It’s perhaps one of the most famous quotes to grace the business pages: “Change is the only constant.” Attributed to Heraclitus, a pre-Socratic philosopher, it’s likely to have been first uttered around 500 BCE, so let’s say around 2,500 years ago. Now, the accounting profession hasn’t been around quite that long (at least not in its current format) but one thing that is becoming more and more apparent is that accountants are not great at embracing oncoming change. Rather, they prefer to wait until the change actually impacts them. For example, a change in tax legislation that they MUST embrace as from a given date.
A couple of recent surveys have alarmed me somewhat. They suggest that all the talk of compliance being commoditized is sinking in, accountants are now aware of what is coming, they acknowledge (at least to some degree) that it will impact them, yet only a small minority are taking action now.
In today’s accounting profession, pricing is a critically important subject. Important enough for me to suggest that unless the profession changes the way it prices its services, profit margins will be seriously eroded.
Clients have more information at their fingertips than ever before. As an example, I just Googled ‘fixed price tax and accounts’ and was presented with a number of web pages where I could see right there on the page how much it would cost me to have a tax return or a set of financial statements completed. It’s likely that the numbers I saw are quite a bit lower than what you might typically charge. Young, nimble players are entering the market, embracing technology, driving down overhead and competing on price in your core space.
So how do you combat that if your firm is of a more traditional nature? There are three important steps:
- Move away from pricing in arrears immediately. Most of the work done by accountants is still billed after the fact based on what is on work in progress. It’s dated. It’s lazy. It’s unfair to the client. You know what the fee is going to be in the vast majority of cases. Get on the front foot, have a conversation with the client and tell them upfront how much it’s going to be.
- Add value. It’s one thing to give the client a price upfront, but unless you do something different that others are not offering, what else has the client to select you on other than price? Layer in value-based extras such as a free Business Performance Review, a complementary goal setting session or a promise to bring three ideas to the client that will help them improve their numbers next year. If your head is in the ‘time is money’ space, you might find this counterintuitive. In reality, using technology these are quick and easy to deliver and will generate leads for additional work much of the time.
- Get better at articulating the value you bring to the table. Explain to the client the benefits to them of working with your firm – in terms that make sense to them. Demonstrate the tangible benefits you deliver every time you work on a client project. Back that up with case studies and testimonials from delighted clients.
Effective pricing can give you a real competitive advantage. The alternative is to stay with the herd and be dragged down with them. It’s such an important topic that at PANALITIX, we believe it’s one of the eight key components to becoming what we coin the Firm of NOW (as opposed to a firm of the future – there’s not enough time for that!).
I strongly suggest you take a day out of your firm and join us at a venue near you for our special one-day conference to help your firm join hundreds of others around the world on the journey to the Firm of NOW. You can find more details and register your place at www.firmofnow.com