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.
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.
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....
Do you charge clients for QBO? You shouldn’t!
As the Amazon number-one best-selling author of Effective Pricing for Accountants, I’d like to share why, when you're moving clients onto a cloud accounting system such as QuickBooks Online, you should bundle the cost of the software into the cost of your solution.
The reason is that it reduces the number of pricing decisions clients have to make. And to prove to you how important that is, I’d like you to think about the last time you bought something online. If you buy from Amazon, for example, I’m sure you’ll have noticed that pretty much everything they sell offers free package and posting.
It may not be rational - but it works!
About a year ago I was buying some batteries on Amazon. As usual, when I typed ‘batteries’ into the search box, back came a whole load of different options within the Amazon marketplace. I clicked on the cheapest, added it to the shopping basket and was about to check...
What do you do if a client says you’re too expensive?
I’m sure most of us have experienced that moment when you reveal the price and your client says, "That's a bit more than I was expecting. Sorry, but it's beyond my budget." The big question then is, what do you do next? One option, of course, is just to walk away. You may not be prepared to take on the business for less than your original price, and that's fine. It’s often a good thing to do. But let's imagine that you particularly want to win this piece of work. What do you do then?
What you should never do is automatically give a discount. That's crazy. Instead, do one of the following.
#1 Review the value
Usually if a client thinks a service you’re offering is too expensive, it’s not because the price is too high but because they don't fully understand its value. So go back and talk about the benefits again. Remind them of the end result, of the difference it will make to their lives. You might...
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...