Debunking the myth of price sensitivity
One of the big myths I hear over and over again – and one of the main things holding us back with our pricing – is that our clients are price sensitive. But, as the Amazon number-one best-selling author of “Effective Pricing for Accountants”, I can tell you that they’re absolutely not.
Let me explain.
Most accountants and bookkeepers I speak to think their clients are price sensitive. But research by behavioural economists suggests that the number of price-sensitive people in society is about one in five, or 20%. And a typical example might be someone who’s retired, who collects the free newspapers and goes through them every weekend meticulously cutting out the 3p-off food vouchers.
So I admit all they care about is price. They’ve got time on their hands. But what I also know is that they’re not your clients. And, if they are, then you may want to revisit your ideal client process!
If you’d like to learn more about debunking the myth of price sensitivity, you can watch my latest video here.
Your ideal clients aren’t in that 20%
To repeat: your ideal clients don’t form part of that 20%. To prove it, think about them for a minute. Do any of them visit Starbucks or Costa coffee? If they do, then by definition they’re not price sensitive because there are far cheaper ways of getting their coffee fix!
Similarly, have you got any clients who own an Apple product? Maybe an iPhone or an iPad? If so, again, by definition, they can’t be price sensitive. There are much cheaper options available.
Price is only part of the equation
What this shows is that most people aren’t price sensitive. They're value sensitive. These are two very different things, and once we understand that everything changes.
The reason many accountants think their clients are price sensitive – and perhaps you’ve experienced this – is that they’ve had a situation at some point where they revealed a price and their client says, “Oh dear, it's a bit more expensive than I was expecting.”
But they don’t say it to you because they're price sensitive. The reason they say it is because they don't understand the value. And that's your fault, not theirs. We have to be better at explaining value. To go back to price sensitivity versus value sensitivity. Most people in society – about 80%, and certainly all of your clients – are value sensitive. They want the biggest profit on the deal. And price is only one part of the equation.
Price – or value?
What people want is as much value profit as possible. The trouble is, because we think clients are price sensitive, we focus on price. We try to be competitive – i.e. cheaper – than the firm down the road. That's crazy. We have to start focusing on value.
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.
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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