I was recently speaking with a practice owner who’s based in the Northwest.
And during the conversation he was telling me about how his practice is 1 of 5 accountancy practices on a 2 mile stretch of road in this particular area.
It was what he said next that I didn’t particularly agree with…
He said… “because there’re so many practices in this small area, all of the potential clients round here are price shoppers. They just go looking for who will do it the cheapest. The only way I can compete is by dropping my fees.”
And he’s not alone in his thinking…
You see there are lots of practice owners who believe their clients want the cheapest possible price for the service they provide
And as a result, they’re too scared to increase their fees and charge what they’re actually worth.
They believe that if they increase their fees, their clients and prospects will take their business to the competition instead.
This makes them believe their fees have to be competitive with what other accounting practices are offering in order to both attract and retain customers.
But in most cases, this is not true.
Would you be surprised to hear that only 1 in 5 people are actually price sensitive?
Only 1 in 5 prospects will make a decision to work with you (or not) based on the price. That’s only 20%. Not quite the ‘majority’ that some practice owners believe.
And the thing is that this 20% aren’t the type of people you want as clients anyway – they’re not your ideal client.
They’re the type of people who want things as cheap as possible, without any regard to the value of the service they will receive.
So, if they aren’t price sensitive, what are they?
So, those 4 out of 5 prospects and clients who aren’t price sensitive, what are they?
They’re value sensitive.
“Price is what you pay, value is what you get” – Warren Buffett
Prospects who are value sensitive understand the real value of your services (rather than just the cost) and how this can help them and their business.
If they understand value, price then becomes a secondary factor.
If they believe that they will receive exceptional client service from an expert accounting firm, who go above and beyond that of a ‘standard’ practice, they’ll be willing to pay a price that reflects the value.
If they know they’re working with a firm that’s experienced and knowledgeable in helping businesses grow and scale, they’ll be more likely to perceive the value of your services as being much higher.
Just like you, your prospects want to work with businesses who satisfy all of their wants and needs, not just ones who provide a basic level of service.
So ask yourself, is the value that you’re offering worth more than what you’re currently charging? If so, you’ll want to raise your fees to reflect your true worth.
So, how can you implement a fee increase?
The number one thing you must do when implementing a fee increase is to understand how to communicate it properly.
For prospects, this will come down to demonstrating clearly the value that you provide, and whilst you might be more expensive than the other accountants down the road, the level of service you offer and the results you get are much greater.
And for your existing clients,you’d like to assume they understand the value of your service, but this isn’t always true. See the below screenshot from Linkedin as an example…
They have to understand the value in order for them to commit to paying the higher price.
If they don’t know the value of your service, it’s your job to educate them and communicate it to them in a way that they understand and can relate to.
In the example above, it is clear that the value of the service hasn’t been clearly communicated to the client – otherwise he wouldn’t be complaining.
Ask yourself what wants and needs your services are satisfying for your clients. These can be thing such as:
- My clients want to grow their business so that they can earn more money and retire sooner
- My clients need to improve their cash flow so that they can invest in new systems and people
- My clients want to minimise their tax liabilities so that they have more cash to invest in other business interests
Providing the assistance that can help your clients achieve the above will help their businesses grow and impact upon their lives.
And if they understand that this is the value of your services, then they’ll be happier to pay a higher fee as a result.
So, instead of focusing on being cheaper than your competitors, lets focus on value instead.
Focus on the value that you offer your clients, communicate this to them and everything else will fall into place.