Everyone values things differently.
This strikes at the very heart of value pricing.
We need to use something called price discrimination. That’s the economists’ fancy label for charging different customers different prices.
I’m going to share with you several practical approaches to price discrimination.
You can watch the video here.
#1 - Every client is different
When we are pricing a client, we should be taking into account their own particular unique needs. Every client has different goals in life, different ambitions, different pain points. We need to understand the exact needs of the client.
We need to understand what the client wants so that we can present them with solutions that are right for them.
My friend Ron Baker has a great phrase…
‘You must price the customer, not the service’.
We need to make sure that each client is priced uniquely.
#2 - Menu Pricing
This is where we present our clients with more than one package. Typically 3,...
Why is pricing one-off projects so hard to do? I get asked about it all the time.
I think there are really four main reasons why…
One-off projects are really challenging. But, we can price them using the same value pricing principles as any other service.
In my book “A Practical Approach to Value Pricing”, I teach a seven step foundation of value pricing. This seven step formula is the same formula we would apply to value price bookkeeping...
Sometimes referred to as an FPA, a Fixed Price Agreement is essentially a document that sets out in writing what has been agreed regarding the scope of the work, the price, and the payment terms.
I’m going to share with you some of the key elements you should have in all of your FPAs.
You can watch the video here.
#1 - Set out the price
Obviously, your FPA should set out what the price is. This price should be agreed on during your price conversation with the client.
It should also outline when the price is due to be paid. There needs to be a deadline set.
You may also need to include specific details to do with how the payment will be received, if it will be split into multiple payments and so on.
#2 - Set the scope of work
It should be very clearly stated what the scope of the work is going to be.
State exactly what work needs to be done, how much there is and what you are going to be doing to tackle that work.
There should be no dispute over the scope.
#3 - Give the client...
The golden rule with proposals, is they should only ever be sent to confirm what has already been agreed upon in a meeting.
You should agree on a price with the client in your meeting whilst you are still in control of the conversation.
When you do build your proposal there is a structure you can use. You want to reinforce all the great stuff that you do, the value and the benefits to the client. There are 5 elements that you should build into your proposal…
#1 - Restate the pain
Start your proposal by reminding the client of the pain they are currently facing or will face if they continue as they are. People are more motivated by the avoidance of pain than by the attainment of gain.
When you spoke to your client you hopefully uncovered what their problems are, what they need solving.
Open your proposal with a reminder of this pain.
#2 - Quantify the pain
If you can, try to put a number to that pain. You can uncover some of these numbers in your meeting...
Pricing is one of the four ‘P’s of marketing.
Marketing is essential to the success of a business.
It’s also important to know that if you want to win more clients, you need to be seen as the expert in your field. You need to be seen as the best. You can create that reputation through marketing.
You can watch the video here.
Marketing has changed many times over the years. We are seeing huge shifts towards social media.
LinkedIn is a great platform for the accounting profession. Twitter as well. But Facebook is arguably one of the most powerful social media marketing tools.
I used to recommend LinkedIn as the number one marketing tool for accountants. But digital marketing is rapidly changing. Over the last four or five years Facebook has increasingly become the place to be.
In the future I imagine it will be something different again. But right now Facebook is the top platform.
As Facebook started to gain traction, everybody became obsessed with creating their...
I made this mistake all the time when I first started my accounting firm. It took me years to realise it.
The mistake is basing our price on the competition.
Many accountants, myself included have done this…
Click here to watch the video
I’d go to the potential client. I would say all the right things. I’d impress them with what I could do.
Then, during my meeting with the prospective client, I would explain to them how I helped with taxes and planning and it would really help me if I could see a copy of last year’s set of accounts so I could fo through and look for some tax planning opportunities. Which I did.
But the real reason I asked to see the accounts would be to flick to the back page and look for the previous accountant’s fee.
Having got that number I would propose a price of 5-10% less than the previous accountant. In hindsight, this was a terrible method of pricing.
I won lots of business this way, I grew my...
The proposal is an important part of your pricing process, but most people get it wrong.
The golden rule is this: a proposal should only ever be written or sent to confirm what’s already been agreed.
The mistake people make is they meet with a client, they ask the right questions, they build up the value, the client wants to buy but we get stumped by the price question. When the client asks what it’s going to cost, we say that we will go away and think and then put it in writing and send it through the mail.
This is fatal!
You can watch the video here:
You should never do that because you’ve now lost control of the pricing conversation.
You should always have the pricing conversation with the client face-to-face. If the client doesn’t say yes to you in the meeting and asks you to go away and put in writing, you haven’t inspired them sufficiently. Don’t ever agree to put a proposal in the post.
There must be a reason they haven’t said yes....
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...