Fixed Pricing is NOT Value Pricing

value pricing Aug 01, 2016

Fixed Pricing is a bad idea – it’s NOT Value Pricing

 

Fixed pricing isn’t just a bad idea. It’s a really, really bad idea.

Why?

This video explains why.

When I started teaching pricing back in 2000 almost every accountant priced based on time. In the last 15 years or so attitudes amongst accountants changed. They realised the old way no longer worked and that a move to value pricing was more sensible.

That’s great.

But that’s not necessarily what has happened.

 

Struggling with the concept

 

Many people are struggling with the concept and instead, time and time again I see fixed prices.

Bad idea remember?

Ok, so it’s better from the customer’s point of view because it’s no longer based on time. Except it is. It’s based on the accountant’s or bookkeeper’s best guess as to how long a job will take.

It has nothing to do with value to the customer.

It’s even worse when someone has a...

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Why The Old Way of Pricing is Unethical

value pricing Jul 18, 2016

Why the old way of pricing is unethical

Actually, I don’t just believe that the old way of pricing – time-based billing – is unethical. At times I think it actually borders on negligence.

But why?

A few years ago AVN founder and head of research Steve Pipe and I were involved in a research study that looked at more than 150 accounting firms to find out what the most successful were doing differently.

As part of the study we looked at what proportion of errors those in the survey found that a previous accountant had made when they took on new clients.

The results were staggering. 45% of firms found mistakes made by the new client’s previous accountant. 42% found things the previous accountant had missed.

Such figures are worrying.

And, whilst you may not think you make mistakes, perhaps one day ask the same question of accountants that have won work from you. You might be surprised.

 

So why does it happen?

 

It’s not like we don’t have...

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The Two Things Every Customer Wants

value pricing Apr 18, 2016

When your customer buys from you there are two things they want.  Every time.  You must understand these.

So what are these two things? 

 

Your customer needs CERTAINTY

 

When you buy you want to know exactly what you're getting and how much it’s going to cost. The problem is, the old way that as a profession we’ve priced - time-based billing - is a redundant way of pricing, and by definition pricing based on time gives no certainty for the customer.  Whilst you might tell them your hourly rate, they will never know until the job is done how many hours it will take. So we must get away from time-based billing because customers hate it.

 

Your customer needs CHOICE



The other important thing for a customer is CHOICE! We want to have the freedom to decide things on our own, to make choices because we are all different. We want a solution that meets our own specific needs.

As an example, think about the most profitable company on the planet...

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Meet The Most Incredible Bookkeeper

I recently caught up with Jane Aylwin who is, quite simply, an extraordinary bookkeeper.  During our interview, she told me how – in the last 5 months – she had added £53,000 in fees, almost entirely from pricing (which means most of it goes straight to bottom-line profit) in a different way.

She started off, just like many bookkeepers, working from her kitchen table.  And getting OK results.

But those OK results got worse and worse as her business grew and she took on people to work for her.  Her old pricing models were no longer working.

 

The big epiphany


A few months ago, on the way to a client she had a big realisation… she needed to do something different.  Otherwise, she’d keep getting the same results.

That meeting with a client was the first of 4 meetings that week; a week she now describes as her ‘week of wow’.  In that week she had a pricing conversation with each of those 4 clients…

…...

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