This is the story of Elnize Goosen who has been putting the value pricing foundations in place for the last few years and transforming the results of her firm.
Of course, if you would prefer to watch the full interview, you can find it on my YouTube Channel here, https://youtu.be/16t46EYwGC4
Elnize Goosen’s firm, DGE Chartered Accountants and Registered Auditors, is based in Centurion, South Africa. They are a fully virtual, cloud-based firm.
Previously, Elnize worked in a corporate firm. However, the firm that she was working for merged with another firm, and they had a finance department already. Elnize was declared redundant. In a recent interview together, Elnize told me, “I was about six or seven months pregnant at that stage. And I was declared redundant, and I lost my job. It was a shock! But for a while before that my husband Daniel had been nagging me to start my own firm. That was the perfect opportunity to do that.”
Elnize and her husband now work together and have done since 2016, and they’ve grown rapidly. Elnize said, “We're very family driven; everything we do, we do for our family. And that's the reason why I wanted this virtual firm, so that I can take off and go sit on the beach and take a laptop to work there. And then COVID struck, and we weren't really thrown off by the fact that you had to do everything at home, and your children are at home. Nothing like that actually disrupted our lives much.”
Elnize joined my Value Pricing Academy in 2019 to help improve her pricing. Before that, her biggest challenge with pricing when she started her firm was that she didn’t know how much to charge people. Elnize told me, “That was a massive issue! No one gives you guidelines. The industry didn’t have norms or regulations. Everyone prices differently. So how are you supposed to suddenly know how to price? It was a massive issue for me.”
At that point, Elnize just did everything the way she thought it should be done: charging by the hour, asking the client what their budget is, getting the financial statements and looking to see what the previous accountants charged. But Elnize was losing out on so much money by pricing that way.
She also struggled as she was accepting every single client, whether they were a good fit for her or not but earning very little from them. This led to problems with the scope of work – Elnize never clarified what the scope was, she just did everything for everyone, with no niche, no structure and no systems.
Elnize described her problems: “I ended up with really massive bad debts, to the tune of $50,000. It was really big. The bulk of it was that I would accept a new client and price them for accounting or bookkeeping work. And then they also have clean-up, and we’d never price them for that clean-up work, so we’d end up writing that off. I had massive write offs for clean-up work.
“Another problem we had was invoicing the client at the end of the work that was done based on the hours that we’d spent, and them being shocked because it's so much, and then they just don't pay us! So massive bad debt, and even court cases, I'm still in a court case with a previous client that’s been dragging on for four years.
“And then we’d also have horrible communication with clients because I assumed that people in business had some idea about accounting, and I felt like I was patronising someone if I explained what I was doing for them. But that was so wrong: people have no idea what you do for them and how much work it entails.”
Elnize came across one of my posts on Facebook and signed up for the Value Pricing Academy in February 2019.
She started implementing the 7-step framework from VPA sessions. Firstly, Elnize switched from hourly billing to fixed pricing immediately. She also started menu pricing and offering her clients choices to give them more control. And she set out different payment terms for her different services.
She also worked on communicating the value of what she did with her clients. She would describe what the features of her service were and how they would benefit the client’s business. Elnize said, “That was a massive change, communicating the value.”
Elnize also implemented a paid diagnostic review. Firstly, to eliminate the clients she didn’t want, because if they weren’t willing to pay for a diagnostic they wouldn’t be willing to pay the prices she was going to charge. And secondly, to try and get a better idea of the scope of the work by asking critical questions and drilling down as far as possible into what needed doing.
Furthermore, Elnize categorised her clients as either A, B, C or D clients and did a massive purge, reducing her client base by almost half. She said, “That was a very big deal, because I opened up time to focus on discovering issues for the clients I love to work with, to help uncover more value for them.”
As well as all those amazing changes, Elnize found she had a passion for the price psychology side of pricing.
Elnize told me, “Different things like anchoring – creating a different, or even unrelated, price to secure the clients’ minds on a higher price so that your price seems lower. Or price precision, so that you don't have a round figure which clients will just deny or negotiate with immediately. Price placement on the proposal, or the order in which you show your different packages. Little things like left digit management and the power of nine – all those price psychology techniques I systematically implemented, and it was massively effective.”
I asked Elnize how these changes have affected her firm today. She told me that by implementing these principles, she has increased her prices by at least 30%, and at most 200%. With half her client base purged, she’s doing much less work for much more money.
Elnize took the core services that she was offering anyway, and she put those into her middle ‘Full’ package. She then added at least 30% to the price she charged for this before and used that as the lower ‘Essential’ package price. So, the ‘Essential’ package was priced higher and was less work than what she used to do. Her ‘Full’ package, which most people pick anyway, was then at a much higher price, but doing the same amount of work that she did before.
Elnize said, “Doing this opened up so much more time for me and my family, which was the whole reason I started this in the first place!”
Elnize gave an example of one of her clients who does interior decorating. Previously she charged them around $170 per month. Now, just by implementing the basics, Elnize has increased that price to around $720 per month. That’s already a massive increase, but Elnize also said she’s doing less work for them now as well. She provides training videos so that the client can do a lot of the bookkeeping work themselves whilst Elnize focuses on the high-level stuff.
Another example is a corporate hygiene client of Elnize’s who she previously charged $2100 per year for doing their entire finance function. Now she has increased that to $3700, which is much more than she previously would have charged.
Elnize also told me about some complex tax planning work she did recently where she managed to implement value pricing principles to show the client what the tax saving would be if she did this difficult work for them. She ended up asking for $20,000 for that project.
Elnize told me, “I’ve really seen massive results per client, but then overall as a business as well. Over 2021 alone, we’ve added about $90,000 worth of revenue, so that’s really massive for us. From where we were when I started my firm up to now, we have increased our revenue by 280%. When we started, I did it for scraps. Halving my client base and getting these results, it really puts the focus back to where it’s supposed to be – being with my family.”
I asked Elnize whether during this process she was afraid of losing too many clients, or whether she went into the process aiming to lose half her client base. She told me that her mind was at ease because she knew those were her D-class clients who she didn’t like working with anyway.
Elnize said, “I had this one massively horrible client. During COVID times with all the COVID relief measures, we did the application for them for free to help them out. It ended up being such a massive job that if I’d known before, I would have charged them a lot more for it. They ended up blaming us when the government didn’t pay out in time. It was yelling and screaming and threatening to sue us and smear our name. I had to put my foot down and say, ‘You’re out of here, I do not work with people like that.’”
For other clients who were not that extreme, Elnize did feel it was daunting to lose those clients, but when she looked at the numbers afterwards, she knew it was a good thing. Now Elnize has a client base who she loves working with and who value her better.
I asked Elnize what her 3 tips for people would be. She replied:
Watch the full interview with Elnize here: https://youtu.be/16t46EYwGC4
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Wishing you every success on your pricing journey.
Chartered Accountant, Public Speaker and Author of Amazon No.1 Best Seller “Effective Pricing for Accountants”
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