What if I told you that you could put tens of thousands of additional dollars in your pocket this year – and all it will take is for you to make one simple change? Wouldn’t you do it?
Of course, you would. That’s why I know that starting now, you’re going to begin charging appropriately for your services.
How can you tell if you’re charging inappropriately?
See if you’re guilty of any of the following pricing and packaging mistakes commonly made by CPA practitioners:
When your fees are low, you get caught in a downward spiral of competing on price, and that leads to clients failing to value your services.
That, in turn, can force you to reduce the quality on what you deliver.
Don’t get stuck there – that’s a terrible place to be.
Recognize the value in what you offer and raise your fees.
Charging So-Called “Industry Norms”
Who knows who comes up with these random, industry-wide pricing standards we’re all supposed to follow?
One I hear a lot is that we should be charging three times the cost of labor. It’s meaningless, and a mistake.
Why a mistake?
It’s merely a flat formula that doesn’t take into account the value you’re bringing to the client – the benefits they’ll enjoy from your level of expertise.
Failure to Increase Fees Over Time
The cost of everything goes up. Occasionally, so must your fees. Keep pace with the times.
I know many practitioners are afraid to ask clients to pay more – afraid clients will walk.
I say, let them! Let some other practitioners work like crazy for nothing, giving away valuable guidance to bargain-hunters.
The kind of clients you want is the ones who will deeply value and appreciate your contribution.
Additionally, if you keep your fees the same year after year, you’ll likely end up providing extra services without charging for them.
Eventually, the client comes to expect more for less and you find yourself in that spiral I mentioned before.
The longer you go without raising your fees, the harder it becomes to do it.
Obsessing Over the Competition
Stop worrying about what other practices are charging. It’s irrelevant.
We do it because we want to feel we’re fitting in, but instead, we’d all do better to go our own way and change the playing field completely.
We need to look inward and ask ourselves how we can continue to build value so our clients will pay what we want to charge.
Think of how you can break from the cookie-cutter practice mold, be completely different, and well worth your fees.
Working by the Hour
Hourly rates are rarely the best reflection of value for professional services.
Instead, take steps to ensure that clients appreciate the value you deliver.
You’re not just grinding out paperwork – you’re a valuable driver behind your client’s success.
Failure to Uncover the Client’s $100K Problem
As I said, you’ll want to be sure clients recognize your value. But it’s hard to communicate how valuable you can be to them if you don’t understand what they need.
Find out. Take the time. Ask more questions. Have more conversations.
But don’t just go digging for any old pocketful of challenges.
We could all come up with a long list of obstacles and struggles. What will set you apart value-wise is uncovering your client’s “$100K Problem”. It’s the problem that, one way or another, is costing them $100K.
Maybe they’re paying too much in taxes. Maybe they’re not growing as they should be.
Every client is unique. Learn as much as you can about their situation in detail.
Only then will you be able to quantify what their mistakes or missed opportunities are costing them and introduce a solution.
If your guidance is putting $100K into a client’s wallet, fees won’t be an issue.
A trusted adviser is priceless.
Failure to Offer Packages
When you combine your services into a package, it helps build a long-term relationship with the client and increases the perceived value of what you do.
You move from being a reactive provider of services to a proactive business partner.
Failure to Offer Premium Pricing Options
Regardless of the economy and regardless of where you do business, there will always be people who are willing to pay a premium to get the very best.
If this wasn’t true, there’d be no luxury cars when there are so many non-luxury vehicles that can just as reliably carry you from A to B.
Those people are out there. Offer something for them. Otherwise, you may be missing a huge opportunity.
Failure to Cross-Sell
As I said before, getting to know what your clients need can help you develop added services that will rock their world and increase your bottom line.
When you do begin to identify new ways of helping your clients and transforming them into services, make sure they’re aware of the full range of services you offer.
Find ways to cross-sell products to new clients and promote new services to existing clients.
Fear of Building in the Cost of Business
It’s a fact of life – running a business costs money.
In your practice, you may be paying for rent, insurance, equipment, advertising, licenses, utilities, your website domain, internet service, cleaning services, repairs…the list goes on and on.
Please take this in: It’s normal and acceptable to build the cost of doing business into your fees – and yet some practitioners don’t do it.
It’s as if they think it’s wrong to pass those costs on to the client, but that’s how business works.
When you buy a pack of breath mints, you’re paying for more than just peppermint, sugar, and a paper container.
You’re also paying a tiny portion of the manufacturer and retailer’s many expenses necessary to make or sell mints.
If you’re doing everything right already, then kudos to you. You must be running a very lucrative practice. But if you’re guilty of even just one or two of the pricing mistakes above, you could be missing out on significant revenues.
Which items will you work on to make 2020 better than any year before it?