Being too cheap can actually lose you business

Although people often think that the quickest way to grow their accounting firm is by keeping prices low, today I'll explain why being cheap can actually lose you customers.

To prove it, I'll start with a quick story. It dates back many years to when I’d first started to learn value pricing in 2000 or 2001. I’d been asked by a limited company if I could do some quite complex tax planning for them, work involving group structuring overseas and so on. As I came from a tax background though, I felt confident I could deliver.

The company asked me to create a proposal and a price. I’d already started to learn about the importance of building value, and so I created a proposal that included five or six pages of detail of what I could do for them.

How I beat one of the top-six accountancy firms

However, it was only when I won the business that they revealed they'd been shopping around. In fact, one of the other firms...

Clients are only interested in the end result

Today I’d like to share a really important pricing tip I gained from marketing.

One of the most important lessons you can ever learn is that your clients aren’t buying what you do. They're not interested in it. What they are interested in is the end result.

People buy benefits, not features

The problem is, when we talk about what we do we often describe it in terms of its features. What we can learn from marketing, from top marketers, is that people don't buy features. They buy benefits. Which means that in all our written and verbal communications we need to make sure we're constantly talking about those benefits.

To illustrate, I’ll give you a practical example. I’d like you to imagine that you’re discussing annual financial statements with a potential client, and that your brochure or proposal says something like: “As part of your annual accounts, we'll also carry out a tax-planning review.”

...

Referrals don’t just happen – you need a system

As regular readers of my blog will know, I’m a great believer that referrals are one of the best ways you can find to grow your accounting or bookkeeping firm. However, you can’t just sit back and expect them to happen. It’s vital that you have systems in place to make sure you get referrals systematically.

That’s why I’d like to share a really powerful system for doing just that. It’s based on something I learned many years ago about the best time to ask for referrals. When I put it in place in my own firm – way back in 1999 – I saw the results immediately.

The best time to ask for referrals

The best time to ask for referrals is right at the start of a relationship. Why? Because when the owner of a business first employs you, they’re incredibly grateful. They get to breathe a huge sigh of relief. We tend to forget that finding a great accountant, bookkeeper or tax...

Why referrals is the best system to win new clients

Do you want to grow your business?  If so, there are many marketing tactics for doing just that.  But there is one that is still the best for the accounting professions.

It’s the power of referrals.

Although there may be many exciting new tools at our disposal – social media for one – referrals continues to be one of the most powerful. I believe it’s the best way to win new clients. And I know that many of you will agree.

If you prefer to watch rather than read you can watch the video here.

There’s a but…

Whilst you may agree, how many systems do you have in place to systematically win more clients and win more referrals?

I suspect the answer is, “None“.  It usually is.

Yet if we believe in the power of referrals so much then why are we leaving it to chance? Why are we just hoping that our clients are saying good things about us, and recommending us to other people,...

Why you should never answer the price question… with the price

When someone asks you the price question I have one piece of advice for you.

Never answer it with the price.

Ok, so that may sound a little weird but bear with me.

The trouble is that when you’re sat in your meeting with your existing or prospective client and you’ve revealed your solution then that’s the question they will ask.   It’s obvious.  But your answer, your price, will always sound expensive.

So you have to do things a little differently.

If you prefer to watch rather than read you can watch the video here.

Communicate the value

Instead of revealing that price early in the conversation you have to first build up the value. That means properly communicating both the value of what you do, the benefit to the consumer and the end result. You need to set that all up before you even thing about revealing the price.

Go for contrast

Another useful tool is the Contrast...

3 key pricing strategies you could adopt in your business

To grow a successful, profitable business you have to figure out your strategy.  It’s the foundation of your business so you have to figure it out pretty quickly. Fail to do so and you are relying on just one thing.

Luck.

And luck doesn’t always go your way.  

Of course an essential part of that strategy has to be around pricing. So how do you define your pricing strategy?  There are essentially three different pricing strategies that you could follow:

Find out more about the 3 types of pricing strategy you could adopt in the video here.

Option 1 - Low cost leadership

At its heart this strategy is actually about being the cheapest. But it’s cheapest with a difference. It’s cheapest because we create something within the structure of the business that’s unique. It’s about enabling a different cost structure that isn’t able to be copied.

That in turn means no one...

Why identifying your ideal client should be step 1 of your marketing strategy

When you want to really grow a business then a marketing strategy is key to attract new clients and more work. But it’s an involved process that can get complicated.

Instead first there is a basic, and what I believe, most important step to take. You need to identify your ideal client.

When I started my accounting firm back in 1996 I was simply focused on growing the size of my firm by getting as many clients as I could. Two and a half years in and my business was a mess. I didn’t make any money. I had cash flow problems and I had way too many clients to manage effectively.  

And, as well as having too many, those I did have were a mixed bag. Some were good, some were bad and some were downright awful. I had taken on lots of poor quality clients simply because I thought growing my business was about numbers – about scale.

And I wasn’t alone.

Even today I speak to many accounting...

Why your clients want to pay you in advance

Historically the accounting profession has always given clients credit.  It may be 30 days. It may be two months. But we give credit.

I don’t know why.  Perhaps it’s that we are in the service industry and feel we should.

But guess what? Behavioral economics says it’s not what customers want.  They actually want to pay upfront.  And it makes sense for you too.

If you prefer to watch rather than read you can watch the video here.

The benefits for you

There are numerous benefits when your clients pre-pay.

1.      It improves your cash flow

When you get the money upfront you have more money in your bank account and so your cashflow is instantly improved.

2.     It can eliminate cash collection

How much time do you spend chasing money after you’ve done the work? Too much.

3.     You can eliminate bad debts

Totally.

If you get paid...

Do you put prices on your website? I don’t. Here’s why.

As the Amazon number-one bestselling author of “Effective Pricing For Accountants”, in this post I’m going to explain why you absolutely shouldn’t put prices on your website. To illustrate what I mean, I’d like to talk about one UK firm of Chartered Accountants who does display its – shockingly low – prices on its website. In fact, one of their case studies even boasts about how much they can save you: “Their existing accountant charged them £650. We charged £390 – a 40% saving.”

With examples like that, is it any wonder most accountants and bookkeepers are working far too many hours, for far too little money? Or that they’re far too stressed?

If you prefer to watch rather than read you can watch the video here.

You get what you pay for

So, what's the problem? Well, generally, whenever firms put their prices on a website, it’s...

Why quoting an hourly rate can be fatal for your business

In this post I want to share why it's crazy – even fatal – to quote an hourly rate. And, to prove it, I’ll give you three very good reasons.

 If you prefer to watch rather than read you can watch the video here.

#1 There’s no value in hourly rates

Quoting an hourly rate doesn't convey any value. Think about it: your clients don't buy time. They don't wake up in the morning, remember they've got a meeting with you, and think, “Fantastic! I'm off to buy an hour of my accountant’s time.”

No one does! There’s no value in time, so it makes no sense to quote an hourly rate.

#2 Hourly rates increase payment pain

This is to do with what behavioural economists call saliency – or payment pain. A good example is from the taxicab industry. In the old days, when we jumped in a taxi – a black cab in London, or a yellow taxi in New York – we’d sit and, as...