I’m going to share with you the 4 types of buyers.
Once you understand their characteristics it will help you with your pricing.
If you want the full details, you can watch the video here.
#1 - The price buyer
The price buyer is the person that shops based on price. Price is the most important thing they are looking for.
They are price sensitive.
Thankfully, research shows there aren’t many of these types of buyers in society. It’s typically estimated this group make 15-20% of buyers.
These people aren’t entrepreneurs, they aren’t high net worth individuals.
They’re not the sort of people you might have in your client base.
#2 - The value buyer
The value buyer buys based on value.
Price is still important, but the value of what they get is of even more importance.
When we think about the value equation, it’s essentially made up of the benefits someone gets when they buy minus the cost or price. A value buyer is looking to maximise...
As a profession we are way too cheap.
We aren’t charging enough. Which is why every accountant and bookkeeper I speak to is telling me they are working long hours for too little money.
We have to put the prices up.
You can watch my video here, or by clicking the thumbnail below. Or if you prefer you can keep on reading.
Here’s how you do it:
Step 1 - Reframing
Existing clients know what you charged last year. They have a reference price.
Let’s imagine last year you charged $2000. This year you know you need to put your prices up by 20% to $2400.
The first thing you have to do is make it more difficult for the client to compare the price to last year's by reframing it. We need to change the way we express the price.
A strategy I use is called ‘chunking it down’, to avoid revealing a headline price. It’s easy to compare last year’s $2000 to this year’s $2400. But if we express that price as $200 a month, it isn’t a straightforward...
This is one of the most common questions I get asked.
First we need to understand, what does value pricing mean?
Simply, it means that we come up with a price based upon the clients’ perception of the value of what we do.
You can watch the video here, if you prefer. Or carry on reading.
Get rid of time-based billing
When we increase the value, and when they see and understand that value, they will pay a higher price. The price is based on value, not on old-fashioned redundant ways of pricing based on time.
There was a study done back in 2005 by a major software company, that asked thousands of business owners “What do you hate most about your accountant?” The most popular response was surprise bills.
With time-based billing the client doesn’t know the price until all the work has been completed.
Therefore, clients actually love value-based pricing. It’s in their interest because we are moving away from the shock of time-based bills, which customers...
The other day I received a lovely little package through the post. It kind of blew me away when I got it, I was seriously impressed.
Just to put this into context, this present arrived along with a thank you card from Reza Hooda, someone who I’ve mentored now for several years and helped with his pricing.
The card reads:
It was a lovely little message and he is someone who is doing incredible things in his firm.
Now, often accountants and bookkeepers may send a thank you note to their clients, perhaps with a bottle of wine or some such gift. But I think Reza’s gift takes this to a whole other level.
Firstly, it was beautifully packaged, with Reza’s firm logo Walji & Co on the case. Then inside was a beautiful really high quality power bank, a branded charger for the car, a portable speaker and a USB drive.
Watch the video here and you’ll get what I mean.
It’s something of high quality and real use to me. Something I will keep.
You should be doing...
I recently filmed a video where I shared the 9 biggest pricing mistakes made in the accounting profession. Click here to watch the full video.
As a profession we are way too cheap.
It’s why we are working crazy long hours and not making the money that we deserve.
So we have to rectify that by putting up our prices.
Copying the Competition
Most accountants and bookkeepers are too cheap.
When we try to win new business, we tend to look at what our competitors are charging and use that as a basis. But if they are too cheap, it makes no sense to copy them.
There is a reason the client is talking to you. There is something about their current accountant or bookkeeper they are not happy with.
So if they want better services and better quality, they should be prepared to pay more than they currently are.
Prices on a Website
People put their prices on their website because they want to win more business. But if you put high prices on your website no one will ever contact...
An enormous range of prices
One of the things I’ve found in my benchmarking studies is the huge range of prices in how much firms are pricing for automatic enrolment.
I’ve come across many who don’t know how to price it and are doing it for free! I have heard of many firms charging approximately £500. I have heard of firms charging £2,000 to £3,000. And I have even heard of one firm charging £6,000.
So, given the huge range - from FREE to £6000 - it’s very clear that as a profession, we don’t know how to price this opportunity. It’s very clear that some firms have found a better way; they are more comfortable about their pricing and are getting better results.
Auto enrolment is such a big opportunity for the UK accounting and bookkeeping professions but we need to have a system to price it properly… otherwise we risk...
Many business struggle with their profits and their cash-flow. They work crazy long hours and aren’t making enough money.
The biggest reason for this is price.
The price is too low or the pricing strategy is wrong.
Most businesses price using emotion, their gut feel, and by copying competition. They ignore price psychology and price strategy, proven price tactics.
We need to figure out better ways to price.
I recommend you watch the whole video here or click on the image below.
Here’s an example…
Let’s use this small business havebike as an example. They are a small London-based business that provide a mobile bicycle repairing service.
You can from their website that see they use the menu pricing system with 3 options which is great!
But if we look at the difference in their price options we can see a huge gap between the ‘Deluxe’ and ‘Super Deluxe’ packages.
Firstly, I believe, for a London-based business, all of...
Why you must have an upselling system
When someone buys from you they are in buying mode. They want to purchase. Which means they are also at the most receptive stage to buying more from you.
So how can you maximize the opportunity for upsell?
You need a system in place, that’s how.
What is an upsell?
Upselling involves selling something extra to your customer. It’s something that’s evident in all sorts of industries. In the car or consumer technology industry it could be extended warranties for example. And generally it’s particularly powerful in high value transactions.
You need to find something else that you can upsell to your customers. So, if you are selling annual bookkeeping at £5,000 for example you will want to add in something extra for a price such as £100.
When people are already in buying mode and you offer an additional, smaller purchase like this they think they are already spending £5,000 so what’s another £100....
Making the middle option top choice
I often talk about menu pricing and the power of three. It’s truly powerful stuff. It’s the fact that when faced with three options people tend to gravitate towards the middle option.
And it works with pricing too.
So you might only currently offer one package – your tax return package for example. By adding more services and creating two other packages you will find that many will choose to pay you more by going for the middle, and therefore more expensive, option rather than your basic package.
But how do we get them to do that?
There are things you can do to prompt your customers to pick that middle option but essentially it boils down to one thing. Social proof. It’s something we learn from Dr Robert Cialdini, author of Influence: Science and Practice. Social proof is one of the six main laws of influence. It is defined as follows: “As humans we are lazy when it comes to decision making. When it comes to making...
The power of free
Everyone loves a bargain. But actually there’s something they love more.
Getting something for free.
The most powerful word in marketing
It’s the most powerful word in marketing. And it’s used all over the place in marketing copy.
A powerful way of presenting your prices to customers is through menu pricing using a tick list of options that shows customers what they do and don’t get. It’s visual, powerful and it works. And most of the time that technique means a series of ticks and crosses.
But sometimes you can add in something different. You can add in the word free.
It’s even more powerful than a tick.
As I’ve already said people love getting something for free. They love getting something more than they expected. It stands out.
Don’t go overboard
Of course, it could be tempting to go overboard. To use it everywhere. But don’t.
People like getting a bonus. Something extra. But use the word free...