes that matter.
[00:27:26] EK: It also changes the hoarding of work, because if I’m busy, and there’s somebody else who’s got some spare capacity that day, there’s not a problem with me saying, “Hey, Fred. Would you mind handling this today?” Whereas, in the past, this person is going, “I’m going to do my work. Then, I’ve got this other thing. I’m going to hold on to it, because I’m not going to give it to Fred. Fred can sit there. It sucks to be Fred.”
[00:27:50] AD: Because you’re hoarding the hours, you’re hoarding the work. Yeah, I know. I know I said last question before. I actually have one more here [inaudible 00:27:56]. Okay, so I’ve listened to this, it makes sense. I agree with it. I want to get started. I want to go and try to make this transformation. Where do I start? How do I start thinking about it?
[00:28:07] EK: You start thinking about it by educating yourself on it. I’ll point you to two books, one of which is not out yet, but will be out shortly. The first book is Subscribed by Tien Tzuo. It’s T-Z-U-O. You can get it on Amazon. I highly recommend that book is the gateway drug for those of you interested in subscription. The second is a book that’s going to be out in December by Ron Baker, my co-host on The Soul of Enterprise. It’s called Time’s Up! You can see more information about that by going to thesoulofenterprise.com/timesup. We’ve got a page out there where you can join the preorder club. There’s some benefits that you can get in addition to the book, that will be out in December.
Then, also and this won’t cost you anything. If you don’t want to buy a book, that’s fine, but you can go to thesoulofenterprise.com and at the top of the bar, you can click on our categories. We’ve done, I don’t know, three dozen shows, with either interviewing authors or having conversations with people who’ve done subscription or just flat out us talking about it, where you can listen and learn about the subscription model. So, thesoulofenterprises.com and then the category is subscription pricing.
[00:29:15] AD: Well, I appreciate sharing that. We’ll make sure all of that’s linked in the show notes below for listeners. Again, I look at my own experience around this, we don’t do specific counting service, but we do a knowledge type approach. We are leaning into subscription. I’ve had an interest in it and myself for years, but hearing you is a little bit of the maybe the fire to get me more excited about it and to keep learning more about it. I’m personally interested. I’ll definitely be checking out those resources.
I encourage anyone listening that even if you made it in the back your mind think well, it could never work. We can never get away from this hourly model. We can never change it. I encourage you to explore it. So pick up a book to read to check out the podcast and other content resources that Ed and his team have and just really understand it, because I do think there is a lot of opportunity.
[00:29:59] EK: Alright.
[00:30:01] AD: I appreciate you coming on here. It’s been a great conversation. Thank you for sharing your knowledge with us today.
[00:30:04] EK: Thanks for allowing me to share it. I really appreciate it. It’s my honor and pleasure.
[00:30:07] AD: Awesome. For listeners, I know they can get a hold of you through your podcast website, The Soul of Enterprise.
[00:30:12] EK: Yap, The Soul of Enterprise or just look me up Ed Kless. I’m the only Ed Kless in the world. It’s really hard.
[00:30:17] AD: Awesome. We’ll make sure, we’ll put links in there. Awesome. Thanks again, Ed. We’ll talk soon.
[00:30:21] EK: Bye.
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