A 14% own goal (for everyone)

Not only do I expect both KPMG and Grant Thornton's own clients to be pressing for a 14% discount on audit fees, in light of this article

I also expect every audit partner in every firm across the country to be starting next year's fee negotiation from a much weaker - 'where's the 14% AI saving' rather than the more traditional 'well it's been another tough year for inflation and we need to pass that through'

This highlights an important issue when it comes to pricing, particularly when firms are perhaps a little quick to crow about their own task level efficiency savings in the press

In legal, there's far too much emphasis on the death of the billable hour vs value based pricing - it's all very binary, or black and white

Within our Mini-MBA programme, the conversation we have with partners is more nuanced, highlighting that it is rare that pricing is an either/or proposition

There are typically three factors at play to a greater or lesser extent:

1. cost to deliver

2. value to client, and

3. competitor pricing / market rate

Whilst you can attempt to price exclusively with reference to your client's perception of value, rather than your own input costs of rates x hours, if a competitor publicly signals a 14% price cut it's unlikely you can ignore it

Whether you like it or not, your own approach to AI and pricing is influenced by what your competitors are doing, and this article highlights this exposure, specifically to:

1. the results of competitor efficiency gains from AI investments

2. competitor pricing

3. competitors, humourous if not disastrous, PR

It's all well and good having a chuckle when it's not your sector, but this should serve as a wake up call

How do we price in the bold new AI era is a much bigger question than it first appears

Cost v Price v Value