Save content
Have you found this content useful? Use the button above to save it to your profile.

Someone has to be the most expensive- why not you?

16th Jul 2022
Save content
Have you found this content useful? Use the button above to save it to your profile.

HOW TO CHARGE GREAT PRICES

Over the past 15 years I have asked well over 500 accountancy firms how much they would charge for a set of accounts for a company turning over circa £300K where they were required to file the accounts, a CT return and a Director’s simple personal tax return.  The payroll and accounting records were maintained by a reasonably competent bookkeeper. 

The answers I have received have varied from the lowest of £350 to the highest of £5000 (figures in today’s terms).  It has got me thinking a lot about pricing so hear goes – here are my top tips for charging great prices:

1        You need to find clients who perceive you as valuable

At the start of lockdown, I had a decision to make about haircuts. I don’t have much hair, but I like it neatly trimmed. I went on the internet and bought hair clippers for a price which if I depreciate them over three years, allows me to average the cost of haircuts at 67p a time. I think that’s extremely good value for money, and so was very pleased with my purchase.

However, my wife pays slightly more than 67p for a haircut because hairdressing is very important to her. It’s not only the haircut, it’s the colouring, it’s the wash and blow dry, and it’s the opportunity to chat to a nice lady behind the chair about life, the universe, husbands, daughters, etc. You name it, you can chat about it. And she pays a lot more. That’s because it’s an experience for her. And she loves every moment of it, as do my friends who go to lady hairdressers to have their hair cut. And they typically pay £100. Now you may think that my haircut and hers are ostensibly the same product, but not in the views of the consumer.

Similarly accountants come in all shapes and sizes ranging from the person who is a glorified bookkeeper who works for HMRC, through to the person who can help drive a business forward, help people out of difficult holes, and really add value to the business.

If you want to charge high prices, the key is to find clients who value what you offer and, if necessary, up your skill set to increase your value.  Also the more you are seen as a specialist, the higher the price the client is likely to be prepared to pay.   In this context there is a very good resource in a book written by Daniel Priestley – Key person of influence.  

How do you know whether the client values you?  The answer is two fold.  For existing clients, if you do not get price resistance you are probably not charging enough.  For new clients, I recommend that your conversion rate for prospects should be circa one third.  If it is any higher it shows that the price is too low.

2        Make sure you deliver

From my experience, the three factors that are the most important to clients are:

Speed of response

Clients do not leave as a result of high prices, but they leave because they perceive indifference of the accountant to them.  Responding slowly is one of the ways most likely to lead to clients perceiving you do not care. 

Proactivity

By proactivity I mean the regular phone calls that “I was thinking of you and….”.  Also doing work that is outside the normal role of an accountant is key.  That is why we publish in our facebook group a proactivity checklist. 

Transparency on fees

When I first started in practice fees were based on time spent.  No longer.  Great firms who charge great prices base their fees on value added (hence the need for the proactivity checklist).  If you are the sort of accountant who has the gravitas and skill to help a client expand their business, you should quote in advance based on value.  If you are not sure how to do this have a look at our video “The perfect sales pitch”.

3        The client has to have the ability to pay

I do a lot of work with companies that are on the edge. I love it. It’s very interesting, but unless the client has the ability to pay, I am wasting my time!  Having said that, I can usually free up cash quickly in such companies so they can afford to pay me.  

For that reason, when I was in practice I always used to avoid industries where the vast majority of participants were poor (eg actors) and start ups that were not well funded.

4        You need to have the bottle to charge what you are worth

When people tell me they charge the going market rate I always ask, “Is your service delivery average compared with your competitors?”  Surprising no one has ever owned up to being worse than average to which I pose the supplementary question: “Someone has to be the most expensive. Why not you?”  The usual response is best summed up: “Because I am afraid of losing clients”. 

 

For those of you who do not know me, I qualified as an accountant in 1985, built two accountancy practices, and helped a financial services business and accountancy training business grow rapidly. 

Replies (7)

Please login or register to join the discussion.

FT
By FirstTab
17th Jul 2022 09:03

Spam.

You have built two accountancy practices. What are doing now? Why don't carry on building more accountancy practices?

I suggest you contact Sift's account manager and pay for the advertising.

Thanks (0)
avatar
By AlanKennedy
17th Jul 2022 09:42

Dear First Tab

To answer your questions:

1 I have retired from accountancy because I am adding more value to clients by being a mentor. For example a client said to me yesterday "I would have gone bust if it was not for you - now my prices are 30% higher and looking like turnover will go from 250K to well over 1m this year". It is unlikely i would have had the time to do that when i was an accountant as I was too busy dealing with compliance.

2. I did contact the people at sift and told them the sort of articles i was planning on writing - judging by the feedback I get on my seminars some people love the input.

How is your accountancy practice going btw?

Alan

Thanks (0)
Replying to AlanKennedy:
FT
By FirstTab
17th Jul 2022 10:06

I will never be your target market.

Please readers, do not pay for advice. Read from people with proven record of success. This is just puff.

Thanks (1)
Replying to FirstTab:
avatar
By AlanKennedy
17th Jul 2022 15:40

Dear First Tab

I am not sure why you consider I do not have a good track record but I had hoped that taking a financial services business from 3M to 9m turnover in a four year period building my first accountancy practice from scratch and taking it (in today's terms to 250K of turnover) when local firms went from typically 50-25 staff would help you reach a different conclusion. My linkedin recommendations are also quite persuasive.

However this is all irrelevant because had we followed your logic Liverpool would never have appointed Jurgen Klopp as their manager (he was not such a good footballer) ditto Porto and Jose Murinho - what is relevant is what difference I make to my mentoring clients. You can read my linkedin recommendations if you want to know the answer to that.

Also is it possible you could come out from behind the cloak of anonymity so we can assess your track record?

As regards whether people should spend money with me, if your audience do not want to spend money there is a lot of free material on my youtube channel and would appear that as there are 10K of views over the last year not everyone shares your view of my usefulness to the world.

Thanks (0)
Replying to AlanKennedy:
FT
By FirstTab
17th Jul 2022 10:06

delete

Thanks (0)
FT
By FirstTab
17th Jul 2022 16:13

Even more advertising that you are not paying for. Each response you just dump more spam.

I will not respond anymore.

You did gain trust first. The Very basic about sellling. This my one and only free advice. I will give.

Thanks (1)
Replying to FirstTab:
avatar
By AlanKennedy
17th Jul 2022 18:33

Dear First Tab Thank you I totally agree with you that gaining trust is the most important first step. I have therefore amended the final paragraph removing the suggestion people get in touch with me althought personally I did not think it was selling. I wish you well and hope that one day you will be brave enough to reveal your identity so we can speak and possibly even go for a coffee. Alan

Thanks (0)