A few months back I discovered something that astonished me…
Accounting firms in the US are better at pricing bookkeeping services than those from other countries like Canada, the UK, and in fact the rest of the world.
In my recent study, with 2683 participants, I wanted to find out how accounting professionals are coming up with their prices for bookkeeping services, and exactly how much they are charging.
A mixture of qualified and unqualified accountants and bookkeepers took part in the survey from all over the world.
We analysed the data and then broke it down into different countries to see if the location of a firm had an impact on the way they price. I wanted to know if there was any significant difference in the prices that firms from the US got as opposed to firms from Canada and the UK.
The survey was largely based around 12 different bookkeeping client scenarios. We asked participants to recommend a price for each scenario and answer in their local currency.
We were then able to take the results from those 12 different questions and combine them to create what we have called a portfolio price.
If you had this exact mixture of clients in your own business, the portfolio price would represent your average fee. Using this figure, we can compare how firms are pricing across different countries.
When we looked at the US data compared to the entire global data, we found that firms from the US are consistently charging a significantly higher price when compared with the results from the overall population.
We organised the data into ascending order and then located the lowest and highest price for each set of data, and the median (the exact middle) to use as our average. We also found the 25% and 75% of the data. These figures give us a good representation of the range of prices.
As you can see, the US were pricing much higher for bookkeeping services at every level.
As I am from the UK, it was particularly concerning for me to see that the UK are actually rather poor at pricing their bookkeeping services - accountants and bookkeepers alike. We are lousy at it - so what is the US doing that makes those firms so much better?
I looked for patterns in the data and one of the things I noticed was there was a significant difference in the pricing method they were using.
When asked: “How do you come up with your price?”
Here were the global responses:
Hourly Rates - 40.2%
Single Fixed Price - 34.2%
Menu Pricing - 18.4%
Pricing Systems - 7.2%
And here’s how the US firms responded:
Hourly Rates - 25.5%
Single Fixed Price - 41.1%
Menu Pricing - 23.0%
Pricing Systems - 10.3%
As you can see from the results, there are considerably less people using hourly rates in the US. The majority have made the move to using a single fixed price. There are also a lot more instances of people using value pricing methods of either menu pricing or pricing systems.
Compared to all of the other reasons, this one seemed to explain more than anything else why the US are charging higher prices.
The conclusion I take away from this is, not only are they better at pricing in the US (and we should all learn from what they are doing) but these results are proof that if we continue to use hourly billing, we are going to see worse results.
If we want better prices and to make more money, we need to adopt value pricing.
If you want to see more of the results from the report you can download your free 36-page country specific sample copy here. Or you can buy the full report here.
If you need more help with value pricing, I run a free live online training session every month which you can attend and ask me any questions you have. Click here to register and I will send you an invitation to the next session.
And if you are interested in joining a community of like-minded accounting professionals learning to price more confidently and effectively, you can join my Facebook Support Group here.
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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