This interview with Kimme Lafayette demonstrates what is possible when you have a system for value pricing. Read it carefully, there are many learning points.
Even better, watch the full interview which goes into further detail. You can find it on my YouTube Channel here: https://youtu.be/-3CJZYRGZps
Kimme is located in Southern Ontario, in the Niagara region, and she’s had her business for about seven and a half years. Kimme focuses on bookkeeping, sales tax filings and payroll tax filings – focusing on being involved with her clients on the day-to-day stuff.
In a recent interview, Kimme told me, “When I started my business, I had been working as a bookkeeper for a company and they were changing all of their staff to subcontractors, and they dictated what my opening rate was going to be - $25 an hour instead of the salary I’d been on.”
This was a challenge for Kimme because she didn’t know anybody, she had no network. She needed to hire staff but the rate she was charging wasn’t allowing her to do that.
She said, “Of course, then I met you and got into your program and started working on things, and it’s been a joy ride ever since. I got very busy very fast and based on your teachings I started charging more.”
Kimme’s biggest challenge was that she had allowed that former client to dictate what her price was going to be, and it’s very difficult to then change that.
Kimme was nervous about repricing her current clients because she knew they’d been getting such great value from her for a really low price. She said, “It’s difficult to start charging what you’re actually worth.” So, Kimme began by just increasing her price with new clients, not repricing any existing clients.
She did increase her prices annually for existing clients, but those annual increases didn’t amount to what she would charge a new client. Kimme told me she was so busy – she had a lot of clients coming to her through referrals, she didn’t have a niche and she wasn’t saying “No” to anybody.
Kimme said, “I was spreading myself really thin and not making very much money as a result. Even when I did start getting staff, by the time I paid them and my expenses, there wasn’t a lot left over for the quality of life I like to live. I was just surviving and paying bills.”
Kimme told me that her pricing journey started fairly quickly. We met at a conference in Toronto, and she joined my Value Pricing Academy. But, Kimme told me, “I was so busy. I wasn't attending the sessions, I wasn't doing the homework, I wasn't watching the recordings afterwards. I wasn't doing anything, so I quit the program. And I carried on with my hourly billing. And I thought, ‘I'm increasing my rates gradually, each time I get a new client, so things are getting a little better.’”
Kimme had found her niche in the travel industry, but in 2020 when the global COVID-19 pandemic hit, she found she very quickly lost about 90% of her clients because they went out of business. She re-joined the Value Pricing Academy and really got stuck in: she attended all of the live training, did the homework and used the resources.
Kimme also built her own study group so that other people would hold her accountable. Kimme told me, “They’re all always so thankful for our meetings and discussions!” Kimme decided to be an action-taker rather than a note-taker, and that’s when she started to get some amazing results.
Kimme started to use value pricing using my Effective Pricing software rather than hourly pricing. She told me that the very first time she did value pricing, in her words, “I would have quoted this person $4,200 a year for the services I provide them. But they chose my premium package, and their annual price was over $18,000. So that was huge! The second time I used value pricing my increase was almost 200%. And then the third time, the increased price that I was quoted was over $22,000. And that's not even the biggest part of that quote, the biggest part was that it was an increase of over $30,000 of what their previous bookkeeper was charging them. So, the results that I've been getting have been so significant for my business and my confidence.”
Let’s just reflect on that third instance for a second, because it tells us something important. Not only did Kimme get a price of over $22,000 more than she would have thought to quote before, but over $30,000 more than the previous bookkeeper.
Kimme now understands value pricing. She understands the need to create more value and, more importantly, how to communicate that value. There is a temptation to think we have to compete on price, however, the right clients are happy to pay more when they understand they are getting more.
I asked Kimme how her clients had reacted to this pricing process. Kimme went through a two-meeting process with her clients before getting to the value pricing, so she made sure she knew a lot about their business beforehand through a discovery meeting.
She would then run through her pricing questions before pricing with the client to see what price would emerge if they picked different options and packages, and to check everything ran smoothly. Kimme told me that this helped her to get comfortable with the pricing process, and she felt a lot more confident when going into that pricing meeting with her clients.
She said, “So far, those three clients have all felt that I was very professional compared to other accounting professionals they've worked with in the past. They said they had never had anybody take the time to really ask them those questions about what's keeping them up at night or what their goals are. They've always just worked with people that did the books, and that's all there was to it. So it really made me stand out as more professional, which is why everybody keeps agreeing to my premium package.”
Kimme found that people were always saying “yes” to her price; her closure rate was close to 90%. She said, “I was never getting resistance!” Her clients were consistently choosing her most expensive, premium package without any hesitation.
Kimme decided that for client three she wanted her premium price to be so ridiculously high that he would hesitate. She told me, “I wanted that hesitation from him. And I was fully prepared to lose him as a client, because my prices were so high.”
At this point, Kimme got what she was aiming for: the client did hesitate this time. She said, “I felt really good about that. He asked me for 24 hours to think about it and I walked away from that meeting having achieved my goal to get resistance. He then got back to me less than 24 hours later and said he was really looking forward to working with me and that he would be pleased to choose my premium package. And I thought, ‘Geez, next time I have to push the limits even more!’”
I asked Kimme why she thought her clients kept choosing that Premium package, even when she raised her price so high aiming for resistance, and she told me that, firstly, she believed this was due to anchoring.
Kimme said that she explained to her clients what she would do for them with her basic and middle packages, and that it wasn’t particularly much work. But she would then really sell to them the Premium package, describing it as, in her words, “The equivalent of having a full-time bookkeeper at your beck and call.”
Kimme would articulate the benefits of this package so well, saying, “It's like having me sitting at a desk beside you Monday to Friday, to be there to do everything bookkeeping related that you need. Then I say that the price in my area for a full-time, certified bookkeeper is around $75,000-$90,000 a year. And I use that as an anchor before I reveal my price. So I think that's why everybody chooses my Premium package, because of how I sell it.”
When I asked Kimme what the biggest impact these increases in pricing had had on her, she told me, “I feel passionate about my business again! I got into this line of work because I love math, I love numbers. And I had that passion when I first opened my business, but I lost it. When I was under-pricing myself, I felt resentful of my clients. And going through this pricing journey has given me back that passion and I love my job and my clients again. That's been the biggest thing for me.”
I asked Kimme what her top tips for others going through this process would be. She told me:
If you want to watch the full video with Kimme, go to https://youtu.be/-3CJZYRGZps
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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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