From: How to Price Your Accountancy Services for Maximum Profit (by Mark Wickersham)
Part 4b of 14 OK, now why would you bother settling for just 1%?
You may be already asking yourself the same question. Why would I settle for 1% if I could ask for 5%, 10% or even 20%?
Phil Bessant, a sole practitioner of a firm in Newport brings in annually £250K, which is commendable for an economically challenged area of South Wales. After going through the Effective Pricing for Accountants programme, Phil sent an email:
“I would like to express a huge THANK YOU. Having the whole 11 courses in your series I have started to put them into practice and as a result have signed two clients this week worth £37,500 of fees which prior to your course at the very best I would have quoted £6,000. One paid £25k up front and one paid £6k up front. So a very very very big thank you, I think it is safe to say that the costs have been recovered.”
Soon after I did an interview with Phil where he explained how he followed the processes in the programme and is now able to increase his prices by an average of 28%! Taking his profit from £250,000 to £400,000. If you’d like to listen to the interview, click here.
What’s holding you back?
I’m guessing….. It’s a lack of confidence. It tends to be the first thing that stops accountants from raising their prices. But, this mindset can be overcome and together with getting the skills, knowledge and systems, asking for higher fees won’t be such a concern. You could even look forward to it, you’ll see why.
Price has got nothing to do with costs and everything to do with people. Pricing involves behavioural economics. And when we fully understand this branch of economic theory and have the skills and the systems in place, then we suddenly find that confidence. It’s not our fault that we’re not good at pricing… accountants are simply not taught how to price.
Price is also a mindset matter. It’s about seeing that some people will see your charge out rates as too high for them and also recognising that you don’t want every single person as a client.
Sometimes, accountants say that their clients complain of prices being too high, however, on closer examination the same accountant says the clients that complain make up only 10 to 20% of their client base. We have to remember that when we hear these kinds of things from clients, they only represent some clients, not all. It’s easy to blow this out of proportion in our minds. This can be a determining factor in keeping our prices low.
However, we’ve got this all upside down. Take a look at it another way, if none of your clients ever say to you, “That’s expensive”, that most likely means your prices are too cheap!
So, the answer is to embrace the mindset that can tolerate complaints about pricing with a grain of salt and once you hear them from up to about 20% of clients you’ll know you’re on the right track with pricing your services right.
Objections can put you in the right direction.