Price should never be the defining factor when comparing your firm to competitors. Focusing solely on price can reduce your firm to a mere mill of compliance and allow competing firms to easily outshine you. Additionally, once you establish your firm as being solely price-oriented, it becomes increasingly challenging to differentiate yourself by offering added value compared to competitors. Moreover, once you start competing for the lowest price point, you will continuously need to lower your fees in order to remain relevant.
Now that we understand this, how can we effectively communicate to potential clients that they should prioritise factors beyond price when selecting an accounting firm?
The crucial step is reframing the conversation about your fee structure by emphasising the value that your firm provides rather than simply offering the lowest price. Your firm isn’t like a fast food joint pushing out cheap burgers from a 99-cent menu – it’s more akin to a high-quality prime steak. And naturally, premium quality comes at a higher cost.
Let’s dive into three helpful tips for successfully negotiating with clients who consistently bring up prices in conversations.
1. If you do negotiate price, get confirmation first.
If, despite your best efforts to demonstrate the substantial benefits of your services in enhancing their business or personal finances beyond what other firms can achieve, your client insists on haggling over the price, you have two alternatives.
The first option is to decline politely and graciously. There is great strength in having the self-assurance to say “No.” This conveys to the prospective client that even if they may not fully appreciate the value you can provide to their financial situation, you certainly do and firmly believe their worth to be no less than X amount of dollars.
To further enhance your professional image, you can even elevate your status by suggesting another reputable firm. This not only demonstrates sophistication but also subtly piques the interest of potential clients who may be curious about what they may be missing out on by not engaging your services.
The initial choice can be quite daunting, particularly if you are new to the business and rely on that income. However, the second option involves engaging in price negotiations but only after securing a solid commitment from the client that they are committed to working with you. It is crucial to steer clear of reducing the price prematurely only for the client to express their intention to explore other options. This scenario suggests that the client anticipates further price reductions upon their return, leading to a detrimental downward trajectory for your company.
2. Price based on your effort.
To ensure a successful client engagement, it is crucial to fully understand their expectations. Ideally, you should present a comprehensive suite of services that will provide maximum value for their business or personal finances. Merely offering a price for specific services may lead to misunderstandings and dissatisfaction later on. It may seem obvious, but unfamiliarity with your client’s business can create problems. The more complex their affairs, the more effort you and your team will have to put in to guide them in the right direction. Some clients may require additional work compared to others in order to achieve similar outcomes. Therefore, it is essential to gather all relevant information before determining an appropriate pricing strategy.
3. Find out what other firms are doing better than you.
If you present a compelling case outlining the value you can provide to a client and they persist in asking for a price reduction, there are two possibilities to consider.
Firstly, it is possible that the client may not be the type of client you want to work with. Their inability to comprehend the importance of value over price can make it challenging for you to receive fair compensation for your services. Additionally, this mindset may indicate that they are not proficient in managing their own finances, which could result in ongoing difficulties as you endeavour to assist them.
Competing firms may be offering more value than your company, resulting in them being able to charge comparable fees while providing more attractive services. There are several factors that could contribute to the competition’s superiority, such as specialised expertise, quicker service turnaround, and documented success stories with clients facing similar challenges.
If this is the case, it is important to investigate and understand what sets the competition apart. The goal should be to at least match their strengths in those specific areas or ideally surpass them. By positioning your company as the superior choice across all aspects, clients will have less leverage to negotiate for lower prices. They will fear losing the opportunity to work with a top-notch accounting firm that can elevate their business to new heights.
