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 firm.
Pricing reflects your competency, expertise and the value you create for your clients.
Accountants are notoriously not good at pricing. Think about it.. are accountants the true Trusted Advisors? Yes. It begs the questions 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 firms the #1 client.
Here are several of the biggest pricing mistakes we see 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.
- Most accountants are people pleasers…which often translates to wanting to help people… which translates to being a price apologist. Stand tall, own the fact that you are an expert and a trusted advisor which commands premium pricing.
- Pricing too fast. Accountants live in the gap of what needs to be done. This means I can’t spend too much time on matters other than getting the work done. This translates to not properly assessing the value, scope and outcomes of a job… which means a low price.
- It needs to be said that if most accounting firms aren’t good pricers than you should not base your pricing based on the previous accountant! Especially since most clients do NOT leave their previous accountant because of price (and if they do, they’re likely not your target client…if they join on price, they will likely leave on price).
- Most accounting firm partners under-estimate the scope of a project and how long something will take.Don’t believe, just ask your team! You must build in additional price to cover the scope you didn’t assess on the front end.
- Pricing in arrears.A service in demand is worth more than a service delivered. Period.
- Pricing the service/form not the client or value. All 1040’s are NOT created equally. Take the time to diagnose the client and properly price based on value to the client.
- Do NOT price alone.We are our own worst negotiators. There’s a reason athletes and actors have agents! Price with your team, coach or spouse.
- Price to Win not price to lose.Most accountants’ natural default is to play not to lose e.g., priced to win the work (get the job) not priced to WIN.
If there is anything you need to do improve your firm this offseason it would be to improve your pricing and pricing process. It will be transformative.
