Why clients need to pay you in advance for annual accounts

I have talked in the past how you should ensure that your payment terms enable you get paid in advance before you start the work.  It helps your cashflow and better allows your clients to budget.

Many of the firms that I work with are starting to adopt this monthly in advance payment approach for annual work such as financial statements or tax returns.

You can watch the video here.

How it works

It sounds a little confusing but it’s actually quite simple.

For example, if a client has a year end of 31 December then they would start paying from the previous 1 January in 12 installments, or in 12 installments up to the date it’s expected the accounts will be completed.

If the firm is aiming to complete accounts within three months that 31 December year end would be done the following 31 March and the payments would start 12 months before March 31.

How to explain it to clients?

People tell me they love the idea...

Always give the client 3 options

 
Menu pricing means giving the client different options or different packages to choose from. More importantly, giving them three packages. This means that they can choose an option that suits their circumstances and means clients end up paying more. Now I’m going to share with you some advanced techniques around menu pricing.

 
You can find the full video explaining these techniques, as well as 3 other powerful videos, when you sign up for my free video course here. This is also where you can sign up for my upcoming free webinars and begin your Price Consulting journey.

 
How can a tick list help?

 
The first idea is what I call the tick list technique. What this entails is creating a list of all the various things that will be done as part of a service, and then across three columns, using a tick list format to denote which things are included in which packages.

There's a reason why this is powerful. It's very visual and...

What is Price Discrimination?

Price discrimination simply means charging different customers different prices. This is so important in value pricing because everybody values things differently, which means if you have a client with a single price, it’s always the wrong price. On my Price Consulting programme, when I work with accountants and take them through a 12-month programme, I normally teach 15 or 16 powerful different techniques and methods around price discrimination, but I'm going to share two of them now.

You can find the full video explaining these techniques, as well as 3 other powerful videos, when you sign up for my free video course here. This is also where you can sign up for my upcoming free webinars and begin your Price Consulting journey.

Always give the client 3 options

What economists teach us is there are 3 degrees of price discrimination; first, second and third. The first technique I’m going to share is a form of second degree price discrimination...

Why cloud accounting means you must change the way you price

There’s a big change taking place in the accounting profession currently.

Actually make that a huge change.

It’s the concept of cloud accounting. It’s fundamentally changing everything about our business. It changes how we interact with our clients.  It’s making us more collaborative.  And it means we have to change as a result.

You can watch the video here.

Why we need to change

We have to change our pricing models.  We absolutely have to.  If we don’t there’s only one likely outcome.

We’ll become extinct.

What to know why?  Well in 1988 I was a Chartered Accountant.  Computers weren’t prevalent. Indeed, in the firm I worked in when they did come it was only the partners who had them.

No-one else had access. 

And so, when it came to annual accounts back then a word processing department would create them.   The accounts and trial...

Two Powerful Strategies…

 
Here are two powerful strategies for helping your clients in the food hospitality industry.  When you share these strategies with clients in this industry that you meet, you’ll impress them by demonstrating that you know their industry, and that you’re an expert. It will help you to win them as clients, and it could then lead onto doing some exciting, powerful consulting work at premium prices.

You can find the full video explaining these techniques, as well as 3 other powerful videos, when you sign up for my free video course here.

 
#1 - Menu Layout Matters!

 
If you look at a menu in a restaurant, you might see the prices expressed like this:

This is actually a bad thing. Experts in the restaurant industry and menu engineers teach us that there are actually a couple of things going wrong here. The first is that the prices are right-aligned in a vertical column. The problem with this is, subconsciously it encourages...

Why you need a 7 step formula structured pricing system

There are many things in life that need structure.   Pricing is one of them.  Without a structured system pricing simply happens by chance.  By luck.

Instead you want to control the process so that you do pricing the same way every single time.

You can watch the video here.

I have a seven-step formula for achieving this:

1)     Decide upon your price discrimination strategy

This is the strategy behind charging different customers different prices.   And this in itself is fundamental to value pricing since we know that each person values things differently.  This means we can’t have a single price and instead need to price each person separately.   One of the most powerful, and easy to understand ways of doing this is through menu pricing, giving customers a choice with a number of different options.

2)     Work out how to add more value

When you have...

What are the drivers of profit?

 
We can add more value to our clients by helping them increase their profits. However, we need to understand that profit is the end result of numerous other drivers. You can’t help a client improve their profit. However, you can help them to improve the underlying drivers.

 
As you know, profit is made up of total annual sales minus expenses. However, there are different types of costs in a business that behave differently. The main two, as you know, are variable costs (sometimes called direct costs) and fixed costs. When we do a set of annual financial statements, we normally show sales minus direct costs, which is the gross profit, minus fixed costs, which is the profit. The trouble is, we're just scratching the surface because we need to understand what drives those things.

 
You can find the full video explaining these powerful drivers, as well as 3 other videos, when you sign up for my free video course here.

 
Increasing...

The upgrade nudge strategy

Today, I’d like to share a tip I learned from the science behind the pricing of menus.  I’m sure you’ve read my post on the magic of three, on how important it is to always offer clients three different packages to choose from.  However, once you've done that, what’s the next stage?  How do you price those three options?

One great strategy to use when you’re setting your prices is known as the ‘upgrade nudge strategy’, and it's particularly useful for compliance work.  Imagine, for example, you have three packages: a bronze, a silver and a gold – or whatever you decide to call them.  One of the things we’ve learnt from the magic of three, from the world of behavioural economics, is that most people gravitate towards the middle option.  And, once you know that, you can use it to your advantage.

You can find out more about how it works by watching the video here.

Why...

There’s a huge opportunity for the accounting profession happening right now

Today I want to share with you an incredible opportunity that’s happening right now in the accounting profession. An opportunity that can help you add massive value to your clients by helping them improve their prices, and that in turn will help you to be well rewarded.

 
You can find out more about this powerful opportunity in my video here.

 
The definition of an accountant is changing…

 
As you know, the world of technology is changing extremely quickly. You've heard of artificial intelligence and machine learning. We are seeing that a lot of the compliance work we do is being automated, and that means as a profession we have to change. The definition of an accountant is going to change, and we’re going to have to do more for our clients. The question of course is, "Well, what should we be doing?”

 
Well, for many years the experts have been saying we...

Why three is the magic number

Today I’d like to talk about an incredibly powerful concept known as the ‘magic of three’.  In brief, it means that any solution or service you offer should always, always give clients three pricing options.  And there’s a reason it’s something all the most successful businesses do.

You can find out more about how powerful the magic of three is in my video here.

Tall, grande or venti?

Who’s the most profitable coffee shop on the planet, for example?  That’s right.  Starbucks.  If you go into Starbucks most of their drinks offer three options – ‘tall’, ‘grande’ and ‘venti’ in the case of my personal favourite, latte!  Why?  It’s because behavioural economists have shown that, when faced with three choices, most people gravitate towards the middle.  Once you know this, it’s a huge opportunity.  Think about it....