Is doubling your price ripping the client off

value pricing Jul 31, 2017

Is doubling your price ripping the client off?

Today I’d like to cover something that often comes up when I’m leading seminars and workshops. Almost every time I share stories of how firms using my techniques are able to double – or even treble – their prices, someone in the group will say, "But Mark, if I'm charging double what the firm down the road is, aren’t I ripping my clients off?" The answer I always give is: Absolutely not!

Why? There are three main reasons:

1: Clients aren't stupid

When your clients make a purchasing decision, they do it for the right reasons. They've chosen you because there's something about you they like. They probably know there's a cheaper alternative, but it's the same with many other things they might buy.

Why, for example, do so many of your clients buy their coffee in Starbucks when there are cheaper ways of drinking coffee? It’s certainly not because they’re stupid. (At least I hope not, because I do the...

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Why being cheap will lose you business

value pricing Jul 10, 2017

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...

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Don't answer the price question with the price

value pricing Apr 24, 2017

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...

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What is your pricing strategy

value pricing Apr 10, 2017

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...

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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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Your fixed price is always wrong

value pricing Nov 07, 2016

Why fixed pricing is always wrong

Or to be more precise… when you have a single fixed price 

It’s always wrong.

Essentially it goes back to the basics of economics. I have always been fascinated by economics – so much so that I took a degree in it. One of the most important things I learnt was the theory of the equilibrium price.

Or in other words the fact that price should be set where the supply and demand curve intersects.  

When you look at a visual representation of that it shows an area above the equilibrium price and below the demand curve that is the consumer surplus. 

 That is also the amount of profit available if we can tap into the fact that different customers will pay different prices.

 

You can watch the video here.

The concept of magic price

In a previous video I looked at the concept of magic price and how you figure out your magic price. I looked at the situation of you selling a tax return that costs you £50 in...

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How to find your magic price

value pricing Oct 31, 2016

Taking the law of supply and demand to the next level

So what is a magic price 

Essentially, it's the price that maximises your profit.

The law of supply and demand

When I started to study economics, even at school one of the very first things we learned was the law of supply and demand. That the point at which the supply curve and the demand curve intersect is the equilibrium – or ideal – price. The trouble is that while that works in theory, in practice it's difficult to measure.

If we could, if we knew, for example, exactly how many tax returns people would buy at £200 or £300, we could easily plot a demand curve. And then, if we worked out the profit for each price point, we’d end up with a bell-shaped chart. One that basically shows that a zero price – giving your stuff away for free, while still having to cover all of your costs – means you’d be making a loss.

Similarly, at the other end of the scale, if you price too high...

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