One of the hang-ups we find a fair number of accountants have when it comes to increasing their prices is that they simply think they are charging too much. They think that service X only requires so much work, how could they possibly justify charging any more than Y?
The answer is, you’re not just charging for that service. You’re charging your clients for access to your years of experience and expertise that you’re bringing to bear on your services. You’ve put a lot of study and work-hours into becoming a top tier accountant, and you deserve to make rewards commiserate with all of that learning and effort.
Additionally, you are, quite obviously, in a business. Even if your intentions for starting your firm were completely altruistic, that doesn’t mean that you personally can’t be well compensated.
Let’s take a look at some ways you can start boosting your own personal bottom line as quickly as possible.
Don’t hand out partnerships as rewards
The goal of your firm is to make you, the head honcho, money. Additional partners can have the opposite affect – as partners they drain higher salaries while not necessarily doing anything to bring more clients in. In fact, they might be doing the exact same work you can get out of a regular employee, but at a much higher cost.
Keep your firm’s hierarchical tree trimmed near the top. The fewer partners (especially ones who made it because of tenure rather than because of any growth they offered to the firm) the higher the profits.
Set service and project prices (don’t bill by the hour)
Pricing by the hour by its very nature requires you to work more hours to make more money. Also, it’s a good way to avoid having clients pay for your accumulated expertise.
It’s also a way to cheat either yourself or your client. Clients may end paying more because you drag your feet since you feel they won’t be honestly paying enough for the expertise required to complete a task. On the flip side, you may feel guilty if it takes “too long” and chop off hours to make it up to the client (a kindness they’ll never know about).
Break down the services you offer. Get the average time it took for a particular service. Take the resulting fee (total hours paid) and add on an additional percentage based on what you feel is fair compensation for having such work done by a pro like yourself. 10% on top of the time-based average fee? 15%?
If you really feel like certain services don’t warrant such a bump in prices, then see if you can assemble service packages, and add that particular smaller service as part of the overall bigger bundle.
By the same token, as you figure out the average hourly cost per service you may find that some of the services are never really going to be profit-makers for your firm. It’s time to decide whether you want to keep them on – will you lose clients if you give them the axe? The more you spend your time selling and working on high-profit services, the more you make.
Offer more services
You succeed when your clients succeed. Especially if, when you first pitch them on a project, you tell them that your fees will be coming out of their increased revenue.
This means that the more ways you can get tucked into their business (a.k.a. the more paid services you concentrate on their business) the more the both of you will succeed.
Would a particular client be doing better if they used your bookkeeping service in addition to your payroll service? How about basic compliance work? Could you be testing out different pricing configurations to help them see how they could be saving money or raising their prices?
The more services you show as having value to the client, the more the both of you will profit.
There’s one thing and one thing only that absolutely has to be in your home office location (beside yourself of course) – direct client services. Anything that isn’t involved in directly communicating with the client can probably be shipped overseas and done with the same quality (or higher) results for a fraction of the in-house cost.
Prune your clients
Unless you are just starting out you can probably afford to get rid of the clients who are costing you time and money and are stressing you out. Are your D-listers worth keeping around? Are they taking far too much of your time (compared to A-listers) with constant complaints or questions? You could be using that time to hunt down more A-list clients instead. Plus, like breeds like – the more D-listers you have, the more they’re going to try to bring others like themselves to your firm, increasing the speed of your time-sink downward spiral.
Install documented systems
The more actual accounting work you get done in a day, the more money you make. The more administration-type work you do, the less actual accounting you can do.
Prepare workflow systems. Document them. Make sure everybody is on the same page. When someone comes up with a tweak that will make your office run faster, implement it as quickly as possible and see how the new formation works. The more streamlined your firm is, the more it will be able to concentrate on making you money.
Be in the business of making money
Being a profit-driven accounting firm will lead you to search for efficiency and ways to make your services better for your clients (so you’ll have an easier time selling them those services). This means that every time you shape your firm to be a better-money maker, you’re also shaping it into being a better, more efficient money-maker for your clients as well.