As a profession, accountants and bookkeepers are pricing way too low.
We’re too cheap. We’re working crazy long hours for too little money.
Part of that is because we feel uncomfortable charging higher prices. This is a huge problem. We value ourselves too little.
But accountants and bookkeepers have the potential to make profound differences to peoples’ lives. We are hugely valuable. We can change peoples’ businesses, we can increase their profits, help them improve their cash-flow, save them time. We can really have a profound impact on what we do.
You can watch the video here:
We need to become more comfortable with charging the right prices. That’s part of value pricing.
Value pricing means that we should be putting up prices and charging based on value.
Sometimes, doing that means, for some services and for some clients, we should double our prices. I’ve seen some accounting firms treble or even quadruple prices for doing similar...
If you want to get a proper value based price, then you need to speak to the client. You can’t possibly understand what a client values until you’ve had that conversation with them.
It’s really important to have this conversation face-to-face if possible.
There are three key stages to the value conversation.
You can watch the video on this topic here. Or if you prefer you can keep on reading.
#1 - Uncover the value
You do this by asking questions. You need to ask the client the right questions to understand…
The better you are at asking questions and understanding what is important to your clients, the better you will become at understanding value. You can then build them a perfect solution that meets their specific needs.
You can charge a higher price for providing them with such...
One of the key characteristics of value pricing is that normally - not always, but most of the time - we are giving a fixed price upfront.
We have to make sure we properly scope the work. We need to understand what is needed, what work is required so that we can give that proper fixed value based price.
We come up with scope partly from experience.
Sometimes we will get it wrong. Occasionally, you will give somebody a fixed price for a piece of work, do the work and something unexpected crops up. We just have to learn from that.
Make sure you have a system in place for coming up with a price and make changes if something unexpected comes up.
What are the questions we should ask? Every service is different.
If you want to watch the video I did on this topic you can click here.
For bookkeeping we might ask how many transactions there are in a month. Clearly, the more transactions, the more scope and the higher the price should be.
But it’s not just...
How do you value price clean up work? You’d be shocked by how many times I get asked this.
It’s a tricky thing to do, but I have the solution.
Just so we are clear - by clean-up work I mean sorting out the books and records, perhaps when we take on a brand new client, and they haven’t done their bookkeeping for six months.
We need to fix that before we can start doing the current work. How do we do that?
I’m going to share with you 4 key ideas that you should think about when pricing clean-up work.
You can watch the video here.
#1 - Value Price
What’s the value of clean up work?
That’s something you will have to communicate to the client.
They don’t see any value in the process of doing the clean-up work. So, you need to communicate to them how much value it will give to them if you were to clean it up for them.
It may be they have come to you for help with clean-up work because they are behind, they’re getting pressure from the tax...
How do you calculate a price? It’s a big question I get asked all the time.
There are essentially only two ways that you can price. Cost plus pricing, and value pricing.
Cost plus is the old fashioned way of pricing in the profession. It’s based on time.
Value pricing is the superior way of pricing. We price based on the value the customer places on our service. But how do we know what that is?
The problem is we don’t - the customer will have a number in their mind that they are willing to pay based on their perception of value. They won’t tell us what it is.
Nevertheless, we have to figure out some way of coming up with a price. I’ll give you three ideas…
You can watch the video here.
#1 - Get a fixed price upfront
You need to make sure that you cover your costs. You need to properly identify the scope of the work. That comes from the experience of doing the job and knowing the right questions to ask the client and building that into your...
It’s difficult to say no to your clients when they ask you to do a small task.
But it’s taking up your time. And you are not getting any money for it.
There are some tasks we often get asked to do, like:
These are really simple, easy tasks that we often just do for free.
But this is actually a form of what’s called scope creep.
Scope creep is when the work we do for a client ends up taking longer than we imagined, and therefore we end up spending more on costs, writing time off, and ultimately making a loss on the job.
Why do we let this happen?
It happens for two main reasons:
This is a huge problem. We are giving away so much for free.
But there are stages of tackling this...
Accountants and bookkeepers that I have spoken to tell me they find it difficult to uncover what their clients value.
There is a questioning process that we should be going through.
We need to have a set of questions prepared to ask our clients to get to the root of their pain, to find out what they really want and what they really value.
You can watch the video I did on this here.
Start off with background questions.
These are the questions we would often ask when we meet a client for the first time. We might want to know a bit about their background, why they got into business, what their goals are, what they want out of life.
Those are the questions we are comfortable with. They are familiar questions.
The next three sets of questions are the ones that are really important to uncovering what the client truly values.
#1 - Problem Questions
We need to drill down to what problems and pains the client is facing right now. What challenges are they facing in their business?...
There is a big mistake people keep making with menu pricing.
I think it comes from a lack of understanding of what menu pricing really means and the power of it.
Click here to watch the full video.
So, let me first explain what it means…
What is Menu Pricing
Menu pricing is giving people different choices, different options, bundles or packages.
Sometimes it is referred to as bronze, silver and gold. Sometimes, it’s the good, better and best strategy. If you read the textbooks on pricing, it’s very often referred to as versioning.
It works incredibly well. It’s so powerful.
Occasionally, I come across accountants that tell me it doesn’t work. That leaves me intrigued, because all the research and evidence is absolutely clear that this strategy works.
What are you doing wrong?
I’ve found that many people are doing it wrong. This is due to a lack of understanding, or lack of knowledge of how to build your packages and give people...
Bad payers are prevalent in small businesses. They are crippling them and many accounting firms as well.
Most people do the work, send out an invoice, then cross their fingers that at some point soon the client will pay. Hopefully within our payment terms. Hopefully within the next 30 days.
That’s a huge problem. Very often they don’t pay in time, or even at all.
We could build in our payment terms into our engagement letters. We could put it on the invoices.
But we know that very often clients ignore those terms and they pay when they feel like it or when they have the cash available.
Click here to watch the full video, or if you prefer, you can carry on reading below.
We are giving a service - we should be paid upfront
We are in the service industry. It should not work like that. We should not be acting as a bank and giving credit and lending money.
We should be paid upfront.
That’s how it works in the service industry.
Think about the last time you took...
I’m going to share with you the 4 types of buyers.
Once you understand their characteristics it will help you with your pricing.
If you want the full details, you can watch the video here.
#1 - The price buyer
The price buyer is the person that shops based on price. Price is the most important thing they are looking for.
They are price sensitive.
Thankfully, research shows there aren’t many of these types of buyers in society. It’s typically estimated this group make 15-20% of buyers.
These people aren’t entrepreneurs, they aren’t high net worth individuals.
They’re not the sort of people you might have in your client base.
#2 - The value buyer
The value buyer buys based on value.
Price is still important, but the value of what they get is of even more importance.
When we think about the value equation, it’s essentially made up of the benefits someone gets when they buy minus the cost or price. A value buyer is looking to maximise...