There is such a huge amount of change going on in our profession right now.
We are seeing the rise and increase of Cloud accounting. We are seeing artificial intelligence, machine learning, automation like bank feeds, and not too long ago we also saw Intuit QuickBooks launching Bookkeeping Live - alive bookkeeper, at really low prices.
What we are going to see over the years to come is increasing downward pressure on prices for compliance work and particularly for bookkeeping.
If you are a bookkeeper, CPA, accountant, or do bookkeeping services, this blog is for you.
I’m going to share with you my thoughts on where the profession is going and how we can overcome that.
How do we rise to the challenge? How do we make sure that we can continue to build a very successful accounting practice? How do we beat technology, outsourcing, low-cost competitors, and now software companies that are getting in on the bookkeeping action?
We now have Cloud Technology and Cloud accounting that automates a lot of the work we do. The old compliance work is getting automated through machine learning and artificial intelligence.
As a profession, we have to change.
We have to start doing more for our clients, and one of the things we can do is help them increase their profits.
This isn’t so straightforward. You can’t manage profit. You can’t go into a business and improve profitability by focusing on profit.
What we have to do is understand what drives profit.
You can watch the full video here.
There are a number of different drivers of profit. We can build a mathematical model that predicts profit and allows us to see what is impacting on profit and how it does that.
I want to share with you some of these drivers to give you an indication of how we can start helping our clients to improve their profits.
We can start...
I recently filmed a video where I shared the 9 biggest pricing mistakes made in the accounting profession. Click here to watch the full video.
As a profession, we are way too cheap.
It’s why we are working crazy long hours and not making the money that we deserve.
So we have to rectify that by putting up our prices.
Most accountants and bookkeepers are too cheap.
When we try to win new business, we tend to look at what our competitors are charging and use that as a basis. But if they are too cheap, it makes no sense to copy them.
There is a reason the client is talking to you. There is something about their current accountant or bookkeeper they are not happy with.
So if they want better services and better quality, they should be prepared to pay more than they currently are.
People put their prices on their website because they want to win more business. But if you put...
Reza Hooda used to price based on a mixture of hourly rates and gut feeling.
Then he learnt about value pricing through my mentoring programme and it completely transformed his business.
In the interview he says:
“I could see how time-based billing was completely ludicrous. So we scrapped that idea completely, and then started to price much more based on value.”
An opportunity arose for Reza to use his newly learnt value pricing techniques to price an incorporation project involving a property client.
He sat down with the client and worked out what they wanted to achieve and where the value in his service was.
Based on that, he prepared a proposal and, using the menu pricing tactics, presented his client with 3 options.
It was priced at £66,000. And they accepted it.
Reza used to price his compliance work by charging a similar rate to the client’s previous accountants.
How do we deal with those low-ballers that are always competing with you on price?
There are 2 strategies.
But that’s crazy because if you’re competing on price no one will win. You’ll both just keep reducing your prices to become lower than the other. It’s pointless. It will just continue spiralling until people go out of business.
Compete on quality and on service.
I’m going to share with you three things you absolutely should be doing to beat your competitors in quality.
I recently made a video explaining exactly how you can get around this. You can watch it here.
In every communication you have with your client, focus on quality, service and value.
Make sure what you do is better than your competitors. Then communicate that in your marketing.
You need to...
Many businesses struggle with their profits and their cash flow. They work crazy long hours and aren’t making enough money.
The biggest reason for this is price.
The price is too low or the pricing strategy is wrong.
Most businesses price using emotion, their gut feel, and by copying the competition. They ignore price psychology and price strategy, proven price tactics.
We need to figure out better ways to price.
I recommend you watch the whole video here.
Let’s use this small business havebike as an example. They are a small London-based business that provides a mobile bicycle repairing service.
You can see from their website that they use the menu pricing system with 3 options which is great!
But if we look at the difference in their price options we can see a huge gap between the ‘Deluxe’ and ‘Super Deluxe’ packages.
Firstly, I believe, for a London-based business, all of...
When someone buys from you they are in buying mode. They want to purchase. This means they are also at the most receptive stage to buying more from you.
So how can you maximize the opportunity for upselling?
You need a system in place, that’s how.
Upselling involves selling something extra to your customer. It’s something that’s evident in all sorts of industries. In the car or consumer technology industry it could be extended warranties for example. And generally, it’s particularly powerful in high-value transactions.
You need to find something else that you can upsell to your customers. So, if you are selling annual bookkeeping at £5,000 for example you will want to add in something extra for a price such as £100.
When people are already in buying mode and you offer an additional, smaller purchase like this they think they are already spending £5,000 so...
Accountants make a profound difference in the lives of clients, and, as a result, we should be very well rewarded.
Unfortunately, that's rarely the case. Most accountants are working way too hard for way too little money.
That’s how it was for me when I first started my own accounting firm back in 1996. It was seriously hard. In the space of two years, I had grown it to about 200 clients. It was growing fast, but I wasn’t making any money.
I was working longer and longer hours, it was crazy! But I think that's the state of most accountants and bookkeepers around the world; we work too hard for too little.
When I started to put in place value pricing systems in 2000, my results changed so significantly that a few short years later I was able to sell my accounting firm.
Since then I’ve been teaching...
I often talk about menu pricing and the power of three. It’s truly powerful stuff. It’s a fact that when faced with three options people tend to gravitate towards the middle option.
And it works with pricing too.
So you might only currently offer one package – your tax return package for example. By adding more services and creating two other packages you will find that many will choose to pay you more by going for the middle, and therefore more expensive, option rather than your basic package.
But how do we get them to do that?
There are things you can do to prompt your customers to pick that middle option but essentially it boils down to one thing. Social proof. It’s something we learn from Dr Robert Cialdini, author of Influence: Science and Practice. Social proof is one of the six main laws of influence. It is defined as follows: “As humans we are lazy when it comes to decision making. When it comes to making...
Everyone loves a bargain. But actually, there’s something they love more.
Getting something for free.
It’s the most powerful word in marketing. And it’s used all over the place in marketing copy.
A powerful way of presenting your prices to customers is through menu pricing using a tick list of options that shows customers what they do and don’t get. It’s visual, powerful and it works. And most of the time that technique means a series of ticks and crosses.
But sometimes you can add in something different. You can add in the word free.
It’s even more powerful than a tick.
As I’ve already said people love getting something for free. They love getting something more than they expected. It stands out.
Of course, it could be tempting to go overboard. To use it everywhere. But don’t.
People like getting a bonus. Something extra....