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...

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...

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,...

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,...

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...

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...

The golden rule with proposals, is they should only ever be sent to confirm what has already been agreed upon in a meeting.

You should agree on a price with the client in your meeting whilst you are still in control of the conversation.

When you do build your proposal there is a structure you can use. You want to reinforce all the great stuff that you do, the value and the benefits to the client. There are 5 elements that you should build into your proposal…

Watch the video here.

#1 - Restate the pain

Start your proposal by reminding the client of the pain they are currently facing or will face if they continue as they are. People are more motivated by the avoidance of pain than by the attainment of gain.

When you spoke to your client you hopefully uncovered what their problems are, what they need solving.

Open your proposal with a reminder of this pain.

#2 - Quantify the pain

If you can, try to put a number to that pain. You can uncover some of these numbers in your meeting...

Pricing is one of the four ‘P’s of marketing.

Marketing is essential to the success of a business.

It’s also important to know that if you want to win more clients, you need to be seen as the expert in your field. You need to be seen as the best. You can create that reputation through marketing.

You can watch the video here.

Marketing has changed many times over the years. We are seeing huge shifts towards social media.

LinkedIn is a great platform for the accounting profession. Twitter as well. But Facebook is arguably one of the most powerful social media marketing tools.

I used to recommend LinkedIn as the number one marketing tool for accountants. But digital marketing is rapidly changing. Over the last four or five years Facebook has increasingly become the place to be.

In the future I imagine it will be something different again. But right now Facebook is the top platform.

As Facebook started to gain traction, everybody became obsessed with creating their...

I made this mistake all the time when I first started my accounting firm. It took me years to realise it.

The mistake is basing our price on the competition.

Many accountants, myself included have done this…

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I’d go to the potential client. I would say all the right things. I’d impress them with what I could do. 

Then, during my meeting with the prospective client, I would explain to them how I helped with taxes and planning and it would really help me if I could see a copy of last year’s set of accounts so I could fo through and look for some tax planning opportunities. Which I did.

But the real reason I asked to see the accounts would be to flick to the back page and look for the previous accountant’s fee.

Having got that number I would propose a price of 5-10% less than the previous accountant. In hindsight, this was a terrible method of pricing.

I won lots of business this way, I grew my...

The proposal is an important part of your pricing process, but most people get it wrong.

The golden rule is this: a proposal should only ever be written or sent to confirm what’s already been agreed.

The mistake people make is they meet with a client, they ask the right questions, they build up the value, the client wants to buy but we get stumped by the price question. When the client asks what it’s going to cost, we say that we will go away and think and then put it in writing and send it through the mail.

This is fatal!

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You should never do that because you’ve now lost control of the pricing conversation.

You should always have the pricing conversation with the client face-to-face. If the client doesn’t say yes to you in the meeting and asks you to go away and put in writing, you haven’t inspired them sufficiently. Don’t ever agree to put a proposal in the post.

There must be a reason they haven’t said yes....