Pricing strategies can help the bottom line for your accounting firm. We know how hard it can be to price value that allows everyone – the firm and the clients – be happy. With that in mind we invited pricing expert Rhondalynn Korolak to join Andrew Lassise on the Tech Talk for Accountants Show. She’s the author of “Pricing Value: The art of pricing what your accounting clients value most.”
You can also listen to the conversation below, wherever you listen to podcasts – Apple, Google, Spotify, etc. – or watch the conversation on YouTube. The article below is also based on the podcast discussion.
She has written six books, with the last three focused on pricing strategies in the context of professional services, like accounting firms. Rhondalynn trained as a chartered accountant and lawyer in Canada and now lives in Australia. She works exclusively with accountants offering advisory services around cash flow and pricing.
What’s the struggle with good pricing strategies?
“Pricing is one of the huge hangups when people get into business,” Andrew said. ” I remember when I started my company. What if I say a number and they shoot me down?”
“But what if they pay?” said Rhondalynn. “What if they pay it?”
Why pricing value as your pricing strategy?
A lot of companies are still charging by the hour or other fixed based models, Rhondalynn explained. “The tricky part is that accountants specialize in numbers. We went to school because we are good with numbers. Now pricing looks like a number so I think a lot of accountants think they are good at pricing because they are good with numbers.”
But there’s a problem with that:
Spend the majority of your time to determine pricing strategy on what clients value. Then determine the price tag based on that.
Of course, before you can put a price tag on a service, you have to create the value:
- Here’s what’s being offered
- Value in the eyes of the customer is established
- Pricing strategy based on pricing value happens
“It’s like putting the cart before the horse,” Rhondalynn said. “It’s premature to talk about pricing and the semantics – we need three packages or should it end in a zero or a nine? All that stuff is fluff.”
First you have to create the value and if you don’t or haven’t created value for your accounting firm’s clients “it doesn’t matter what pricing you put on it,” she said. “People aren’t going to pay.”
To create a premium price you’ll first have to create tremendous value – as seen by your accounting clients. Remember that many companies that come to you also have pricing strategy issues. “If you aren’t the expert at pricing your own services how are you going to help them?’ Rhondalynn asked.
If pricing is terrible you can’t make a profit and without profit you can’t have good cash flow. During the 2020 coronavirus pandemic, it became clear that many businesses didn’t have enough cash reserves on hand.
Show up in the relationship and show value that is then priced appropriately. “If you don’t do that you’ll always be chasing your tail,” Rhondalynn said. “You’ll have to offer discounts… these are fundamental issues that we need to get right.”
Pricing strategy is a mindset
There’s really no magic bullet to just flip on the perfect pricing model. One problem is that accounting firms come into pricing strategy with a lot of legacy systems and thinking. “It’s not as easy as dumping all that crap at the door and saying ‘now I’m going to do it differently.’ Those things are deeply ingrained in how you think about what you are worth.”
Those traditional strategies also influence:
- how you organize your day.
- how you communicate with clients.
- what you measure.
“All of that stuff is holding you back,” Rhondalynn said. “It’s about changing your mindset. The key to pricing the value is getting rid of all that stuff that is dragging you down. We have to unlearn all of that to price ourselves properly.”
Commanding the value that your accounting firm brings to the engagement will help you set a better pricing strategy and offer value to your clients.
Pricing strategy is never about you – the accounting firm
Rhondalynn reminded us that the price shouldn’t be about the firm. It’s about the client.
In her book, she uses the example of a glass of water. The value of that glass of water depends on the person’s current situation. Sitting in your office its value is lower than if you were working in a field under the hot summer sun.
“It’s about us to figure out how thirsty our clients are,” Rhondalynn said. “That’s far more impactful than worrying about the semantics of pricing. We need to spend more time asking those questions.”
Pricing strategies – subscriptions
Another area to think about is subscription pricing. Subscription pricing is an ongoing pricing strategy that allows clients to pay an ongoing fee for an ongoing service. For example, we offer subscriptions for tech support to accounting firms here at Rush Tech. The subscription model has seen a rise in popularity in the last couple of decades across a variety of industries.
Fill out the form below to get in touch for our tech support subscriptions:
“You are basically pricing the whole portfolio and are charging subscription-based pricing, but it’s not like QuickBooks,” Rhondalynn said, adding that it’s slightly different in professional services. Basically, clients can pay a subscription fee for access of the entire portfolio which they can then use – or not use – as the need arises.
The subscription model comes from where people own fewer things, for example:
- Instead of owning a Porsche, you get a subscription to a lineup of cars that you can then drive.
- iTunes songs – where listeners get licenses to listen as opposed to buying albums to own like in years past.
- Software as a Service – instead of buying software, companies buy licenses to use it for a set amount of time.
Include other offerings
Certainly taxes need to get done and that’s an important offering to get them done correctly and on-time.
“Filing taxes doesn’t pay the bills for clients,” Rhondalynn said.
Another offering to include in pricing strategies includes forward-thinking advise and tips for the clients.
“That’s the real power to go in with that mindset,” she said, adding that soft skills are important in the accountant-client relationship. Offer services that help them going forward.
Having the right pricing strategy in place can help your accounting firm be more profitable and also offer more value to your clients.