Pricing Matters. In our 60 combined years of consulting to the profession, if we could give one piece of advice it is improving your pricing. Other than doing the technical work, pricing is the most important thing you do in your accounting firm.
Pricing reflects your competency, expertise, and the value you create for your clients. It also directly impacts your firm’s profitability.
Accountants and CPAs are notoriously not good at pricing. Think about it… are accountants the true Trusted Advisors? Yes. It begs the question then why do attorneys have higher prices than accountants… because they ask for it!
Some might say that accountants have a self-esteem problem. Certainly, most are too nice and don’t make their firm the #1 client.
Here are several of the biggest pricing mistakes we see accounting firms make:
- Not establishing minimum and target pricing. Understand your fixed cost and overhead. Saying Yes is a responsibility. No is a complete sentence.
- Not having a target average hourly charge. Even if you don’t complete timesheets (most partners don’t), it’s critical to have a target rate. We suggest $200 an hour. Most people aim at nothing and hit it with amazing accuracy.
- Being a people pleaser. Most accountants want to help people, which often translates to being a price apologist. Stand tall, own that you are an expert and a trusted advisor, which commands premium pricing.
- Pricing too fast. Accountants often focus on getting work done rather than assessing the value, scope, and outcomes. This leads to underpricing and lower profitability.
- Basing pricing on the previous accountant. Most clients do not leave their previous accountant because of price. If they do, they’re likely not your ideal client.
- Underestimating project scope. Ask your team to assess time and effort. Build in additional pricing for unassessed scope.
- Pricing in arrears. A service in demand is worth more than a service delivered.
- Pricing the service/form instead of the client/value. All 1040s are not created equally. Price based on value to your client.
- Pricing alone. We are our own worst negotiators. Price with your team, coach, or spouse.
- Price to win, not price to lose. Most accountants naturally price to get the work, not to maximize firm profitability.
If there is anything you need to do to improve your firm this year, it would be to improve your pricing and pricing process. Doing so can be transformative for your firm’s profitability and growth.
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