Why believing in a market price could mean you’re missing out
As the Amazon number-one best-selling author of “Effective Pricing for Accountants”, I want to share with you why there's no such thing as a market price.
Often, if I tell an accountant they’re charging too little for something, that they should increase the price of doing a tax return, for example, they’ll say, "But Mark, you don't understand my client base. I’m charging the market price – I can’t charge any more."
But I’m going to tell you exactly what I tell them: that they’re wrong. That’s there's no such thing as a market price. And I can prove it.
Staggering results from benchmarking survey
In 2014 I was privileged to carry out the single biggest benchmarking survey of the UK accounting profession. In it, I asked 725 accounting firms a whole bunch of questions about how they price as a profession. In particular, I looked at 25 different accounting, tax and bookkeeping services, and asked two questions:
· How they priced – did they base it on time, a fixed price, or something else?
· What their price was.
Then, for each of the services, I created a chart to explain the results using five columns. On one end of the spectrum was the lowest price, followed by the first quartile, then came the average or median price, the third quartile and, finally, the most expensive price.
If you want to see what the graphs look like, I reveal them 2 mins into the video.
You can watch the video here.
Top-performing firms charge 2-3 times more
What I found was that it didn't matter which service I asked about, the range of prices from the cheapest to the most expensive was staggering. The top-performing firms were sometimes charging two or three times the price of the average firm, let alone the cheapest one.
This tells us two things:
· There is absolutely NOT a market price for accounting services. If there were, people would be charging about the same price.
· 10 - 15% of the top-performing firms charge significantly more then the average.
So, how can we learn from them?
The reason the top firms can charge more is that we're not selling a commodity. If we were selling laptops, for example, then perhaps there might be a market price, but we're not. We're selling a service. We're in the relationship business.
And my analysis uncovers just what an exciting opportunity that offers, because it reveals the top firms have found a way to charge more and show us what’s possible.
The next question, of course, is how we can learn from them to get those same great results…
If you’d like to read my full research report you can download it from my website – where you can also take a look at my other books. Click here to go there now.
Wishing you every success on your pricing journey.
Chartered Accountant, public speaker and #1 best-selling author of
“Effective Pricing for Accountants”
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