2016 will present many opportunities for professional service providers as more and more employers start to stage for their automatic enrolment duties and obligations, says Mike Foster.
The recommendation from the Pensions Regulator is that those staging in 2016 should already be in planning mode, but in reality this is still being put off by many employers.
Automatic enrolment presents professional service providers with an opportunity to attract new clients or upsell to their existing clients. Automatic enrolment administration is a task that many entrepreneurs are saying they will not personally wish to be involved with. This is very likely to present you with new prospects that you possibly did not have when you are solely offering bookkeeping, accounts and payroll support.
In my opinion, it is a support service that can be offered with the ease of delivery. Many bookkeepers, accounts assistants and payroll bureau providers are very good administrators, who like their numbers, and are therefore in the position to maximise the opportunities around AE.
In my last article I spoke about the behavioural styles of individuals in the profession. I have profiled, together with Thomas International, many bookkeepers and accountants and many show the characteristics of steadiness and compliance, which makes them ideal for administrative type roles, service and support. They are comfortable with routine, systematic, have good attention to detail and like orderly procedures. Meeting many people who offer accounts, bookkeeping and payroll support, they can all often see the administrative task required to organise the business processes that sometimes the entrepreneurial business owner cannot see.
The question right now for many professional service providers is how to price such a service.
I was recently reading 6 quick tips for a successful pricing automatic enrolment strategy that opened with the comment “a clear pricing structure will allow any bureau to accurately cost and schedule the work involved for each client.” This made some great suggestions, so I reflected upon how this opportunity could be priced in practice and then presented to the prospective client and employers you wish to attract.
On review of many offerings that have already been established, there has been much linkage to the payroll support offered by professional service providers. Traditionally a payroll support model has been based on hourly rates, pay runs and/or charge per payslip.
However, for many perhaps this is the first opportunity to explore value pricing. Excellent AE administration and support has a value to the employer that is much greater than these charging models.
Can I suggest that we do not naturally link our support for AE with our payroll proposition? Yes, we know in reality that it forms part of the processing and administration of a payroll and we are likely to administer both at the same time. However, employers may be thinking differently. For example, I was recently at a meeting of the Federation of Small Business and spoke to many business owners who did not consider the obligations as a payroll task, but another specialist administrative duty imposed upon them by government. Therefore, I believe this thinking around the ‘pain and problem’ for the employer will therefore support a value pricing model rather than falling into such traditional pricing practice.
Another consideration for your pricing is to develop a menu of support options that you can present as your pricing model. You could link this with the payroll administration support or just adopt the menu pricing model for your AE offering.
Either way, the suggestion is to highlight the detail of your support rather than simply offering “administration support for automatic enrolment” as another product. Create a menu by considering your support offering and break down this support you offer, such as:
- Updating and reporting to the employer/client
- An initial consultation
- Setting up the AE scheme to meet the initial obligations and enrol ‘eligible’ jobholders
- Act as a nominated contact for the Pensions Regulator
- Regular assessment of the workforce
- Communicating with the employees
- Establishing the pension scheme
- Administering the scheme including managing postponements, opt out’s and in’s, triennial re-enrolment
- Communicating with the pension provider to submit payment details
- Proactively managing communication requirements with the Pensions Regulator
You may then consider two or three menu options that offer part or all of these solutions. Option one may just be the initial consultation, option two could include the set up and option three the full package.
Using the menu pricing model, you are able to demonstrate the value of your support and build upon the prospects pain, problem or fear to then support your desired price levels. You may even highlight the potential fines for non-compliance in your pitch, so they then fear such fines if they miss something.
In practice, once the employer has identified that they need the support then some may start to negotiate on the support price. With menu pricing, you can reflect such a request to the elements of the offering and ask them which parts of the menu they therefore do not require. I suspect most will reply that they need it all and therefore will clearly see the value and pay the price you desire.
Finally, the offering around AE also presents us with the opportunity to form strategic alliances with partners to support and offer further value to our own offering. For example, you may outsource the processing or partner with an IFA for pension advice that forms part of your overall package.
So how can you seize the opportunities ahead?
AccountingWEB has launched the No-one gets left behind campaign to alert as many accountants as possible to the obligations implied by auto enrolment. Read our simple eight-point statement which sets out the auto enrolment facts you need to know.