Greg Tirico

June 27, 2021

Episode 346 - Interview with Mustafa Akyol

Greg Tirico

June 27, 2021

Ron’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I'm Ron Baker, along with my good friend and VeraSage Institute colleague, Ed Kless, and on today's show, folks, we're thrilled and honored to have Mustafa Akyol on the show, talking about his books. Hey, Ed, how's it going?

It's going great, Ron.

Ron

So I'm really looking forward to this after reading his latest book. So let me read his bio, just briefly: A Turkish journalist and author Mustafa Akyol studied political science and history at Bogazici University. Since the early 2000s, he has been writing regular opinion columns for Turkish publications. He's a Senior Fellow at the Cato Institute since 2018. He's published six books. We're going to discuss two of them today. Ed's going to take his 2011 book, Islam without Extremes: A Muslim Case for Liberty. And I'm going to take his latest book from 2021, Reopening Muslim Minds: A Return to Reason, Freedom, and Tolerance. Mustafa, welcome to The Soul of Enterprise.

Well, before we dive into your book, your Introduction to Reopening Muslim Minds, the title is, “A Night with the Religion Police.” And this was from a lecture that you gave in 2017. If that doesn't draw you into your book, Mustafa, I don't know what would. Can you tell that story?

Well, Mustafa, I found your book incredibly enlightening and historically fascinating. You're a gifted writer. But I loved the way you weave in some of the history of Islam and quoting these various scholars, and there's a lot of caricatures of Islam out there, as you're more aware of than I am, and you correct the record. You taught me a lot about it. I was really impressed with the scholarship of the book. And the way I would sum it up is you chose the word “reopening” Muslim minds. It's like you're arguing we need to get back to our roots, because it's all there?

That's great, Mustafa, you're asking the right question. I think it's like the study wealth, right? We don't need to study poverty, we need to explain how wealth is created. And that's what you're trying to do by looking back 1000 years. Unfortunately, we're up against our break.

Ed’s Questions: Segment Two

And we are back with our guest, Mustafa Akyol. And Mustafa, I wanted to build on the conversation that you had with Ron and talk to you a little bit more about the whole notion of Islam and its relationship to democracy and liberalism. And I wonder if you would take us through…there's a very “scary phrase” that the American right tends to use when talking about Muslims, and that is “Sharia law.” That’s all you have to do is throw out Sharia law, and it sends people scattering into the woods. But Sharia law has a very strong foundation of property rights. And I wonder if you would take us through that?

I grew up in New York, and there is case law in New York, with New York State deferring decisions to the Jewish courts in certain circumstances. In fact, so much so that I was divorced about 25 years ago, a standard part of a divorce in New York includes, even though I'm not Jewish, that I will not resist what's called a get [in Hebrew, Gett], because that's part of the standard language.

I was having a conversation with my mentor this morning, and one of the things we talked about was religion, spin, and he said, it has taken Christianity almost 2000 years to embrace the concept of hate the sin love the sinner. But I wanted to just jump back. You mentioned this earlier, you say the Quran defines the Prophet as God's bounty, which I think is fantastic. And then later on in your book [Islam without Extremes: A Muslim Case for Liberty], you say that Muhammad is quoted as saying, “He who makes money pleases God.” Is that the Quran, or was that one of the sayings?

I wanted to ask you about this because I think this is important. We've had Rabbi Daniel Lapin on and he oftentimes goes back to the origin of words in Hebrew, and gets insight from them. The translation of the saying, “He who makes money pleases God.” I wanted to ask you about the verb “makes.” Is that verb in Arabic, is it in the sense of create a new? Is that the same kind of word? Because what I think is so significant is that it's not “takes” money. It's “make,” we actually create new stuff. So I just wanted to ask you about that word, if you had any insight there?

Well, this is fantastic stuff, Mustafa, but we are against our break.

Ron’s Questions: Segment Three

Welcome back, everybody. We're here with Mustapha Akyol. We're talking about his book, Reopening Muslim Minds: A Return to Reason, Freedom, and Tolerance, his 2021 book. I did love the reference to [the philosopher, sociologist and historian] Ibn Khaldun, the originator of the Laffer Curve. He didn't draw it on a napkin either I thought that was pretty good. In chapter 11 of the book, you title it, “Freedom Matters.” And you ask, What is freedom? What does it mean? Let me give you one of my favorite definitions of this and I just want to get your reaction to it. I think that liberty is the absence of coercion. But I think freedom is a choice. If I choose to live under the edicts of Islam, or Kosher if I'm Jewish, whatever. I mean, that's a choice. Marriage is a choice, even though it restricts my freedom, but it's not coercive. What's your reaction to that definition?

Mustafa, you quote, Bernard Lewis, and he's about the only person of any serious scholarship that I've ever read about Islam. And he said, “The medieval Islamic world offered vastly more freedom than any of its predecessors.” And I guess my question is, are there liberal Muslim countries—you just mentioned a few—that you can point to as achieving what you're advocating?

Can you describe, and I hope I don't butcher this word, Irja. Because when you explain that, I just thought that was beautiful.

You also quote another verse from the Quran, the Qur’anic sura Ma’ida: Jews follow the Torah, Christians the Gospel. you Compete in doing good here in the world, and then, “You will all return to God and He will make clear to you the matters you differed about.” That was great.

Well, Mustafa, this has been excellent. Ed is going to take you home, but I just wanted to say thank you so much for appearing on The Soul of Enterprise. I thoroughly enjoyed your book, and we will promote it as best we can here. So thank you.

Ed’s Questions: Segment Four

And we are back with Mustafa Akyol, author of Reopening Muslim Minds: A Return to Reason, Freedom, and Tolerance as well as the book that I'm talking with him about, Islam without Extremes: A Muslim Case for Liberty. I wanted to ask you a couple of questions about—again, I'm a language person, my dad instilled this in me—a quote from [Fernand Braudel], who's a French historian, and you have this in your book, “Anything in Western capitalism of imported origin undoubtedly came from Islam.” And you take us through a couple of different terms: Sakk for check, mudaraba, which ultimately became the limited company, and of course, the word tariff. So there's just so many things and terms to build on from Islam that have made their way into our language today. So talk a little bit about that relationship.

One of my favorite quotes from your book is, “Islam, one could say, has produced the seeds of freedom. Regrettably, they were just not rooted in fertile soil.”

Well, we've only got about two or three minutes left, and speaking of autocratic states, I wanted to completely shift gears on you, to a place where Muslims are now oppressed. And that, of course, is the Uyghurs in China. Ron and I have talked a lot about this, we talk about Jimmy Lai and his experiences in Hong Kong. But what are your thoughts? Why does it seem that so many Westerners seem to be willing to talk a great game here in the States about freedom, but when it comes to the Uyghurs in China they completely ignore what's going on over there?

All right. Well, we still have so many questions for you, and of course, we didn't even touch your third book, which I haven't had a chance to read yet: The Islamic Jesus: How the King of the Jews Became a Prophet of the Muslims. We have 30 seconds left. Very quickly, are you working on another book?

Mustafa Akyol

Yes, a new one is coming out. You will like it, I think. It's titled, Why, as a Muslim, I Defend Liberty [due out September 28, 2021]. So it will put all my arguments about liberty in a nutshell, and with new arguments and new episodes from history. Hopefully, we can discuss that, too.

Yes, we would love to have you back on and do that. So Ron, what do we have coming up next week?

Ron

Next week, I'm taking the week off. We have project management in the subscription business model, so it's going to be your show.

Other Resources Mentioned

In Mustafa’s recent book, Reopening Muslim Minds: A Return to Reason, Freedom, and Tolerance he references Nathan the Wise, a play published by Gotthold Ephraim Lessing in 1779. It is a fervent plea for religious tolerance. https://www.amazon.com/Reopening-Muslim-Minds-Freedom-Tolerance/dp/1250256062

Mustafa not only recommends his own books (of course) but also Early Islam and the Birth of Capitalism, by Benedikt Koehler.

Mustafa wrote an article about China’s gulag for Muslims over two years ago.

Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

This week was bonus episode 346 - Tolerating intolerance and Subscription Air travel. Here are a few links that helped drive the conversation:

Click the “FANATIC” image to learn more about pricing and member benefits.

Greg Tirico

June 20, 2021

Episode #345 - Interview with Mark Wickersham

Greg Tirico

June 20, 2021

[Editor’s Note: Scroll to the bottom for some excellent resources that Mark provided to us for inclusion in the show notes.]

Ed’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I’m Ed Kless with my friend and co-host, Ron Baker, and folks on today's show, we are pleased to have with us, Mark Wickersham. Hey, Ron?

Ron

Hey, Ed, how’s it going?

Going great, rehearsing a lot for my show. We'll talk more about that later, maybe in the bonus episode.

Ron

That's cool. Well, I'm excited about today, longtime friend Mark Wickersham is with us, by audience demand, too.

I know, which is great. So we expect some great ratings from this one, looking forward to it. Well, let me get the particulars out of the way. Mark Wickersham is a chartered accountant, public speaker and number one best-selling author. He is a most sought-after profit improvement expert in the accounting community. He also strongly believes that the old business model, the way accountants are taught to run accounting firms, is not only commercially stupid, but unethical. Mark is a widely published author on practice issues and in May 2011, his book Effective Pricing for Accountants was a number one Amazon bestseller. Welcome to The Soul of Enterprise, Mark Wickersham.

Well, we are happy to have you. For the benefit of our audience who don't know you that well, let's delve into what's the Mark Wickersham story. How’d you up here?

And why do you do this, Mark? Why you do what you do—the Simon Sinek “Why” question?

I love that part of your story. You improved your pricing in the firm that you had started, made it really profitable, but loved doing this so much that you said, “I'm going to walk away from that profit to go over here and start this other thing” because you were so passionate about it.

It's a great story. I have to ask you about this because I did pull that line that I used in your read in from your bio on your website. Why unethical? Why is the current model that most accountants use not only suboptimal, clearly, which you've demonstrated and proved over and over again in all the firm's, but why is it also unethical?

And I would add to that the flip side, which is all of the accounting professionals who put on their timesheets not what actually happened, but what they think should have happened so that when the boss, like you, is reviewing the account, you said, “Oh, look at this, we're right on budget where we thought we were going to be.”

Now, talk to me a little bit about this. In your practice, when you've helped people shift, do you find that some still try to cling on to the timesheet? And what is your advice to them? Or what is your admonition to them, I guess is a better word?

Right and that's clearly the value pricing to which we would certainly want to talk to you about, I just want to harp on the timesheet a little bit. Do you absolutely recommend that people rid themselves of the timesheet, and that’s one of the core messages that you preach?

I think I know the answer to this question, but I want to hear it from you. In your role as a consultant to the profession, how do you handle the question when they say to you, “Well, what's your hourly rate?”

I found it hysterical that people come occasionally to Ron and myself who want help with pricing, and then have they ask the unironic question, at least in their mind, about what our charge rate is.

Well, and so let's talk a little bit about that. We've got about two minutes before our break. Why don't you get that question? What is it that you do from a marketing standpoint that you just don't get that question?

Perfect. Well, we're up against our first break.

Ron’s Questions: Segment Two

Welcome back, everybody. We're here with Mark Wickersham, of the Value Pricing Academy. Mark, so funny, you were talking about the timesheet and filling in all the non-billable time. Recently, there was a hurricane, I think it was a couple years ago, and one Big Four actually issued a code to its employees for the hurricane. So if you were put out of work by the hurricane, you had a code for your timesheet, unbelievable. I actually saw the memo that went out, it was hysterical. I have a question for you, Mark. You have said that, per a recent benchmarking report, over 50% of accounting firms don't make an economic profit. You didn't say profit, you said economic profit. Explain why you think that's happened?

I agree. But do you think it goes deeper than that? We do a lot of shows on strategy and positioning and our colleague, Tim Williams, who I think you saw, or met down in Allen, Texas when you came, he's really convinced me, and we say all the time, that you can't value price the wrong customer. And it just seems to me that so many firms try and be all things to all people. They’ve never met a billable hour they didn't like, a dollar they didn’t like, a customer they didn't like, and they just they refuse to niche down. Do you think that's also part of the problem?

I couldn't agree more. I actually think we pay lip service to the relationship. Because our business model is not aligned to monetizing the relationship. It's aligned to monetizing transactions, even to some extent that's true of value pricing, which pains me to say by the way, but I've come to that conclusion. What's your response to that?

I've come to that conclusion because we don't put the relationship is not at the center of the business model. What is at the center is this idea of pricing the customer and figuring out a scope of work and all this stuff, having change orders, if you go out of scope, all this crap. This is why I'm big proponent of subscription because it does away with all of that. I mean, it’s a topic we can talk about later, but I just think we pay lip service as a profession to the relationship. Because as you say, Mark, there's no way to have a relationship with over 100 clients.

I totally agree. And I've come back to this idea that it's because that sitting down and thinking isn't billable, I can't put that on my pricing proposal, I can't put that on my timesheet. There's no reward structure for investing in the lifetime value of the customer, which the subscription puts at the forefront of your KPIs, your dashboard, and your mind, and innovation is baked into that model. That's why subscription is superior as a business model than just a value pricing firm.

To some extent, Mark, I think making the leap from hourly to subscription is easier than going from value pricing to subscription. So in some respects, those people that are stuck in hourly have an easier time of making that transformation. But that's something that we talk a lot about, we have multiple shows on it. But let me get your ideas on this. You published a book, I think it was in [2016], How to Build a Successful Bookkeeping Business. I think you've had a co-author, is that right? Yes, [Jane Aylwin]. We talk a lot about bookkeepers having deeper relationships with their customers then do the accountants because they're at the coal face, they're usually in there, and they might get called first by the customer when they're having a problem to find out what to do about it. Do you find that's true—that the bookkeepers actually have better relationships with the customers?

I have a feeling we're going to see more move to subscription from bookkeepers then we will form accountants, at least at the start, because they already understand the value of that relationship. And like you said, they have fewer customers as well. That helps because they have deeper relationships with every one of them. I don't know if you saw this, but there was an article recently in Harvard Business Review, of all places, which I just stopped reading because I think everything in it is pretty much wrong. But it was an interesting article called, “What Professional Service Firms Must Do to Thrive.” And they actually had a spectrum, a way to analyze your customer portfolio: commodity work, procedure work, gray hair work, where it requires more experience, and then rocket science, that's the real creative/innovative stuff. And what they pointed out was, firms as they grow, even if they start in their lane, will inevitably spread out across, maybe not the entire spectrum, but most of it, in one way or the other. Even if they start at rocket science, they'll slide down to commodity or the procedure work. And I just think this is a big problem in our profession. We just go after everything. And then we wonder why there's dissension among the leadership and disagreements. We wonder why it's hard to train team members; because we don't stand for anything, we’ll take anybody.

And that's a hard sell, I have found, to try and get businesses, or firms, to niche down and shed lines. I think you're defined by the customers you don't have, and the services you don't provide. Like you said, it makes it easier to say No, when you're easily in your lane, when you know what your lane is.

But it's so counterintuitive, it scares the heck out of people. Well, Mark, this is great. Unfortunately, we're up against our next break.

Ed’s Questions: Segment Three

And we are back with Mark Wickersham, chartered accountant, public speaker and number one bestselling author of the book Effective Pricing for Accountants, we will put a link in the show notes to hopefully drive some new book sales for Mark, maybe get back to number one for you, Mark, how about that? Mark, I wanted to talk with you a little bit about what has been your experience both personally and professionally. Is there anything that surprised you about the way the profession reacted to and it has handled, the COVID-19 situation?

Yeah, interesting you point that out, because I just was doing some rereading for a presentation I had to do this week, and I was reminded of Tim Harford's book, who's also in the UK, and wrote a great book called Fifty Inventions That Shaped the Modern Economy, one of them being double entry bookkeeping, and he makes the point in his book about this, that the very language of accounting is auditory, is language, right? It's a verbal accounting, it's auditors who were the listeners. And we're really getting back originally to the roots over that, over this relationship piece, which I just found fascinating. Any thoughts on that?

Check out Tim Harford, you can find a video of him, I think you would find his stuff pretty robust. And he's got a new one called The Data Detective, which I think you would like as well. You anticipated, in a way, my next question in your answer to the one about COVID-19. And you gave part of your answer, but I want you to expound on it a little bit. Talk about the problems with the partnership model.

Well as my brilliant co-host often says, when these big firms get together, it's dinosaurs mating—I love that phrase. So, Mark, I'm going to ask you, I think this is probably my most challenging question. So just to give that as a run, we've got about three minutes left. A study was done about 10 years ago of Canadian accounting professionals, so it included accountants and bookkeepers, but people who were practitioners, small firms. Curiously, it came back with the following: that men-owned firms out charged women-owned firms, in roughly the same proportion as we see in the economy, women make 80 cents on the dollar compared to men. So the women-owned firms were charging 80%, roughly, of what the male-owned firms were charging. And what I found interesting about this is they're setting their own price. Do you find anything, in the folks that you work with—and again, this is a phrase that I stole from my mentor, Howard Hanson, this is not sexist, but gender specific. Do you find that there are challenges and differences between men and women in the way they set price?

And I would be curious If you have any data about that, because I think what you just said is absolutely true, because Ron and I have worked with a lot of, especially in Canada, that's where this whole thing started. And we find that the women who move are much more, let's call it, aggressive with their pricing, once it starts to click, I think they're better at it.

Yeah, that's great stuff, Mark. But we were up against our last break.

Ron’s Questions: Fourth Segment

Welcome back, everybody, we're here with Mark Wickersham. And Mark, I know your Value Pricing Academy has customers from around the world. And I would imagine the English-speaking world. So tell me, which countries do you see leading in the diffusion—that diffusion curve, the innovators, the early adapters, and the early majority, you've seen that bell curve diffusion curve? Which country is in the lead in terms of adoption—that is, percentage of firms adopting value pricing?

It's been my experience that the US is still in the lead in terms of diffusion. If you look at some of the AICPA stats, or the state societies, 30% to 40% of firms report they do value pricing. Now, I take those numbers with a huge vat of salt, because it's self-reported, it might not be a random sample, all of those problems. But there is no way if you roll the clock back 20 to 25 years, you would have got five or 10% of firms saying that they do value pricing, or fixed prices, or something like that. I just find it interesting, because I hear different things from different people who say that Britain's ahead, US lags, whatever. And it's just interesting to get different perspectives. The other thing, Mark, I know you like behavioral economics, the whole options, and anchoring, and framing, and choices, and all of that. Has there been any new insights from that field that have caught your eye in terms of how they can apply to pricing?

I haven't. The guy who I keep abreast of just to decipher this for me is Rory Sutherland. And he's from Ogilvy & Mather in the UK. He's all over on video, you can catch him speaking at conferences through YouTube or whatever. And he always comes up with some really interesting way to frame a pricing issue, because that's part of his work is in pricing. How about for firms that want to transition to value pricing, obviously, they should join your Value Pricing Academy. But I know you've published a lot of books, which of your books would you point them to? To get their feet wet? To be exposed to the idea?

Mark Wickersham

That's a good question. I think that my second book, which is A Practical Approach to Value Pricing, is arguably the better one, because my first book I had no idea what I was doing. I had never written a book before, and so whilst people say wonderful things about it, it was a kind of a scattered getting my thoughts out, whereas the second one was much more structured in terms of some of the key foundations of value pricing. So that's the one I'd always recommend—start with A Practical Approach to Value Pricing.

Ron

Okay, excellent. And we'll link to all your books in the show notes. And then I'm also curious, have you got anything new in the works?

Mark, I just have to say this. I remember you sent me a video of one of your programs. And I was just amazed as you were going through something that had like 25 ideas for firms. One of them was to start a social club, a CEO/CFO club, I forget what you called it, CEO roundtable or something. And you went through all of these things. And I just thought, this guy is not just doing value pricing. Since value pricing touches everything else in the firm, your scope is far beyond value pricing. I get the branding, and I get why you want to say that, I'm just saying that I know that your content is way beyond pricing.

Awesome. And Mark, where can people find you? What's the best way to learn more about what you do?

Mark

All sorts of ways. So connect on LinkedIn, anyone who connects on LinkedIn, I can then send through some links to some free resources. I have a Facebook group called Value Pricing with Mark Wickersham. I actually spend more time on Facebook than LinkedIn. So I interact with people via that, and I run I do a lot of live streams on my YouTube channel. So follow my videos on YouTube, come to a live stream session, and type some stuff in the comments. And then we can start a conversation.

Ron

Excellent. Well, Mark, thank you so much. It's been an honor to finally have you on, it's long overdue but thrilled that you gave us some time here. Thank you so much. Ed, What do we have coming up next week?

Next week, Ron, I'm excited that we're going to welcome to the show Mustafa Akyol, author of Reopening Muslim Minds: A Return to Reason, Freedom, and Tolerance, and Islam Without Extremes: A Muslim Case for Liberty. It’ll be fun.

Ron

Looking forward to it, see you in 167 hours.

This has been The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I'm Ed Kless, with my friend and co-host, Ron Baker, and we are signing off, but please do us a favor and subscribe to the podcast on your player of choice. And we'll see you next week.

More Resources from Mark Wickersham

FREE BENCHMARKING SURVEY RESULTS

In July 2019 I carried out a survey of 2,683 accounting professionals to find out exactly how – and how much – they charge for bookkeeping services. You can grab a free sample copy here:

https://www.wickersham.co.uk/store/eGMMmYv4

FREE LIVE TRAINING WITH ME EVERY MONTH

Is this the year you want to take your income to another level? Join me every month on a 60-minute online training session and I’ll share with you powerful pricing strategies. Click here to find out more and to get on the VIP list…

https://www.wickersham.co.uk/p/free-mentoring

FREE SUPPORT GROUP

Have you visited my Facebook group? It’s dedicated to helping accounting professionals master value pricing. To request access to it, click here https://www.facebook.com/groups/valuepricingwithmarkwickersham/

BECOME A FOUNDER MEMBER

Last month I launched the Online Live Academy and this is your opportunity to be a founder member with a special price locked in for life. Find out more here, https://ola.wickersham.co.uk

Bonus Content is Available As Well

This week was bonus episode 345 - Sous Vide and Aduhelm. Here are a few links that helped drive the conversation:

Click the “FANATIC” image to learn more about pricing and member benefits.

Greg Tirico

June 13, 2021

Episode #344: Fifth Interview with Rabbi Daniel Lapin

Greg Tirico

June 13, 2021

Ron’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so that organizations can thrive. I'm Ron Baker, along with my good friend and VeraSage Institute colleague Ed Kless. On today's show, folks, we're honored, we have Rabbi Daniel Lapin for the fifth time. Hey, Ed, how's it going?

It's going great. And at the risk of extending my stay in purgatory, I'm going to suggest a change to the Hail Mary, which is as follows: “Hail Mary, full of grace/Sirico is now in second place.

Ron

He doesn't need an introduction, but let me try and do it anyway. Rabbi Daniel Lapin, known widely as America's Rabbi, and to this audience, known widely as my rabbi, is a noted rabbinic scholar and best -selling author and TV host. In 2002, he published the fantastic book, Thou Shall Prosper: The Ten Commandments for Making Money. He followed that up with its sequel Business Secrets from the Bible, and I'm thrilled to see that they have been translated into different languages. Pairing his inheritance as a descendant of a multi-generational rabbinical family with his background in science and business, he teaches ancient Jewish wisdom in an unparalleled manner. And I can vouch for that, as a longtime listener. Rabbi Lapin, welcome back to The Soul of Enterprise.

It's our pleasure. Earlier this year, there was a couple weeks when your podcast didn't drop. And I thought, I wonder if he's traveling. Then you came back finally, and announced that you had COVID and had recovered. And I just wanted to ask you, what did you learn from that?

Ron

I hope you don't get this long COVID that they're talking about? Good, good. And I have to ask you, Rabbi, with what's been happening between Hamas and Israel and the attacks on Jewish people in the USA. You were talking on one of your shows recently, that you're very hesitant to use the term anti- Semitism. I know this is something you speak about a lot, and have even written about, but why?

That's very compelling. Rabbi, we were going to do a show today on envy, until you graciously agreed to come on. Michael Novak said that envy was the most destructive force in any free society, more so than hatred. And when you think about the seven deadly sins—they're called that because they lead to other sins. What does ancient Jewish wisdom teach us about envy?

That's true. Is envy as destructive in Jewish wisdom as it seems to be in some other religions?

I'm sure you saw, Rabbi, the ProPublica disclosure of the IRS tax data from all these rich people. Nothing frustrates me more. But when we talk about income inequality, and like you were saying about it, we fight it from the economic side with all these statistics, but what's the moral and ethical argument? I mean, what is my fair share of what you earn?

That's a great point. Well, Rabbi, we're up against our first break.

Ed’s Questions: Segment Two

We are back with our first ever five-time guest, Rabbi Daniel Lapin. So thrilled to have him on today. And I'm going to take advantage of the fact that I have a rabbinical scholar on, and you and Ron we're having a great conversation about envy and jealousy. I thought as I was preparing for this show, now would be the time to learn something, Ed. I’d really liked for you to go deep with us on the story of Cain and Abel in the Bible, because I think this is one of the original examples of envy. Because as a Catholic, I'd never read the Bible in Hebrew, so I know there's stuff I'm missing. One of the things that I never quite understood was, what did Cain do wrong with his offering? Is is just because they didn't like it? Help me there.

It's also the first offering that that takes place there, right? And the offering is, in a sense, it's the notion that I can I can put off today and benefit in some way tomorrow. In a way, it's almost the invention of time, isn't it?

So East of Eden is a very good explanation of that section of the Bible. Great movie with James Dean, too. We have just about 90 seconds before our break, and I want to ask you something. As I re-read the story of Cain and Abel today, I came across this. Tubal-cain, who is one of the descendants of Cain, he is the fashioner of bronze and iron weapons. So from Cain descended the creation of weapons, is that correct?

Very interesting. Well, thanks. I really wanted to take that to the essence of it, maybe get some insight, which I certainly did on envy. But right now we're up against our break.

Ron’s Questions: Segment Three

Welcome back, everybody. We're here with my Rabbi, Daniel Lapin, and Rabbi, you were talking to Ed about names and how there's no Fred or Sally in the Bible. And I want to ask you about the first born Jew, who you had mentioned on your show, being named Isaac, and how in Hebrew that means laughter. What the significance of that is?

No, that's fine. It was great explanation. I remember John Cleese, of Monty Python, saying that “All humor is critical.” And that's so true.

Well, Rabbi, I'm going to change subjects on you again. You've taught me that anything random can’t happen just once. And this is why Darwinists must find life on other planets. Otherwise, life on earth is not just random. I have to ask you, I know you have a science background, and you're a pilot, and I have tremendous respect for pilots. They're not kooks, they tend to be very smart, practical people. Rabbi, tell me about these videos of these UFOs. What's your take?

Okay, make sense. And Rabbi, you did a show recently on Taiwan. Through Father Sirico, and others, we've been following Jimmy Lai and his travails in Hong Kong. How do you see it unfolding, and by the way, we recently had on Charles Cooke [Episode #342] from National Review. And he's a big Second Amendment proponent, even though he's from Britain. And he thinks maybe we should maybe provide the Taiwanese citizens with guns. What's your take on all that?

Unfortunately, I think you're right, Rabbi. Well, this is great, we're up against our next break.

Ed’s Questions: Segment Four

We are back with Rabbi Daniel Lapin, and Rabbi, I'm going to take you back out of the present day. And we're going to go back to some scripture. Because I want to take advantage of this wonderful time with you and I want to read you a story from another Rabbi and get your reaction to it. Someone in the crowd said to him, “Rabbi, tell my brother to divide my inheritance with me.” The rabbi said, “Man, who appointed me a judge or arbiter between you?” And he said to them, “Watch out. Be on guard against all kinds of greed. Life does not consist in abundance of possessions.” So what are your thoughts on that story? Now, the rabbi Jesus. But he's the only other Rabbi I know.

Well, I think you've done an excellent job of explaining that parable even with your lack of knowledge of the New Testament, in that it's really about, Hey, work on your relationship before you worry about the division of this inheritance thing, connect back with your brother, first. Rabbi, we only have about a minute left. Here's the impossible question in a minute. In a world where there is envy and jealousy, what's the best thing for us as individuals to do?

I love the fact that you said “build on small accomplishments” and also, and I think Father Sirico would join me in saying this, recognize the humility of when you find out what that small accomplishment is, to realize that yes, that's just it. That's all, be humble, that's all you're capable of. So do it and make it happen.

Absolutely. Well, Rabbi, thank you so much for being on The Soul of Enterprise again, this was a fantastic visit, as usual. Ron, what do we got coming up next week?

Ron

Next week, Ed, we have Mark Wickersham. A lot of our listeners have been asking for him, so we got him on.

Excellent, see you in 167 hours.

Ron

This has been The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so that organizations can thrive. Join us next week, folks, Friday at noon. In the meantime, feel free to check us out at www.thesoulofenterprise.com. We'll post full show notes on our interview with Rabbi Lapin, who you can find at www.youneedarabbi.com you should subscribe to his Thought Tools, which is his weekly newsletter, which is fantastic, and listen to his show [The RDL Podcast]. Thanks for listening, folks. Have a great weekend.

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Greg Tirico

June 6, 2021

Episode #343: Price Sensitivity Factors in the Subscription Business Model

Greg Tirico

June 6, 2021

This episode was a reboot of Episode #61. See that show’s notes for more detail on the 10 price sensitivity factors. In this episode, we discussed these 10 factors in the context of the subscription business mode.

The following is excerpted from Chapter 14 of Ron’s book, Pricing on Purpose: Creating and Capturing Value.

Price Elasticity vs. Price Sensitivity
Certainly mathematics has its place in pricing, allowing us to test, predict, and determine elasticity. Yet, since pricing is an art more than a science, judgments are also vitally important and cannot be substituted with mathematical precision.

Even if a company possesses a precise elasticity calculation it knows is accurate, it would only be part of the puzzle of pricing. Since elasticity normally lumps “consumers” together, it does not help us in segmenting customers into different value propositions, thereby offering individuals different bundles in order to maximize profit.

Ten Factors of Price Sensitivity
Thomas Nagle identifies ten factors affecting price sensitivity in their book, The Strategy and Tactics of Pricing.

Perceived Substitutes Effect
This effect states that buyers are more price sensitive the higher the product’s price relative to its perceived substitutes.
Unique Value Effect
Buyers are less price sensitive the more they value the unique attributes of the offering from competing products. This is precisely why marketers expend so much energy and creativity trying to differentiate their offering from that of their competitors.
Switching Cost Effect
Buyers will be less price sensitive the higher the costs (monetary and nonmonetary) of switching vendors.
Difficult Comparison Effect
Customers are less price sensitive with a known or reputable supplier when they have difficulty in comparing alternatives.
Price Quality Effect
Buyers are less sensitive to a product’s price to the extent a higher price signals better quality. These products can include image products, exclusive products, and products without any other cues as to their relative quality.
Expenditure Effect
Buyers are more price sensitive when the expenditure is larger, either in dollar terms or as a percentage of household income. Business purchasers look at the total amount of the purchase, while households will compare the expenditure to total income.
End-benefit Effect
This effect is especially important when selling to other businesses. What is the end-benefit they are seeking? Is it cost minimization, maximum output, quality improvement? The fulfillment of the end-benefit is often gauged by its share of the total cost.

The end-benefit effect is also psychological. Think of going out for a romantic anniversary dinner and paying with a two-for-one coupon. Think of the Michelin tire ads showing a picture of a baby in diapers next to its radial tire proclaiming, “Michelin. Because so much is riding on your tires.”
Shared-cost Effect
When you spend someone else’s money on yourself, you are not prone to be price conscious. This is one reason airlines, hotels, and rental car companies can all price discriminate against business travelers, because most of them are not paying their own way.
Fairness Effect
Notions of fairness can certainly affect customers, even when they are not economically (or mathematically) rational. We accept discounts more naturally than premiums.
Inventory Effect
The ability of buyers to carry an inventory also affects their price sensitivity. The perishability of the item in question is another factor to consider.

In the subscription model, these ten factors reside in your strategy, positioning, branding, marketing, and value proposition. They are spread across the entire portfolio of customers.

Search, Experience, and Credence Attributes
From a marketing perspective, products and services can be separated into three useful classes: search products, experience products, and credence products.

Search products or services have attributes customers can readily evaluate before they purchase. A hotel room price, an airline schedule, television reception, and the quality of a home entertainment system can all be evaluated before a purchase is made. Price sensitivity is high with respect to products with many substitutes, and since most buyers are aware of their alternatives, prices are held within a competitive band.

Experience products or services can be evaluated only after purchase, such as dinner in a new restaurant, a concert or theater performance, a new movie, or a hairstyle. These types of products tend to be more differentiated than search products, and buyers tend to be less price sensitive, especially if it is their first purchase of said product.

Credence products or services have attributes buyers cannot confidently evaluate, even after one or more purchases. Thus, buyers tend to rely on the reputation of the brand name, testimonials from someone they know or respect, service quality, and price. Credence products and services would include healthcare; legal, accounting, advertising, consulting, and IT services; baldness cures; pension, financial, and funeral services; and even pet food (since you have to infer if your pet likes it or not). Credence services are more likely than other types to be customized, making them difficult to compare to other offerings. Because there are fewer substitutes to a customized service, and there is more risk in purchasing these types of services, price sensitivity tends to be relatively low.

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