In the first of this series of three blog posts, I explained what the commodity trap is, and the big mistakes our profession makes that lead to working way too hard for way too little money. I told you that the key to avoiding commoditisation is differentiating your services so that they cannot be compared to others’.
Then, in my last blog post, the second in the series, I showed you how we can differentiate anything, and explained that we need to follow a high differentiation, high value pricing strategy to stop being seen as a commodity and stop pricing too low.
In this final blog post, I want to share with you three different aspects you need to think about in order to create more value for your services following that high differentiation, high value model.
The first thing you need to think about is how can create more tangible value or benefits. What I mean by that is, whatever service you’re thinking...
In my last blog post, I talked about what exactly the commodity trap is, and the big mistakes our profession makes that lead to working way too hard for way too little money. I told you that the key to avoiding commoditisation is differentiating your services so that they cannot be compared to others’.
In this blog post I’m going to show you how, with a little creativity, we can differentiate anything, including our services. I’ll take you through 3 different pricing strategies that we can follow and explain which one is going to help you to differentiate your services so you can stop being seen as a commodity and stop pricing too low.
First, let’s look at examples of how anything can be differentiated with a little creativity. Take one of the most common substances on the planet: water. We might think of water as being a commodity because we can simply turn on a tap and it...
A commodity is a product that has become interchangeable with the same product from other sources; customers perceive the product as being identical regardless of the source. When customers view your product or service as a commodity, the only differentiating factor becomes price. This is a bad thing because it means customers will go for the cheapest option, forcing us to compete on price.
I see people posting online about compliance services like bookkeeping, payroll, tax returns etc. being commodity services. That’s a big mistake. These services are not a commodity unless you think they are. What we need to do is banish that commodity thinking.
One of the big mistakes that we make in our profession is very simply: we price WAY too low.
I see this over and over again. I did it myself when I started my accounting firm back in 1996. For...
I interviewed Lana Jo Hill in July 2020 because she was having extraordinary pricing successes, despite some personal challenges and the world going into lockdown. Lana talked about scope creep and the importance of working with the right clients.
If you would prefer to watch the full interview, you can find it on my YouTube Channel here: https://youtu.be/HACoKZ77ltU
Lana owns her own virtual bookkeeping firm, Hill Bookkeeping and Consulting, based outside of Baltimore, Maryland. The business will soon be reaching its fifth year.
Lana started her virtual bookkeeping business to fulfil her passion for helping small businesses grow. Having a virtual business is also perfect for Lana as it allows her to spend more time with her two young boys whilst still continuing to earn an income.
One of the biggest challenges Lana has had to face is scope creep.
Here is another inspirational case study from a multi-award-winning bookkeeper in Canada, Teresa Slack.
As always, if you would prefer to watch the full interview, you can find it on my YouTube Channel here: https://youtu.be/MlXQpU_TxKI
Teresa runs Financly with her sister Connie which they started seven years ago. From day one, they decided on being a virtual firm, and they grew really quickly thanks to networking events. They decided it was time to hire staff and hired three bookkeepers.
But they quickly realized that their hourly rate of $35 wasn’t enough to cover paying their staff and business expenses, and things got bad. In a recent interview I had with Teresa, she told me, “We actually hit a point where Connie and I had to put our own personal funds in just to cover our payroll. That was extremely stressful!” Teresa found there was nothing left after paying their staff to allow them to get...
This story is a very typical story of how an accounting professional moved away from hourly billing and the results she got. Her name is Jessica Fox.
Watch the full video where she describes her results here: https://youtu.be/L1v5QwdRCWU
Jessica Fox started Florida Virtual Bookkeeper in 2016. Before then, she had been a corporate bookkeeper, so she was great at the technical stuff, but knew nothing about pricing.
When Jessica decided to become a freelance bookkeeper in 2010, she had two clients. One tax accountant who kept her busy with clean-up work and catch-up projects; they told her how much they would pay her, and she agreed. So, she had no need to know how to price.
The other client was a small non-profit, which Jessica worked for mostly out of the kindness of her heart, not because of the money, so she was only charging them very small amounts.
This is Melanie Jury’s inspiring story. If you would prefer to watch the full interview, you can find it on my YouTube Channel here: https://youtu.be/9X6LSo9FNo4
Melanie Jury started her bookkeeping journey in the mid 90s. Her family had a business, and she was bookkeeping for that company, which then led her into other companies.
Melanie then started her own bookkeeping business, but at that time, she was raising her children and didn't have very many clients. That was a good thing because she wanted to raise her children and be there for them.
Melanie’s company was all manual and desktop-based, there was no cloud software, and it grew very fast. So did the family business, and this meant she had to take a step back from her own company, let it go, and focus on the family company.
In the end, that didn’t really lead anywhere for Melanie, so she left the family business, and started over with her new...
This is the story of Elnize Goosen who has been putting the value pricing foundations in place for the last few years and transforming the results of her firm.
Of course, if you would prefer to watch the full interview, you can find it on my YouTube Channel here, https://youtu.be/16t46EYwGC4
Elnize Goosen’s firm, DGE Chartered Accountants and Registered Auditors, is based in Centurion, South Africa. They are a fully virtual, cloud-based firm.
Previously, Elnize worked in a corporate firm. However, the firm that she was working for merged with another firm, and they had a finance department already. Elnize was declared redundant. In a recent interview together, Elnize told me, “I was about six or seven months pregnant at that stage. And I was declared redundant, and I lost my job. It was a shock! But for a while before that my husband Daniel had been nagging me to start my own firm. That was the...
You must review prices regularly. After all, circumstances change. One of the most common questions I get from the accountants and bookkeepers I work with is how to re-price existing clients, particularly when the current price is far too low, and the price hasn’t been changed for some time.
This is a huge opportunity for you to significantly improve your profit. Here’s a case study to help illustrate that. It is based upon an interview I did with an accountant called Stanley Dean in October 2021.
If you would prefer to watch the full interview, you can find it on my YouTube Channel here: https://youtu.be/JMbt8Sxvz8Y
Stanley Dean runs a firm called SDA CPA Group in Atlanta, Georgia in the USA, and has been in business since 2003. When he started his firm, as a CPA Stanley believed he knew everything about running an accounting practice. However, it wasn’t until he got into it that he realised he...
This is the story of Carol Kostachuk who is now much more confident with pricing. She knows she does not need to win every client and she uses a meeting fee to pre-qualify.
If you would prefer to watch the full interview, you can find it on my YouTube Channel here: https://youtu.be/O7nxDdBzyOU
Carol is based in British Columbia, Canada, and has been in business for over 24 years. She started in a position where she was doing administration and bookkeeping. But Carol was working crazy long hours, going to work at 5:30 in the morning and not getting home till 5:30 at night.
Then, when she was off on maternity leave, Carol spoke to her friends that were already in the bookkeeping business right out of school, and during her maternity leave she started her own business.
Since then, Carol has completely transformed the way that she prices from the old-fashioned way of time-based billing. I spoke with her recently to...