Ronald J. Baker 
Pricing on Purpose 
Creating and Capturing Value

Pricing on Purpose explores the importance of pricing, one
of the four Ps (product, promotion, place, and price) of marketing,
that is largely ignored in business literature. Pricing is the
opportunity for a business to capture the value of what it provides
to the customer, and deserves as much attention as promotion,
product and place in the marketing strategy of any business. This
book calls attention to the market share fallacy, explains the
difference between cost-plus pricing and value pricing, and
provides best-practice pricing examples. It presents the theory of
value–long established in the economics profession–and
how any business can use various pricing strategies to communicate
and capture the value of their products and services.

Table of Content

Foreword xi

Preface xv

Acknowledgments xix

About the Author xxv

1 Why Is Movie Theater Popcorn So Expensive? 1

2 Why Are We in Business? 7

3 Mind Over Matter 15

4 The Old Business Equation 25

5 The New Business Equation 31

6 Ninety-Nine-Cent Pricing, Engagement Rings, and the Assumption of Rationality 41

7 The Invisible Hand: No One Person Knows How to Make a Pencil 49

8 ATale of Two Theories 63

9 Cost-Plus Pricing’s Epitaph 87

10 The Wrong Mistakes 103

11 Price-Led Costing Replaces Cost Accounting 121

12 What and How People Buy 129

13 The Value Proposition 143

14 The Consumer Surplus and Price Discrimination 175

15 Customer Segmentation Strategies 197

16 Price Discrimination in Practice 213

17 There Is No Such Thing as a Commodity 235

18 Baker’s Law: Bad Customers Drive Out Good Customers 249

19 Ethics, Fairness, and Pricing 269

20 Antitrust Law 283

21 Who Is in Charge of Value? 307

22 Pricing on Purpose: Getting Paid for the Value Your Company Creates 333

Bibliography 343

Suggested Reading 355

Index 367

About the author

Ronald J. Baker started his career in 1984 with KPMG’s
Private Business Advisory Services in San Francisco. Today, he is
the founder of Vera Sage Institute, a think tank dedicated to
educating businesspeople around the world.

As a frequent speaker, writer, and educator, his work takes him
around the world. He has been an instructor with the California CPA
Education Foundation since 1995 and has authored ten courses for
them: How to Build a Successful Practice with Total Quality
Service; The Shift From Hourly Billing to Value Pricing;
Value Pricing Graduate Seminar; You Are What You Charge For:
Success in Today’s Emerging Experience Economy (with Daniel
Morris); Alternatives to the Federal Income Tax; Trashing
the Timesheet: A Declaration of Independence; Everyday
Economics; The Firm of the Future; Everyday Ethics:
Doing Well by Doing Good; and The New Business Equation for
Industry Executives.

He is the author of the best-selling marketing book ever written
specifically for professional service firms,
Professional’s Guide to Value Pricing (seventh
edition), published by CCH, Incorporated. He also wrote Burying
the Billable Hour, Trashing the Timesheet, and You
Are Your Customer List, published by the Association of
Chartered Certified Accountants in the United Kingdom. His prior
book, The Firm of the Future: A Guide for Accountants, Lawyers,
and Other Professional Services, co-authored with Paul Dunn,
was published in April 2003 by John Wiley & Sons, Inc.

Ron has toured the world, spreading his value-pricing message to
over 70, 000 businesspeople. He has been appointed to the American
Institute of Certified Public Accountant’s Group of One
Hundred, a think tank of leaders to address the future of the
profession, named on Accounting Today’s 2001, 2002,
2003, 2004, and 2005 Top 100 Most Influential People in the
profession, and received the 2003 Award for Instructor Excellence
from the California CPA Education Foundation.

He graduated in 1984 from San Francisco State University with a
Bachelor of Science in accounting and a minor in economics. He is a
graduate of Disney University and Cato University. He is a member
of the Professional Pricing Society and presently resides in
Petaluma, California.