I made this mistake all the time when I first started my accounting firm. It took me years to realise it.
The mistake is basing our price on the competition.
Many accountants, myself included have done this…
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I’d go to the potential client. I would say all the right things. I’d impress them with what I could do.
Then, during my meeting with the prospective client, I would explain to them how I helped with taxes and planning and it would really help me if I could see a copy of last year’s set of accounts so I could fo through and look for some tax planning opportunities. Which I did.
But the real reason I asked to see the accounts would be to flick to the back page and look for the previous accountant’s fee.
Having got that number I would propose a price of 5-10% less than the previous accountant. In hindsight, this was a terrible method of pricing.
I won lots of business this way, I grew my accounting firm fast over the first two or three years. It looked successful, but it took me three years to realise I wasn’t actually making any money.
I was working crazy hours for not enough money.
My pricing was just too low because I had based it on the competition.
Most bookkeepers and accountants don’t know how to price. They are too cheap. Copying those people is a terrible idea.
We also have to recognise that if this client is thinking of changing their accountant or bookkeeper, then there must be something about their current advisor they are not happy with. We should absolutely be charging a higher price because this client wants more.
When you are pricing brand new work, a brand new client, make sure you do NOT copy the previous accountant or bookkeeper.
In fact, don’t even try to find out what they charged.
If you find that number, it will create an anchor in your mind and you it will affect your particular price, and you may end up going lower than you really should.
If you need more help in perfecting menu pricing, I run a free monthly training program online which you can attend and ask me questions. You can click here to register and I'll send you an invitation to the next session.
And if you would like to join a community of like minded accounting professionals learning to price more effectively and confidently, then you can join my Facebook Support Group here.
Wishing you every success on your pricing journey.
Chartered Accountant, public speaker and #1 Amazon best seller of “Effective Pricing for Accountants”
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