Understanding value pricing and implementing it can do wonders for your bookkeeping firm. Find out how you can do just that and increase your profitability.
Before entering the bookkeeping industry, Michael Braun was a flight attendant for WestJet. And it was there that he learned the importance of having a systemized approach to business. And he applied that lesson when he became part of the management team of the company.
The feeling of restlessness soon came to him. That’s why in 2014, he left his job and ended up working for a production company. But the recession hit in the fall of 2015 and he was let go. With a four-year-old son and no particular skill set, Michael was limited to two options: to look for another job or go back to school. He chose the latter. He completed his courses one year later and graduated with a straight-A average. A friend of his soon approached him and asked if he could be the bookkeeper for their construction company and Michael agreed.
That was his first bookkeeping client. But with no experience in bookkeeping, Michael had to constantly turn to his mother who was a bookkeeper herself for advice. Unfortunately, serving clients at $30 per hour was not sustainable. So, he had to take a job with a multinational company where he also got a lot more experience in accounting. Despite working eight hours a day for that company, Michael still worked on his own clients’ books each night. He also went to networking events and did everything he could to build up his bookkeeping company.
At some point, he discovered The Successful Bookkeeping podcast. And he heard the speaker talk about value pricing in one of the episodes. This resonated strongly with him and compelled him to dig deeper into the topic. Michael signed up for the training and after completing it, he rebranded his bookkeeping company. And he made an important change: He incorporated value pricing. This meant he began using a tiered pricing model with premium, essential and basic packages to offer his clients, among others. And using this model, he was able to sign on a premium client, which made such a big difference for his bookkeeping company financially.
Unlike Michael, most bookkeeping business owners don’t understand how to apply value pricing in their own businesses. That’s why in this article, you’ll discover Michael’s five tips on how to master value pricing and improve your bookkeeping business.
A bookkeeping business has different services, and each service has different components. You should be able to assign a value to each of those components. For example, let's say you offer management services. And its components include basic management reporting and full management reporting. That means you must have a different price for each of those components.
Then, you can create packages and set a price based on the services and components offered in each package. Doing so will help you avoid undercharging your services. Plus, you can explain why the overall price of a package is set as such. If you’re offering a variety of bookkeeping services, it can be hard to justify the fixed price you’ve set to your clients. But when you show them that each service and component has its own value, they’ll see how it all adds up and why your prices are reasonable.
It’s not easy to determine what a fair price is for each of your bookkeeping services. Fortunately, there are some pricing software available to help you out. It does all the work for you and makes the pricing process seamless and automatic. You no longer have to rack your brain, trying to come up with the right prices for your services.
Using pricing software, you can boost your overall productivity. And it can even make your bookkeeping business more profitable. After all, it can also help ensure that you’re not undercutting yourself or charging too much by automating the pricing process. At the same time, customers can rest assured they’ll always get billed at prices that are consistent with the work being done. And if they’re satisfied enough, they can become repeat clients as a result.
This is an excellent way to sell your bookkeeping firm’s service. With a tiered-pricing model, you create different packages with different price points. Then, ask which package your clients prefer. You can also use tiered pricing to offer add-ons and complementary services to an existing package.
For example, you can add monthly reporting as an add-on for your low-tier package. It still won’t cost as much as the next tier, but it allows you to make more for that particular tier. As a result, you build higher profit margins on top of existing projects. Ultimately, this will lead to a seamless process for you and your client.
This relates to the previous tip. Based on your clients’ needs and their budget, they should be able to look at each one of your packages and pick the package that suits them best. Yes, you can always try to talk them into one of your more profitable packages. But ultimately, leave the decision to them.
Why? You want people to avail your bookkeeping services because they like you and trust you, not because they feel obligated after a hard sell. And when you hand in the reins to them, they’ll see it as you being honest, instead of just after the sale. If a client agrees to the upsell, great! But if not, no worries. Just keep building your relationship with the client until there’s another opportunity for you to make the upsell. Remember that saying no today doesn’t mean they will say no forever - they might still get the higher priced package or say yes to your upsell later!
Establishing your price point is an important step when dealing with clients. And here’s one effective way to do that: When you go to a pricing meeting, have a quick summary of all the services you provide that the client can look at. Allow them to ask as many questions and listen to their concerns, challenges, and expectations.
With this information, you can then design packages that are tailor-made to their specific needs. And this will also help you add more value to what you can offer them. In doing so, you can increase the chances of your client saying yes to one of your packages. And they might even be more amenable to getting more of your services… and paying more for it!
If you can master value pricing with the help of Michael’s 5 tips above, you can set your bookkeeping firm up for even more profitability. After all, value pricing can prevent you from undercharging your bookkeeping services. It’s even better if you offer them tiered packages that they can choose from. And if you ensure their satisfaction, chances are they’ll be more open to availing your more expensive packages and services later on. Not to mention they might refer you to others who might also need your bookkeeping services.
If you'd like to learn more about mastering your sales process, go ahead and: