As a recent article from my colleague Neil Davidson, managing director UK of Deltek argues, managing a firm means a continuous process of seeking ways to increase revenue and improve profitability. Part of this process should also include evaluating your pricing strategy to ensure that it supports these goals.
All too often, firms neglect to reassess their pricing strategies on a regular basis. This can mean that the value of the work completed can be undervalued and accounting firms are under-billing clients.
Adopting a value-based pricing strategy where firms tailor a menu of services to each individual client can empower accountants as the price and terms of engagement are agreed before the work begins. This also helps focus client time to agreed activity only and helps limit overservicing on accounts, which ultimately impacts on profitability.
While adopting a new pricing model can meet reluctance from some in your firm for fear of the change involved, it is vital that accounting firms have a suitable software system that enables accurate billing and reporting.
By having more accurate and real time information brought about by a new billing model, you can have a much clearer idea of margin growth and how new engagements are running in accordance with the company growth goals, and ensure that your firm retains its competitive edge.