Pricing is a critical area for both clients and professionals, and it is often a sensitive topic.
As such, accountants frequently find themselves in a predicament of lowering prices to gain new work.
However, this mindset is not necessarily beneficial for the accountant or the client. To solve this problem, our ReNew Your Pricing Module has developed a new framework for revitalizing your pricing process. Here are three tips on pricing taken from our active discussion forum:
1. Value-Based Pricing: Instead of charging based on hours worked, you should set prices based on the complexity of the work being done and more specifically, the VALUE and OUTCOMES to the client of that work. Accounting work is not a singular, rigid service; it encompasses various processes requiring varying levels of expertise. Often, the years of experience can create significant value for the client, and the price you charge should reflect this.
2. Upfront Pricing: Instead of only receiving payment after you've completed the work, price up-front. When you do this, you are signaling to clients the confidence that you have in the firm's ability to effectively and efficiently create value for the client. When people buy something, they will often do so seeking assurance in the quality of the product. Therefore, if the service they choose is certain of its capability to provide what it is offering, the client will not see a larger upfront price as a drawback but as a mark of quality and happily pay in advance. Moreover, if clients pay upfront, they will want to work with you to ensure the best possible outcomes so they can get value for money, incentivizing them to provide you with necessary information faster and build a better relationship with the firm.
3. Never Reduce Prices: Finally, you should never reduce prices to onboard new clients. Though it's easy to be apologetic about your pricing, if you know that the work you'll do will provide valuable outcomes, then there is no reason to lower the price. Every potential client has the ability to walk away if they want to, so do not fall into the trap of thinking that lowering prices will automatically bring in the work. Instead, price with the goal of winning the greater profits from the work being done and creating great value for the client, rather than just bringing in more work at any cost.
It's important to remember that as an accountant, the services you provide are valuable, and you have worked hard and taken on a lot of risk to be able to supply them.
How you price should reflect this above all else.
Pricing is not a one-size-fits-all solution, but by adopting these tips, you will be able to develop a pricing strategy that aligns with the value you provide to clients. Pricing based on value and outcomes, upfront pricing, and never reducing prices will help you win profitable work and create great value for clients.
Remember, it’s should not be a race to the bottom but a reflection of the value you bring to the table!
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:
Colin Dunn, a Chartered Accountant with extensive experience in the accounting industry, is passionate about helping accountants transform their firms and lives. With over 25 years dedicated to creating content for to help CPAs improve their profitability, Colin shares valuable insights into properly pricing based on value. Colin believes that CPAs can create a better work-life balance by learning from past experiences and applying these insights to their firms, allowing them to spend more time with their families and pursuing hobbies and leisure interests.
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!