What does value pricing really mean?

value pricing Aug 27, 2019

Value pricing is a superior way of pricing.

When you boil it down, there are really only two ways of pricing: cost-plus pricing and value pricing.

You can watch the video I did on this topic here.

If you understand economics and the supply and demand equation, one deals with the supply side, one the demand side.

Cost-plus pricing: Add up the costs and add on an amount for profit.

In the accounting industry, many people use time-based billing as their form of cost-plus pricing.  It’s a crazy way to price, partly because customers hate it and partly because it won’t earn you as much money as value pricing.

Customers want certainty when buying. They want to be able to budget and plan, so giving them a fixed price upfront will give them the certainty they need.

The problem with hourly rates is you have no idea how long a project is going to take until you have done the work. That means you can’t give the client a fixed price and you instead have to give them a...

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How to increase prices without the fear of losing clients

value pricing Aug 20, 2019

Most accountants and bookkeepers are too cheap.

But, when I tell people this, I find that most people are so afraid of losing clients, that they haven’t put their prices up in years.

That’s crazy!

If you have ever felt like you are working excessively hard and you aren’t making enough money to show for it - this is probably the reason.

I did a video on this topic. You can watch it here.

You need to increase your prices. You deserve to increase your prices. So, I’m going to share with you this simple process for increasing your prices without losing clients.

Menu Pricing

It’s called Menu Pricing.

Let’s imagine that you decide you want to increase the average price across your business by 20%.

You need to give your client three choices.

You need a Bronze, Silver and Gold package. The Bronze package will be very similar to the service you provided last year, but take out the frills. Only have the absolute essentials in this package. This will be a...

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How to win high value business advisory services

value pricing Aug 13, 2019

The accounting profession has been going through some big changes with the improvements in technology, automation and artificial intelligence making compliance work very quick.

We have to do more for our clients. We have to add value.

That could be by doing planning work, consulting or advising, anything that adds value to the service.

Let’s focus on business advisory. This refers to the process of giving your client advice about their business: producing management reports, helping them reach their goals, improving their efficiency, looking at the numbers, identifying problems and suggesting how to fix them.

How do we sell more advisory services?

You can watch the video here.

Here are three tips…

#1 - Packaging

The first thing you will need to do is give your service packaging.

Your clients probably won’t know what business advisory services are. Giving it packaging helps you to build up the value of what you do by having a system or structure.

I recommend you...

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Why building an accounting firm feels such hard work

value pricing Aug 06, 2019

It can sometimes feel like we are wading through treacle as we try to grow our accounting firm.

The reason it feels so hard is because we are trying to do too much at once…

  • chase new clients
  • put new systems in place 
  • recruit that new person we’ve been looking for
  • train that person we’ve got in the office right now 
  • learn social media marketing
  • make videos for a YouTube channel
  • write an ebook
  • launch a brand new service

We’re trying to do everything and it’s too hard. You can’t get everything done all at once. 

Rome wasn’t built in a day.

I want to share with you a simple strategy that will help you get complete clarity as to what you should be doing next.

You can watch the video here.

Never work on more than three big projects at any one time

Just pick three things.

It could be that your want to launch your Facebook presence. Or it could be that you want rebrand. Maybe you also want to sort out the fixed pricing, the value...

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Why are so many accounting and bookkeeping firms moving to value pricing?

value pricing Jul 30, 2019

Everybody in the accounting profession is talking about value pricing right now. Why are so many firms making the change to value pricing?

I’ve been teaching value pricing since 2000.

I first came across it in the late 1990s when I was working in my own accounting practice as a sole practitioner. I met Ron Baker, who is now a good friend of mine. He taught me about value pricing and I read his book - it changed my life.

When I first started teaching value pricing everyone was using time sheets. They were all pricing based on the hour; almost nobody had heard of value pricing.

But there has been a big change in the last 5 to 10 years. Everyone is moving to value pricing. Why is that?

You can watch the video here.

There are a number of reasons.

Firstly, we have had a cloud revolution. The technological changes in the accounting profession have made a significant difference to the way we have to price.

We have cloud technology, cloud accounting, artificial intelligence and...

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How to create effective packages that sell

value pricing Jul 26, 2019

I talk a lot about menu pricing.

Menu pricing means that when we are presenting our solution to our clients, we give them a choice. This shows a move into value pricing as it allows the client to choose based on what they value.

We create different packages. You may have seen it presented as Bronze, Silver and Gold packages, or the Good, Better and Best strategy.

I call this menu pricing.

I want to share some tips on how to build up effective packages that will get more clients to buy from you.

You can watch the video here.

#1 - Think of the client’s needs

When creating their packages most people start to just randomly allocate different services to different packages. This is a big mistake.

Because if you randomly assign things to your packages then you are not tailoring it to the clients specific needs. It may turn out that the package in their price range doesn’t give them all they need so they won’t be happy.

You harm the chance of buying if you pack out a...

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How to find out what is important to clients

value pricing Jul 23, 2019

Value pricing is all about coming up with a price based on value. But before you can do that you need to find out what your clients actually value.

After all, if you don’t know what they value, how can you possibly give them a value-based price?

Everyone values things differently. You need to find out what your clients find valuable so that you can build it into their package and give them maximum value.

You can watch the video here.

If you want to find out what your clients value, here’s what you do…

Ask them.

It’s that simple.

Once you understand what is important to your clients, what they value, you can then build those things into their solution.

You can communicate those things better when describing their solution so they really see the value. If you communicate it effectively and help the client to understand the value of your solution, they will be willing to pay the higher price.

You can, and should, charge more for highly valuable services. And,...

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How to charge different clients different prices

value pricing Jul 16, 2019

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,...

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How to value price one-off projects

value pricing Jul 09, 2019

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…

  • Unlike recurring services such as bookkeeping, payroll or tax returns which we can invest time into coming up with a system and structure, we have no way of preparing for one-off projects.
  • They are often big, time consuming and costly projects. There’s a lot at stake so they need to be priced correctly.
  • There is uncertainty in the scope, we have no idea how much work is going to be involved.
  • We have no idea what the result will be. With tax planning, for example, we don’t know whether it will be successful or not.

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...

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How to set out your Fixed Price Agreement

value pricing Jul 02, 2019

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...

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