What Drives Profit?

valuepricing Feb 12, 2019

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...

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How an accountant gets results from value pricing

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...

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Dealing with cheaper competitors and low-ballers

valuepricing Jan 16, 2019

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,...

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