Everybody in the accounting profession is talking about value pricing right now. Why are so many firms making the change to value pricing?
I’ve been teaching value pricing since 2000.
I first came across it in the late 1990s when I was working in my own accounting practice as a sole practitioner. I met Ron Baker, who is now a good friend of mine. He taught me about value pricing and I read his book - it changed my life.
When I first started teaching value pricing everyone was using time sheets. They were all pricing based on the hour; almost nobody had heard of value pricing.
But there has been a big change in the last 5 to 10 years. Everyone is moving to value pricing. Why is that?
You can watch the video here.
There are a number of reasons.
Firstly, we have had a cloud revolution. The technological changes in the accounting profession have made a significant difference to the way we have to price.
We have cloud technology, cloud accounting, artificial intelligence and machine learning. A lot of the work that we do has become automated. As a result there is an increasing downward pressure on price for compliance services.
If we price based on time, our fees are going to come down because technology is reducing the time it takes to do compliance work. Switching to value pricing is necessary to maintain a profit.
Secondly, value pricing is also a better way to price. It’s a fairer way to price.
Using time-based billing, we can’t give a fixed price upfront, and the client won’t know what their bill is until we have finished the work. If we run over, it’s the client that gets the shock of the bill at the end of the work. That’s not fair.
And if we do give a fixed price, we run the risk that if we run over, we end up losing money on the job. It’s impossible to get it right with hourly rates.
But with value pricing, you price based on value.
The client wants more value. They want better results, more advice, a better business. When we help them get those results, they will willingly pay us a higher price. It’s a win-win situation.
Thirdly, firms that are value pricing are getting much higher prices, making more profit, working less hard, doing work that is more fun, more durable and working with better quality clients.
Those still using time-based billing are falling further and further behind.
My question for you is: have you made the change yet?
If you would like to join a community of like-minded accounting professionals learning to value price more effectively and confidently, you can join my Facebook Support Group here.
And if you would like any more help with value pricing, I run a free monthly online training session. You can click here to register and I will send you an invitation to the next session.
Wishing you every success on your value pricing journey.
Chartered Accountant, public speaker and author of Amazon #1 best-seller, “Effective Pricing for Accountants”
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