Would you like to increase profits? Then perhaps it’s time to move clients to a new way of pricing…
One of the most common questions I get asked is, "When we move to value pricing I understand how to use the new approach with new clients, but what about existing ones?"
It’s a great question, and it includes two separate issues. The first is simply about transferring clients to a new way of pricing.
What does every customer want?
Research shows there are two things every customer wants:
· certainty – about what they’re getting and, most importantly, its price
· choice – everyone has their own wants, needs, and things they’d like to avoid.
The problem with time-based billing is it doesn’t meet either. First, a price based on time means there's no certainty. Customers won't know the price until the job’s finished.
And second, an hourly rate doesn’t offer any choice.
Customised services offer choice and certainty
Rather than a one-size-fits-all solution, customise your service. In the case of existing clients, you could say something like:
“Hi John, our clients have told us that they hate accounting and bookkeeping prices based on an hourly rate. It means they don’t have a final price to budget for. And it doesn’t give them any choice. So from now on, we want to offer you a fixed price and a range of packages.”
I promise you your clients will love this, because it gives them what they want: choice and certainty.
But won’t we have to increase our prices?
The second issue relates to the real question I think I’m being asked. It’s “If we move into value pricing, and we do it properly, won’t our prices go up?”
And yes, they absolutely should go up! From my research, the accounting and bookkeeping professions are way too cheap.
What I really think I’m being asked though is, “Mark, if I put my prices up – won’t I lose my existing clients?”
And the reality is: “No, you won’t.” At least not if you do it the right way.
First, because many clients actually know you’re too cheap. And second, when you move to value pricing, you have to learn to better communicate your value.
Communicate your value
But there’s no need to panic – just making sure you explain the way you do things will increase customers’ perceptions that you’re doing more. Even though you’re doing exactly the same as you’ve always done, explaining this in a way that helps clients see your value means they will happily pay more.
That’s because people are value sensitive, not price sensitive. And I know this because almost everybody I’ve helped move towards value pricing over the last 16 years tells me:
“I've managed to increase my prices by about 20% and hardly lost any clients at all.”
And, in many cases, they’ve not lost any.
Find out more
Every month I provide free online training helping accounting professionals get results from value pricing. If you want to get access to that free training click here to register your place on the list of people I invite.
Wishing you every success on your pricing journey.
Chartered Accountant, public speaker and #1 best-selling author of
“Effective Pricing for Accountants"
Your Pricing Journey gives you access to my pricing training delivered every month in easy to digest, and easy to implement, steps.
So if you sometimes find yourself working too hard, for too little money, this programme will solve that problem.