Pricing. Are you asking for forgiveness or permission?
You remember the saying (I do from my restless teenage years).. either you said it or someone said it to you. I find it also applies to pricing.
I had a conversation late last week with a firm who worked on a project that saved the client over $500K. Their engagement letter states they will charge based on value eg. no upfront price. The partner said they were just focused on “getting the work done”… Partner doubts the client reads the engagement letter.
The firm called us to discuss how to approach the conversation (Did NOT want to surprise the client with a 10K bill). The firm was going to be happy with a price of 10K yet admitted the client was a bit frugal so wasn’t excited about the conversation (permission or forgiveness comes to mind).
The firm’s objectives/concerns:
- Wanted to respect the client
- Wanted to address any concerns verbally
The firm stated they were concerned the client would ask.. “how many hours do you have in the job.”
The response we aligned around:
"We don’t price by the hour. We can’t tell you how many hours we have into the job. We have invested thousands of hours in training in order to be in a position to this kind of project work and create value for you. As your Trusted Advisor, we are proactive and have your back".
Do NOT bill in arrears.
Get the price “out of the way”.. and then focus on “getting the work done.”
Getting the price upfront is making the firm the #1client.
You leave value and money on the table by pricing upfront and appropriately.
My hunch is an upfront conversation to save a client $500K is worth a lot more than 10K.
Billing in arrears does not build goodwill in the relationship.
We live and learn!
If you're interested in more insights like these, consider signing up for our Renewsletter: https://www.renewgroup.com/newsletter. Alternatively, if you'd like to discuss your CPA firm's specific needs, feel free to schedule a call with us: https://www.renewgroup.com/contact.
About the Author:
Shannon Vincent has dedicated his entire career to working with accountants in various capacities. He has consulted with Top 100 firms to Sole Practitioners, helping them create sustainable and profitable businesses. A member of the California Society of CPAs, he received a Bachelor’s Degree in Economics with an emphasis in accounting from University of California, Santa Barbara, and now resides in the San Francisco Bay Area. Shannon is passionate about helping accountants improve their pricing for better outcomes into the future.
About Renew Group:
Are you tired of being on the diet but not seeing results? Most consultants to the CPA Profession do lots of talking and deal in 'fluff'. But there's no accountability and no focus on RESULTS.
At Renew, we start with your numbers. Our firms complete a Pareto for Profit analysis EVERY YEAR, set new targets to improve their profitability and then 'weigh in' regularly. We give you a roadmap to transform the profitability of your accounting firm by accessing our content, collaborating with other firms on a similar path and being held accountable by our coaching team and your peers.
Get paid what you're worth, create a better life based on a scalable business model and eliminate tax season insanity once and for all!