The ONE thing that most accountants don't know about pricing their services (according to Mark Wickersham)
Why is it that some accountant firms thrive, command higher rates yet work less hours than other firms who provide the exact same services?
We interviewed Mark Wickersham, a UK-based chartered accountant, public speaker and best-selling author, and known as the most sought-after profit improvement expert in the accounting community.
What is the ONE thing that most accountants don't know about pricing their
MW: There are many mistakes accountants make with their pricing (when I was in practice I made all of them) and so many myths. For example, the mistake of sending proposals through the post. The myth that clients are price sensitive. Or the myth that fixed pricing IS value pricing.
But perhaps the biggest thing is, clients don’t care about what we do. Clients don’t care about how many hours we spend. Clients don’t care about our costs.
The only thing clients care about is the end result, the knowledge they gain, the solution or the value. And so we should price based upon that (not hours).
What is value-based pricing and why is it important for accountants?
MW: Whilst there are over 40 methodologies for pricing (hourly billing is just one), there are only two ways to price (and all pricing methodologies fall into one of these two ways). First, cost-plus pricing of which hourly billing is a cost-plus pricing method. Second, value pricing. That’s it. Just two. One starts with costs, the other starts with the customer and what they want.
Value pricing is a better way to price. The interests of the accountant and client are aligned, i.e. the more value we create the better for the client. And when we price based upon that value, the accountant earns more money.
Most accountants actually want to increase their rates but are afraid that they may lose customers or want to avoid a hard conversation with their clients. What mental barriers does the average accountant need to get past to fully appreciate and use value-based pricing for their practice?
MW: Most accountants are too cheap. If you find yourself working crazy long hours and not making the money you feel you deserve, it’s probably down to your pricing. You need to put your prices up.
The trouble is, there is a fear that when we do the clients will leave. In reality, when we do it the right way, clients rarely leave. We have to recognize that clients are value-sensitive and not price-sensitive. That means we have to focus on providing more value, and even more important, communicating it better so the client understand what’s in it for them. When clients perceive greater value, they will willingly pay a higher price.
About Mark Wickersham:
Mark Wickersham FCA– Chartered Accountant, public speaker and author – is known as the most sought-after profit improvement expert in the accounting community. Join Mark every month on a 60-minute online training session and he’ll share with you powerful pricing strategies. Click here to find out more and to get on the VIP list.