Is doubling your price ripping the client off?
Today I’d like to cover something that often comes up when I’m leading seminars and workshops. Almost every time I share stories of how firms using my techniques are able to double – or even treble – their prices, someone in the group will say, "But Mark, if I'm charging double what the firm down the road is, aren’t I ripping my clients off?" The answer I always give is: Absolutely not!
Why? There are three main reasons:
1: Clients aren't stupid
When your clients make a purchasing decision, they do it for the right reasons. They've chosen you because there's something about you they like. They probably know there's a cheaper alternative, but it's the same with many other things they might buy.
Why, for example, do so many of your clients buy their coffee in Starbucks when there are cheaper ways of drinking coffee? It’s certainly not because they’re stupid. (At least I hope not, because I do the same!) The reason we choose Starbucks is because we like the coffee and the whole experience of buying it from them. Your clients are doing exactly the same when they choose you.
2: The power of three
As long as you've been following my advice, you’ll already be giving clients a choice by offering three pricing options. That way, if they decide to choose the most expensive, it's entirely up to them.
3: Most people’s prices are way too low
The third reason is, I think, even more important. I know from my research that most accounting professionals are too cheap. And, when we price too low, we have to make compromises. Sometimes this means we end up making less money, or working longer hours. Other times, though, we end up cutting corners. Not because we want to, but simply because we’re up against the clock and need to get the job done. As a result, we miss opportunities to add value.
A prime example, and one which I often look at in more depth in workshops, is the way UK accountants incorporate businesses. (By incorporate I mean the way accountants take a sole trader and – as long as there are benefits such as tax advantages – move them to a corporate structure.) What I've found is that the prices they charge for this are crazily cheap, on average £200 - £400. In contrast, firms I work with charge four- or five-figure sums for the same process.
Clients deserve the best
Again, some of you might think, "But if one firm will do it for £300, while others charge £2000, they must be ripping clients off." Again, the answer is, ‘no’. I genuinely believe that the cheaper firms are in danger of being negligent. In the case of incorporations, for example, there are at least twenty different things we need to consider if we’re going to do the job properly and give the right advice.
The problem is we don't always recognise the importance of what we do. But, when I explore these twenty things in seminars, everyone agrees they couldn’t possibly consider them all for £300. That’s why we owe it to our clients to be expensive. They deserve a Rolls-Royce service – and we need to allow enough time in our budget to provide one.
You can watch a video where I go into more detail here.
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.
I’d love to hear your thoughts in the comments section below. In the meantime, 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.