(Feb. 1, 1999) Baker is a contributing editor of CPA Profitability Monthly and author of The Professional's Guide to Value Pricing. He is a frequent conference speaker, a consultant to CPA firms and an instructor with the California CPA Education Foundation. In Part One of this interview Baker discusses the theory behind pricing and why CPAs need to address how they bill their clients.

	Track 1
Pricing is a complex topic business people grapple with daily. Baker discusses his goal of eradicating hourly billing from the accounting profession and asserts that the legal profession is already abandoning the billable hour.

	Track 2
According to Baker, the accounting profession is in the mature stage of the product life cycle, as illustrated by consolidation, price competition, the move toward marketing and promotion, and the growing sophistication of clients.

	Track 3
Baker traces the origins of hourly billing, from Franklin to Marx and beyond. He explains why he would like to replace the labor theory of value with the subjective theory of value, which states that the value of a commodity is worth whatever someone is willing to pay for it.

	Track 4
Baker agrees that hourly billing is a rational paradigm, but explains why the disadvantages outweigh the advantages. He says hourly billing inhibits profitability because it misaligns the interests of the customer and the CPA, and because it focuses on hours rather than value.

	Track 5
According to Baker, it is natural for customers to demand to know the price of something before they buy it. He says that because the hourly billing method does not set prices up front, all of the risk involved is transferred to the customer.

	Track 6
Baker explains the terminology involved with the paradigm of value pricing. He discusses why he prefers the word price to terms with negative connotations like billing and fee and reiterates the importance of setting a price up front.

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