Why your customers want to pay you in advance

value pricing Mar 13, 2017

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...

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Why putting prices on your website creates the wrong anchor

value pricing Feb 27, 2017

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...

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What is wrong with quoting an hourly rate

value pricing Feb 13, 2017

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...

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Why you should never, ever send a proposal through the post

value pricing Jan 30, 2017

Never, ever send a proposal if you want to win clients

As the author of the Amazon number-one bestseller “Effective Pricing for Accountants”, I’d like to share why you should never, ever send a proposal through the post.

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

 

How to lose clients. Or, what NOT to do …

Probably the best way to illustrate this is by telling you about the mistakes I made when I started my accounting firm, back in 1996. For the first two and a half years, even though I grew very quickly, I had no idea about pricing. This meant, for example, that although I did a lot of marketing and saw a lot of potential clients, often impressing the heck out of them with my background in tax planning and all the ideas I came up with, at the end of the meeting, having done all the hard work, I’d blow it. They'd say, “Mark, this sounds brilliant. We want to work with you. How much will it cost?” And...

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Building an online mentoring group

strategy Jan 23, 2017

Build a mentoring group – and your revenue

In a recent post I shared a new business model for the modern accountant: running an online mentoring programme[HP1] . That’s to say, working with a group of business owners every month to help them improve their business. Now, I’d like to share seven ways you can attract more clients – both current and prospective – to join your group.

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

#1: Put it on the agenda

Unfortunately, because my business is online and I don’t have regular face-to-face meetings with clients, I can't use this technique. But, if you do have meetings, then make sure you always have an item on your agenda when you can talk about your online mentoring group. (If you don’t use an agenda for meetings, then you should!)

#2: Social media

Social media is so, so powerful. You absolutely should be using it. You should be joining groups of business owners –...

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The new business model for the modern accountant

strategy Jan 16, 2017

Powerful new business model for the modern accountant

As Cloud accounting continues to reduce the time spent on bookkeeping and year-end, I’m sure you’ve already realised that as modern accounting professionals we need to find new ways of adding value to what we do.

One great way is to run an online mentoring group. Basically, once a month you get a group of around ten of your best current or prospective clients together online for 60 to 90 minutes, and teach them how to improve their businesses.

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

Increase leverage – and revenue

Although the benefits are multiple, perhaps the biggest is leverage. As accountants and bookkeepers, historically we’ve worked with clients on a one-to-one basis, which is limited by how much time we have. But online mentoring groups allow us to work with lots of people at once, generating much greater revenue in the process.

Imagine, for example, that you charge ten...

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Reveal your most expensive option first

price psychology Jan 09, 2017

How top-down pricing can improve your turnover

As the Amazon number-one best-selling author of “Effective Pricing for Accountants”, I’d like to talk about why you should always reveal your most expensive solution first. A lot of research has been done in this area and there are a number of ideas we can learn from it to improve our pricing strategy and income.

 

 

Create a high reference price – and watch clients spend more

One key idea is top-down pricing. Basically, it means we should always talk to clients about our most expensive option first because it creates a reference price, or an anchor. And what the research has found is that when we talk about the most expensive option first, people end up spending more money than if we’d revealed the cheapest first.

A related idea that I also teach is the price-order effect, and what this says is that you should reveal your prices in a certain order. Sometimes we might have a verbal conversation...

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Avoid coupling at all costs

price psychology Jan 02, 2017

Do you want to streamline getting paid? Then avoid coupling
 
I’d like to share with you why you should avoid coupling at all costs.

So what does coupling mean? To explain, I’ll need to refer to some research done in 1998 by Prelec and Loewenstein, two behavioural economists. Here are their exact words on what they learned from their study: "Coupling refers to the degree to which consumption calls to mind thoughts of payment and vice versa. Some financing methods, such as credit cards, tend to weaken coupling. Whereas others, such as cash payments, produce much tighter coupling. Sometimes this is referred to as saliency. What it means is that if we can change the way that we take money from the clients, we can reduce the association of payment pain."

 

 

Uber leads the way

I can give you a great example of how this works in practice by taking a look at the taxicab industry. I’m sure you’re aware of how it’s been revolutionised in the last...

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When should you use verisimilitude in your pricing

price psychology Dec 26, 2016

How verisimilitude – the appearance of truth – can improve your pricing

Today I’d like you to think about why you should use verisimilitude – the appearance of truth – in your pricing. To help, I’ll first need to tell you a little about the research behind it, and then I’ll explain how you can apply what you’ve learned to reap the rewards in your own business.

Rounded prices rely on emotions, non-rounded on cognition

In 2015, Wadhwa and Zhang – two Assistant Professors of Marketing – wrote: "Because rounded numbers are more fluently processed, rounded prices encourage reliance on feelings. In contrast, because non-rounded numbers are disfluently processed, non-rounded prices encourage reliance on cognition." Theirs was the first research that examined the impact of rounded prices on people’s decision to buy a product – and more specifically that was based on whether the decision was driven by feelings or by...

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Why you should never reveal your headline price

price psychology Dec 19, 2016

Why you should never, ever reveal your headline price

In this post I’d like to share something you must never, ever do: please, please, please don't reveal your headline price. As the Amazon number-one best-selling author of “Effective Pricing for Accountants”, I can assure you it’s an incredibly powerful concept that will get you much, much higher prices with much less price resistance too.

So, what is your headline price?

Very simply, your headline price is the total price. I can probably best explain the concept by telling you about an experiment done some years ago by Ryan Deis, one of the world's leading Internet marketers.

Ryan decided to sell one of his products at $197 and found he sold 340, which generated him just over $66,000. Not a bad result, but it’s what happened next that’s really interesting. He decided to find out what would happen if, rather than $197, he asked for two payments of $97. (It’s not quite the same price but,...

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