You must review prices regularly. After all, circumstances change. One of the most common questions I get from the accountants and bookkeepers I work with is how to re-price existing clients, particularly when the current price is far too low, and the price hasn’t been changed for some time.
This is a huge opportunity for you to significantly improve your profit. Here’s a case study to help illustrate that. It is based upon an interview I did with an accountant called Stanley Dean in October 2021.
If you would prefer to watch the full interview, you can find it on my YouTube Channel here: https://youtu.be/JMbt8Sxvz8Y
Stanley Dean runs a firm called SDA CPA Group in Atlanta, Georgia in the USA, and has been in business since 2003. When he started his firm, as a CPA Stanley believed he knew everything about running an accounting practice. However, it wasn’t until he got into it that he realised he didn’t, especially when it came to pricing his services.
In a recent interview, I asked Stanley what some of the problems he was having with pricing were. He told me, “It was just too low for sure! I was using a program in the US where you sell services using telemarketing, and as part of that program they had a suggested fee sheet to price the services, and they were way too low. There were some years where I was losing money because of the program. That went on way too long.
That went on until Stanley got involved with my program and started to learn about different ways of pricing, how to be more confident in his pricing, and how to reprice his existing clients.
One of the first steps Stanley took when changing his pricing was offering his clients different packages to try to evaluate what was the most the client would pay. By offering multiple packages, he was able to get his prices up with his existing clients as well as with new clients, and that helped him to gain confidence.
Stanley told me it took about a year to get his packages together. He said, “On our website I put together the packages and tailored them around the information in my brochures. I took the brochures from the Value Pricing Academy and put our graphics and branding on them.”
Stanley also saw from other groups he was in that his prices were way too low. He said to me, “You provided the way to price things, so I used that plus some of the prices I saw from other firms to see I needed to really increase my fees. That combination got my prices up significantly.”
The great thing about Stanley’s brochures is that they help to distinguish him from other firms that a prospective client may be looking at. Stanley told me that he’d had prospective clients tell him how professional his systems and processes came across.
I asked Stanley how he dealt with repricing his existing client base, as a lot of accountants and bookkeepers worry about losing clients through this process. He told me that hearing from other firms and the kind of fees that they were able to get for their services gave him the confidence to increase his own prices. Stanley said, “I knew we did quality work. It’s not like we were charging high prices for low service. We needed to get paid for what we were doing. And our profitability was nowhere near where it should be. So I felt comfortable with raising the price, and I took on an attitude of being okay with losing clients that I was losing money on.”
Stanley told me that 2018 was the first year he increased his fees, and that he managed an overall increase in fees of 47%! He said, “I did lose a few clients, but even after losing those few clients my revenue was up 23% on fewer clients.”
In fact, Stanley told me of one client that he increased by 100%, another he increased by 126%, and a third he increased by 135%!
In the letter he sent out to his clients to explain that they were being repriced, Stanley evaluated the services that he was offering his clients and he started offering them his different packages, which he hadn’t done in the past. This meant that his clients had options. If they felt Stanley was charging them too much, they could choose the cheaper package.
Stanley told me he then did another reprice the following year. That added an extra 11% increase in prices to the 47% increase from the year before. That equates to an average price increase over 2 years of 63.17%.
Then, just last year, he increased again and added another 10% to that. That equates to an average price increase over 3 years of 79.49%!
When he repriced these clients, he sent out a letter again explaining the different packages, and why their fees were increasing. This could be because their number of transactions had increased, and the fee needed to reflect that. He gave them plenty of notice of this increase, sending the letter out in November with the increase occurring in January.
I asked Stanley what his practice was like today. He told me, “About the time I decided to increase the fee significantly, three years ago, I also decided to get out of the individual tax return market. I only wanted to serve small businesses and their owners. We still do individual tax returns, but only for owners of small businesses. We do about 200 total and we get pretty large fees on our individual tax returns.”
Today, Stanley’s profitability is much higher – even last year during the COVID-19 pandemic, the revenue was the highest ever for the firm out of the 18 years they’ve been in business.
Stanley said, “I'm very much more comfortable and confident in pricing and offering our services because I'm willing to not take on every client that comes along, we now screen our clients before I even talk to them. If they don’t own a business, I’m not interested in talking to them, and even then, their business may be too small to afford our services. My assistant screens all these prospective clients for me.”
I asked Stanley what his top three tips would be based on everything he’s learned over the past few years. He told me:
Watch the full interview with Stanley here: https://youtu.be/JMbt8Sxvz8Y
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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