As an accountant or bookkeeper, how do you up your prices when there are so many others out there undervaluing their services?
The fastest and most effective way of driving profit within your accounting practice is to raise your prices, but how do you get your clients to pay you more when your competitor down the road sells their services dirt cheap? These days, far too many accountants and bookkeepers are undervaluing their services and this is greatly affecting the industry. As a result, many talented professionals are overworked and underpaid by clients who want nothing more than their pound of flesh.
Clients who don’t see the value in your services are likely to defer elsewhere when you raise your prices, which makes the whole process pretty terrifying – especially if you aren’t getting enough new leads. You’re worried about where your next client is coming from, and so you continue to let these vampires bleed you dry.
This has to stop, so let’s take a look at how you can begin to charge more in spite of price sensitivity and find those radiator clients who actually pay you what you’re worth.
A good offer means that you can ethically charge high prices for valuable services. However, if you’re only providing basic compliance then expect to be questioned on price.
Compliance is transactional and therefore at the low end of the pricing scale. There’s nothing wrong with offering compliance-based services such as VAT and payroll, but there is a ceiling on value. All businesses have to be compliant, and this means that your competitor down the road offers the exact same service.
If you solely offer compliance, then the most important thing you need to do in order to up your prices is work on your mindset. Some accountants and bookkeepers charge £80 per month for compliance, whilst others receive £500-1000 for the same level of service. The difference comes down to confidence.
In order to charge more, you need to work on your mindset and learn how to communicate value to your prospects.
You can also try increasing your prices gradually. Add £20 per month for the next client, then £50, then £100, and so on until you discover the optimum price point for your target market.
However, you will have to mentally prepare and be willing to stand your ground. Confidence is key.
Prospects stop questioning you on price when they see your services as transformational. Rather than a basic compliance cost, transformational services are lucrative investments.
When you transform your clients’ businesses through offering advisory, helping them to grow their profits and improving cash flow, you generate a significant return on investment. Yes, £10k is a lot of money, but it pales in comparison to an ROI of £100k.
In order to charge this kind of money for your services, you need to learn how to communicate your value and ensure that your clients understand how you will make them money. The more you will make for them, the more you can charge.
Four Levels of Pricing
There are four levels of specialism which dictate the level of pricing power you wield as an accountant or bookkeeper.
You do everything for everybody. You’re all things to all people, and so you’re effectively invisible. People don’t know that you exist and if they do stumble across you, there’s no real proof that you know what you’re talking about. Therefore, your prospects will question you on price and go elsewhere if they find somebody cheaper.
You have an industry niche and are therefore higher up the value curve because your clients are prepared to pay more for your specific expertise. When you are visible to the target market, you can charge more because your prospects believe that you understand their unique problems.
#3 Niche Celebrity
You’re a specialist in your chosen niche and you’re exceptionally well-known within that area. In fact, you’re the go-to. Consequently, your prospects already expect your services to be more expensive and they’re prepared to pay extra for access to you.
#4: The Market Leader
Think of the Big Four – they charge ten times more than smaller firms, and are able to do so because they have positioned themselves as the market leaders. They certainly don’t get push back on their pricing.
When you become a niche celebrity or market leader, the perceived value of your services rises immensely – and so, therefore, can your prices. You will be able to charge enough to create a true freedom practice, because your clients will see you as vital:
Let’s say you want to charge a prospect £500.
They’re likely to push back on compliance services if they know they can find a cheaper accountant elsewhere.
However, if they understand that when they pay £500 to work with you, you will save them more than that on their tax return and help them to grow their business through your advisory services, then they’ll happily hand over the cash. You become valuable.
In order to move up the pricing scale, you need to increase your visibility and communicate your value by positioning yourself as an expert. You need to activate your sales and marketing superpowers. You can’t become an industry celebrity when no-one even knows who you are.
Move Up the Curve
The key to charging more and attracting high value clients is positioning yourself as vital. Firstly, you need to understand the true value of your services, then you need to learn how to attract attention and articulate that value.
The more you show up, the more visible you become.
The more value you share, the more vital you become.
Don’t sit back and be a generalist. Take purposeful action to start moving up the scale and become a specialist. Your goal should be to dominate the industry and become the market leader so that clients stop questioning you on price and instead value your services as a worthy investment in the financial health of their business.