The world is changing fast.
We now have Cloud Technology and Cloud accounting that automates a lot of the work we do. The old compliance work its getting automated through machine learning and artificial intelligence.
As a profession, we have to change.
We have to start doing more for our clients, and one of the things we can do is help them increase their profits.
This isn’t so straightforward. You can’t manage profit. You can’t go into a business and improve profit by focusing on profit.
What we have to do is understand what drives profit.
You can watch the full video here.
What are the drivers of profit?
There are a number of different drivers of profit. We can build a mathematical model that predicts profit and allows us to see what is impacting on profit and how it does that.
I want to share with you some of these drivers to give you an indication of how we can start helping our clients to improve their profits.
We can start by thinking about a set of...
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...
Reza Hooda used to price based on a mixture of hourly rates and gut feeling.
Then he learnt about value pricing through my mentoring programme and it completely transformed his business.
In the interview he says:
“I could see how time-based billing was completely ludicrous. So we scrapped that idea completely, and then started to price much more based on value.”
An opportunity arose for Reza to use his newly learnt value pricing techniques to price an incorporation project involving a property client.
By using menu-pricing
He sat down with the client and worked out what they wanted to achieve and where the value in his service was.
Based on that, he prepared a proposal and, using the menu pricing tactics, presented his client with 3 options.
It was priced at £66,000. And they accepted it.
By using the Cloud Pricing software
Reza used to price his compliance work by charging a similar rate to the client’s previous accountants.
But since having a software based...
How do we deal with those low-ballers that are always competing with you on price.
There are 2 strategies.
The first is that you could compete with them.
But that’s crazy because if you’re competing on price no one will win. You’ll both just keep reducing your prices to become lower than the other. It’s pointless. It will just continue spiralling until people go out of business.
What we do instead is focus on being better. Compete on quality and on service.
I’m going to share with you three things you absolutely should be doing to beat your competitors in quality.
I recently made a video explaining exactly how you can get around this. You can watch it here.
Number 1 - Communicate your quality to the client
In every communication you have with your client, focus on quality, service and value.
Make sure what you do is better than your competitors. Then communicate that in your marketing.
You need to make yourself seem different from the rest,...
How to price bookkeeping services
I received an email a short while ago from a Chartered Accountant called Patrick. He told me how he’d used a process to get 4 times his normal price for his bookkeeping work.
You can watch the whole video here.
I’m going to share with you the techniques he used to achieve this in 3 easy steps.
The first thing Patrick did was to create and use a brochure. He called it “Taking Away the Hassle of Keeping the Books”.
There are several reasons why I strongly recommend you have a professional brochure.
Firstly, it is one of the strongest forms of marketing. You are professionally packaging your services and this influences people’s perception of what you do.
They will expect high standards and they will expect a high price.
Secondly, your brochure becomes your script on how you would run a meeting to properly communicate value to the client.
Patrick’s second technique was to package his...
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....
I believe that the accounting profession is an incredible profession.
Accountants make a profound difference to the lives of clients, and, as a result, we should be very well rewarded.
Unfortunately, that's rarely the case. Most accountants are working way too hard for way too little money.
That’s how it was for me when I first started my own accounting firm back in 1996. It was seriously hard. In the space of two years I had grown it to about 200 clients. It was growing fast, but I wasn’t making any money.
I was working longer and longer hours, it was crazy! But I think that's the state of most accountants and bookkeepers around the world; we work too hard for too little.
It all changed when I implemented value pricing…
When I started to put in place value pricing systems in 2000, my results changed so significantly that a few short years later I was able to sell my accounting firm.
Since then I’ve been teaching accountants around the world...
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...