Pricing is something that most accountants struggle with…
They’re stuck using ‘old-fashioned’ models that are damaging for their profits, and their time.
One of the reasons you’re stuck with your current pricing model – is because of your mindset.
If you don’t change this mindset, then you’ll find yourself left behind in the ‘old way’ of doing things, working too hard and writing-off profit.
Alternatively, if you change your pricing mindset, then you’ll be able to utilise more profitable pricing strategies which allow you to grow your practice whilst working less.
With that in mind, here are 3 mindset shifts you need to make if you want a more profitable pricing model in your practice:
1. Your clients are not price-sensitive, they are value-sensitive
Most accountants are too cheap.
And even the practices who aren’t the cheapest could still get away with increasing their fees even more.
One of the main reasons that most accountants are too cheap, is because they think that all their clients are price-sensitive.
This isn’t true.
Around 14% of clients are price-sensitive – and guess what? These are the wrong clients!
And if you find yourself only attracting this kind of clients, then it says something about your ‘message’ and ‘positioning’ in the market.
The truth is that the majority of clients are value-sensitive.
Here’s an example…
How did you decide on your last car?
– Maybe you wanted lots of space for your wife, 3 kids and 2 dogs.
– Perhaps you wanted a car that could easily handle X miles a year.
– Or possibly you knew the dealership and garage was only down the road.
Whatever your reason, I’m sure price was an element, but it wasn’t your true motivator.
Your true motivator was value.
– The value of knowing you can go on long weekends away with your family and comfortably fit everyone in the car.
– The value of knowing you can do X miles a year, and you won’t be in and out of the garage getting parts replaced or repaired.
– The value of knowing the dealership is only down the road so should anything need doing, you can easily get down there.
If everybody was price-sensitive, then we would all be driving the same car – the cheapest!
Price is one element of the mix, but more often than not, it’s a smokescreen.
Stop thinking your clients are price-sensitive and start thinking they’re value-sensitive.
2. The value lies in their perception, not yours
So if your clients are mostly value-sensitive, then we need to understand what this ‘value’ is actually worth.
Here’s the honest answer…
I don’t know, and neither do you…
The only person that truly knows what the value is worth – is the client.
They are the ones who know how important it is to them. And if they don’t know, then it’s your job to educate them!
The value of your service lies in how much the client is prepared to pay – based on – how much they perceive the service (and you) is worth.
If their perception is that you are a cheap accountant who submits their tax return and manages your accounts, then guess what, they will perceive the value of your service to be much less than it’s worth.
Whereas, if their perception is that you are an expert in helping businesses grow by saving them tax and plan for the future, then chances are they will perceive the value of your service to be much higher.
3. Hourly billing doesn’t reflect your value
Hourly billing is an old pricing model that has no place in a modern accountancy practice.
It’s inefficient and unprofitable.
But one of the main issues with hourly billing is that it doesn’t reflect the value of your service.
Here’s a completely theoretical example, but one that demonstrates the point:
Let’s assume your hourly rate as the partner is £500.
Scenario 1 – You spend an hour doing tax returns,
Scenario 2 – You spend an hour solving a complex tax query for a client that potentially saves them £000’s.
In both scenarios, you have spent an hour of your time working.
In both scenarios, the hour was worth only £500.
But in the second one, the value of your service is much greater than that of scenario one, only you aren’t rewarded for it.
Stop thinking you sell time, and start thinking you sell value.
“As I change, it changes”
As you start to adjust your mindset and your approach to pricing, then things in your practice will begin to change.
Your practice is a reflection of you.
It’s a bit like when you start going to the gym.
At first, you might not notice that much change. But over time, the reflection that you see in the mirror will change.
The same goes for your practice…
Your practice, your team, they are all a reflection of you.
And as you begin to change, so will they.