I am frequently told by my students in the Value Pricing Academy that price psychology is the most fascinating and powerful aspect of pricing.
In this interview with Jan Baudat, she talks about how she re-priced her clients. Look out for how she uses quantification, the contrast principle, and creates a new anchor when re-pricing.
If you would prefer to watch the full interview, you can find it on my YouTube Channel here: https://youtu.be/9SPxX_P3EM0
Jan and her husband Michael are the owners of QB Jan LLC DBA: FitBooks, a business cash flow management service. Together, they handle bookkeeping and remotely support over two dozen QuickBooks Online and QuickBooks Desktop clients. Jan currently lives in Cornville, Arizona (near Sedona), and is planning to move to the Weatherford, Texas area in the fall of 2021.
Jan shared with me how she used to struggle with pricing, having not put her prices up in three years, and with such an important move on the horizon, getting her clients repriced successfully was crucial.
Jan told me, “Our income could not change, or we would not qualify for the loan when the house is finished and closes later in the year!” Despite these worries, Jan ended up getting an AMAZING result through her repricing process, which she shared with me in a recent interview. Jan’s results are truly inspirational, and she has some great tips for anyone else who might be in a similar situation, afraid of repricing their clients.
I asked Jan what the difficulties she had with pricing bookkeeping services were before joining my Value Pricing Academy, to which she responded:
“The hourly rate issue – the better the technology got, the less money I was going to make. It was very frustrating to be faced with losing income because we were getting faster with the technology but having to pay for that technology to do it. Making our lives easier was going to make us less money.”
Jan told me that she realised she needed a system for pricing services that wasn’t based on an hourly rate. After seeing my keynote at a QBConnect conference several years ago, Jan joined the Value Pricing Academy, started using the Effective Pricing software, and got all her clients set up on fixed pricing. She got some good results from doing this.
But, three years down the line, with over a year of that being the global COVID-19 pandemic, Jan didn’t reprice her clients again. She told me, “My new clients were paying in some cases double or more what my older clients were paying. Scope on some had changed dramatically and it had not been properly addressed.”
Jan knew she had to reprice these clients, but after such a long time, in her words, “I was scared”. Scared of clients’ reactions, and of losing more client income if some left due to the repricing process which would put her income and house loan in jeopardy.
The first thing Jan did to begin this repricing process was go back through the Value Pricing Academy training library, revisit the resources there for repricing clients and watch the videos again.
“Going through the resources and watching the videos made it so much less stressful for me to do this process as it built my confidence up!” Jan told me she “attended every one of my VPA repricing sessions running this year. I asked loads of questions. I read some more. All to build my confidence back up to a level that would give me the courage to actually do this!”
Next Jan went through and scored her clients. This involved making score cards which ranked the client from A to D (with A clients being the best clients) based on questions such as ‘Is the client’s business profitable’ and ‘Does the client listen to our advice?’ Through this process, it became clear which clients were Jan’s ideal clients, and which were not. The score card also included the client’s current monthly payment for reference.
Then she wrote individual emails to the clients that she wanted to reach out to for the repricing conversation.
This is what she put in those emails:
Email Subject: Bookkeeping fixed price agreement renewal
We had intended to have a meeting with you last Spring or early Summer to review your fixed price bookkeeping agreement with us. However, due to the uncertainty of the times we decided to leave things as they were for another year. Last year has come and gone and it is now time for us to re-evaluate our service contract with your business.
Believe it or not it has been 2 1/2 years since we established your monthly fee with no change in price. We're in business and just like you, we need to review our prices regularly to stay in a profit position. Also, some of our service offerings have changed and perhaps your needs have as well. A new and improved agreement will help us make sure that the price is fair and that you are more than satisfied with our services. We absolutely love having you as our client and working with you has always been a pleasure.
We look forward to talking with you soon so we can schedule an appointment to create a fresh new fixed price agreement!
Then, over the next few months, Jan contacted each client to schedule an appointment for a virtual meeting.
What Jan did next was really clever.
She created a new ANCHOR for her clients that wasn’t the lower price they were already paying. “I used Effective Pricing to come up with what a NEW client would be paying for the same current services, and then gave the client a 15 to 20% discounted price”. Jan then asked them if there were additional services that they might want, and discussed their current situation and their future goals, as well as possible upcoming changes in their situation. The biggest challenge was the client comparing their new, higher price to the old price they were paying, so by showing the client the price a new client would pay, then offering a ‘great client discount’, Jan established a NEW ANCHOR in their minds, which she described as, “so they could realize how much prices had increased and what a bargain they had been getting!”
After this repricing conversation, Jan told me that although clients understandably didn’t want the price to go up initially, she said, “They all understood and picked a new package that suited them. Many had scope changes that had not been addressed so I explained the changes to them and how that impacted the price."
Through this careful planning and preparation, Jan’s repricing was a total success! FitBooks lost no clients, which had been a key fear of Jan’s, and the total overall increase in prices per month was a 45% increase with just 8 clients!
Jan described this outcome as “a huge win overall for me emotionally, relationally and financially. It gave me confidence to just keep doing it each year and not get behind”.
Jan now has more time, can work with fewer clients, and clients that she actually wants to work with. Most importantly, Jan said “It’s wonderful to be free of the time clock!”
After going through this process with such an amazing outcome, I asked Jan what her top tips for other accountants and bookkeepers who might also be struggling with pricing or scared of going through the repricing process would be. She replied:
If you found this valuable and would like to learn more about value pricing, I run a free live online training session every month with a topic chosen by you. Attend live and you can ask me any questions you have. Click here to register and I will send you an invitation to the next session.
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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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