A lot of practitioners I talk to worry about pricing. They’re concerned that asking for more could backfire and damage client relationships. Here’s three top strategies for raising prices with less client push-back.
1. Adopt value-based pricing
Many advisors we work with have switched to value-based pricing. Taking the focus off hours worked and putting it on creating value is a win-win. It can generate more revenue, and increase profit as your efficiency improves.
Chad Davis, co-founder of LiveCA LLP, has done a great job creating value for his clients. And has been able to charge increased prices as a result. But, as he says, “Value-based pricing isn't just something you do. It's a business plan change.” The goal is to focus on the customer and charge less than the value they receive.
He suggests using a staggered approach to adopting value pricing. Start small. Get a foot in the door, and build towards a better pricing model. Make sure to set expectations that prices will evolve as your relationship develops.
Value-based pricing requires a new approach to client interactions. Chad recommends getting rid of timesheets. And never sending out cost increase letters. Instead, invest in your clients by having individual conversations with them. Work to understand what they want from the relationship. Explore their motivation and how you can grow together. How do your solutions save them money? How do you help them grow? What is that worth to them on an ongoing basis?
Take the time to explain that your pricing is based on the value you deliver. Sometimes it helps make hypothetical comparisons. Ask them to consider what it would cost to hire a full-time person or another less savvy bookkeeper.
2. Differentiate yourself
Smart practitioners look to redefine themselves as advisors in order to raise their prices. The best way to develop as an advisor is to differentiate yourself. Find a niche and build your expertise within it. Use your skills to look into the numbers and diagnose client’s business issues. Dig deep into their concerns. Helping them grow their business will demonstrate the value in your new price structure.
One great way to differentiate yourself is to bundle extra products and services. Many accountants and bookkeepers we work with include a suite of apps in their monthly fee. They bundle apps like Hubdoc, ShareFile, TSheets and Bill.com. The technology automates document management, time tracking, and billing. It streamlines workflow and saves clients time and effort. It also frees up practitioners to provide great client solutions. Bundling helps take the focus off individual costs. As Chad says, “Bundling reduces the number of conversations you’ll have about irrelevant details.”
Check out our Niche to Win blog post to learn more about how to find your niche and differentiate yourself. (Link to blog post)
3. Look for ways to create additional value
For Chad the real key to increased pricing is to, “Stop being average and do something great.” And that means truly understanding how your customers define a successful relationship. What do they really want from you?
Many clients want solutions they can’t come up with themselves. They want an advisor who can go beyond the numbers. Someone to provide advice on strategy, structure, and systems integration. If you can demonstrate that kind of value, increased pricing starts to make sense for both parties.
The Last Word
To increase pricing, great practitioners like Chad act as true advisors. They seek to differentiate themselves and bundle extra products and services. They listen to their clients and focus on deeply understanding their businesses. And they look for ways to add additional value. That allows them to increase prices in a way that makes sense to their clients.