Is Value Pricing a Service or a Product?

The concept of Value Pricing in the Accounting Industry is nothing new, however many accounting SME firms struggle with implementing it. I have heard from many accountants that “it would be against my moral beliefs to charge more than my hourly posted rate.”  Providing protection against an IRS Audit included in the engagement letter is a struggle for many. 

Let’s be straight up here. When you are charging and hourly rate for all your work be it compliance or audit work your services are a commodity. Yes, that means competitive pricing for the service provide. 

Any business owner worth their salt would ask what is it that you accomplish in that hour. Do all accountants work at the same speed and efficiency? Why would you discount yourself if you and your team work efficiently?

𝐖𝐡𝐞𝐧 𝐦𝐨𝐬𝐭 𝐨𝐟 𝐲𝐨𝐮𝐫 𝐰𝐨𝐫𝐤 𝐢𝐬 𝐜𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞 𝐛𝐚𝐬𝐞𝐝, 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐨𝐰𝐧𝐞𝐫𝐬 𝐬𝐞𝐞 𝐲𝐨𝐮 𝐚𝐬 𝐚 𝐧𝐞𝐜𝐞𝐬𝐬𝐚𝐫𝐲 𝐚𝐧𝐝 𝐮𝐧𝐰𝐚𝐧𝐭𝐞𝐝 𝐞𝐱𝐩𝐞𝐧𝐬𝐞.

Its transaction based. If the business owner doesn’t see your value they will go shopping for a cheaper service.

Here is another way to help get a grasp on value pricing.  Consider the last time you took your vehicle in for service. The oil change was a set fee with the exception of the quality of the oil you chose. The Brake Job was a set fee. That’s the fee you paid no matter if the mechanic did it in 40 minutes or 55 minutes. Voila. An oil change and a brake job are now a product. So why can’t you do the same for bookkeeping and tax services and add value added services such as monthly or quarterly reviews. It’s clean and you get to bill the client at the beginning of the month instead of the end of the month. What would that do for your cash flow?  

𝐀𝐫𝐞 𝐲𝐨𝐮 𝐭𝐞𝐚𝐜𝐡𝐢𝐧𝐠 𝐲𝐨𝐮 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐜𝐥𝐢𝐞𝐧𝐭𝐬 𝐭𝐡𝐢𝐬 𝐬𝐭𝐮𝐟𝐟?

The big advantage of value (product) pricing is you can add features like payroll, state tax and federal tax filing or a monthly review with the client. You create a pick list and price according. Just like the quality of oil you happily chose at the service garage. A one-million-dollar low margin client does a lot more work than a million-dollar high margin client and the low margin client has a lower net profit. Yuck.  Doesn’t the same apply for your accounting business?

𝐒𝐭𝐨𝐩 𝐟𝐞𝐞𝐥𝐢𝐧𝐠 𝐥𝐢𝐤𝐞 𝐲𝐨𝐮 𝐰𝐨𝐮𝐥𝐝 𝐛𝐞 𝐜𝐡𝐞𝐚𝐭𝐢𝐧𝐠 𝐭𝐡𝐞 𝐜𝐥𝐢𝐞𝐧𝐭 𝐢𝐟 𝐲𝐨𝐮 𝐰𝐞𝐧𝐭 𝐭𝐨 𝐯𝐚𝐥𝐮𝐞 𝐩𝐫𝐢𝐜𝐢𝐧𝐠.

If you are feeling guilty then you don’t value the service you provide. That is a whole other conversation.

If you keep saying you are worth more than you charge then do something about it. Work less and make more is not a myth.

I’m Paul Roy, founder of Profitable Practice Pro. My mission is to assist Accountant and CPA practice owners in becoming great leaders while growing their businesses through three core pillars: People, Processes, and Profits.

Are you ready to transform your accounting practice? Book a 20-minute call with me today to learn more! Schedule your call.