Scope is creep is probably one of your biggest costs, but it can be totally invisible!
You need to be able to spot scope creep when it is happening so that you can address it and adjust your price accordingly. You should never have to make a loss on a job.
Here are 7 common examples of scope creep to look out for…
When the client gives you corrupt data, or they haven’t given you the data in the format you wanted, that is a scope issue.
At the outset of the project, you should build into your proposal or fixed price agreement very clear instructions on how you need to receive the data, and also what will happen if those conditions are not met.
This used to happen to me all the time! Clients would drop off their books and records – and in those days, back before cloud technology, it was all held together in a paper bag!
When projects end up taking longer than you expect, you end up making losses on the job.
How do you solve that?
I’m going to share with you a 7-step framework to stop you suffering from scope creep ever again.
Have you ever got to the end of a project, produced a work in progress report and realised you spent way more time on a project than you initially thought you would, but have no idea why?
You end up having to write time off to make sure the client will pay your bill – you end up making a loss.
You need to become more aware of scope creep and be able to spot when it is happening. If you know what to look for, you can identify scope creep and deal with it before it becomes an issue and costs you money.
You should deal with scope right at the outset of the project. You should discuss it in the pricing conversation.
I met recently with one of my students who told me about her immense success. Here’s what she posted in my Facebook Support group:
I just had to interview her!
Lana signed up for my How to Price Bookkeeping course, and after studying value pricing and implementing the new practises throughout her business, there were 3 clients in particular that she managed to get great results from and demonstrate her improvement in pricing.
The first client was an education consultant.
She had a bookkeeper but wasn’t really satisfied with them, so asked Lana to double check everything was in order.
Lana noticed there were a number of accounts that weren’t entered, and several holes in the paperwork needed sorting.
She priced this clean-up work at $2500.
But, the real value pricing achievement came when Lana priced her bookkeeping…
When you have a price conversation with a client, the better you are at communicating your value, the more business you will convert at higher prices.
Recently one of my students asked how to create a pricing brochure for bookkeeping services, so I’m going to share with you how to do that.
Having a professional looking brochure shows that you are professional, you are the expert, you are experienced and have clearly done this before.
When people see you as the expert, they are more likely to want to buy from you because they want to work with the best, and they will be willing to pay a higher price for the privilege of working with the best.
Recently, one of my students has been dropping some frankly amazing success stories into my Facebook Support Group:
The results she is getting are absolutely incredible, so I just had to interview her!
One of the biggest challenges Lana had to face was scope creep.
“Client’s didn’t understand that no, you hired me to do ‘A’, and now you’re asking me to do ‘B’, ‘C’ and ‘D’ as well!”
These clients tended to become difficult and reluctant to pay the bill at the end. This was hard on Lana as she was trying so hard to provide for her family, but clients were refusing to pay her for her work.
The tax season rush was another big issue Lana faced.
Come January, all her clients panicked as the tax year end was approaching, and Lana was struck with a huge influx of enquires and new clients wanting her to bring their...
Clean-up work is one of those services that can feel quite tricky to price.
When a client comes to you with their books and records in a complete mess and they ask you to fix them and give a price – the difficulty is the huge amount of uncertainty.
You have no idea how much work is going to be involved. You can try asking the client to get a better idea, but sometimes they aren’t any more clued up on their books!
You might ask when they last reconciled their bank account and they tell you it was a few weeks ago, but in reality it hasn’t been reconciled properly for 6 years.
The clients don’t know the answers and you won’t know the true scope of the work until you actually start.
It’s challenging – so how do you price that?
By the way, you can watch the video here if you prefer...
Option 1 – Charge an Hourly Rate
This is what most accountants and bookkeepers do, but it’s the worst possible way of pricing.
Accountants and Bookkeepers are always asking me:
“What should I be charging as an hourly rate for bookkeeping?”
I get asked this particularly from bookkeepers who are starting their business journey.
So I decided to find out, definitively what the profession is charging. So let’s look at that. Also, later I’m going to share with you how you can get 30 days of free access to some of my best training.
Hourly Rates for Bookkeeping
I recently created the world’s largest ever study, with 2683 participants, into what people are charging for their bookkeeping services.
One of the questions I asked in the survey was:
“If you price based on an hourly rate, what is that hourly rate?”
This graph shows the findings…
As you can see, at the bottom end of the spectrum, there are accounting professionals charging as little as $19 an hour for their bookkeeping services. This is a ridiculously low price.
Bookkeeping is a highly valuable...
I got an email recently that completely blew my mind.
When I saw it, I couldn’t believe what Carla was telling me…
I was absolutely astounded by this result. Not only had Carla got an incredible 6-figure fee, but she had done it only one month after discovering value pricing, on her first attempting, in just 2 hours with the client!
I had to reach out to Carla to find out exactly how she achieved this amazing result. She agreed to an interview. It’s 29 minutes of pure gold! I suggest you watch it now.
Meet Carla Davidson
Carla started her bookkeeping practice small, by herself, from her house.
She struggled with the amount of work, and couldn’t make a decent profit because she was still using hourly billing.
She wanted to be able to help her smaller clients so started hiring people to help, but things didn’t improve right away.
Hourly Billing Became A Big Issue
Carla found that, because she was using hourly billing, all her clients were asking for a...
I want to share with you 7 practical tips for how you might price bookkeeping services…
If you prefer you can watch the video here.
Tip 1 - Don’t Move Straight to Value Pricing
This is a big mistake I see often.
If you try to move from hourly billing to value pricing in one quick jump you are going to fail without a doubt.
Value pricing is a difficult concept to grasp in the first place. Trying to apply it to a complex compliance service like bookkeeping is going to make it even harder.
The move to value pricing is going to be a journey, not a quick fix, so be patient.
Tip 2 - Remember It Is Valuable
You need to recognise that bookkeeping is valuable.
The perception is often that it is a low value service, it’s just data entry. But bookkeeping can be so much more complex than that.
I know that my bookkeeper is quite expensive, but I don’t mind paying that price because I know I am getting great service. It gives me peace of mind knowing that the...
Do you struggle with knowing how to price your bookkeeping services?
Do you hate having the pricing conversation with clients?
Do you feel you are working crazy long hours for too little reward?
Trust me, you are not alone.
I know far too many bookkeepers who are underselling themselves and not getting enough money for the work they do.
I’ve noticed that people in the accounting profession are not typically very good at communicating their value to clients.
The ultimate problem is when clients don’t see the value of the work you do, they don’t want to pay a premium price for your services.
That’s why bookkeepers price so low. But you are worth so much more.
I hate seeing bookkeepers being under appreciated for the work they do. I’ve been there myself.
That’s why I have created this new ebook ‘How To Price Bookkeeping’ with these 5 easy steps to getting better prices:
Step 1: Change the way you price - stop quoting hourly rates and move...