Founder and Author The Accountants Millionaires' Club
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Neuroscience and how to price accountancy services

7th Feb 2020
Founder and Author The Accountants Millionaires' Club
Columnist
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Decision making is not rational. Therefore, there is great power in knowing what is going through one’s mind when such a decision is being made. To help you convert your prospects, particularly when thinking about how to price accountancy services, here is what neuroscience says about how people buy accountancy services.

Included in this article are:

  • Why all our decisions are emotional not rational
  • How and why the brain takes shortcuts when decision making and how this relates to pricing for accountants
  • What biases and shortcuts our brains take which are directly related to how to price for accountants.
  • How to use the power of neuroscience to make it easier for your clients to choose you

If you don’t have time to read all of this 2000+ word article now, click here to download the PDF (name and email required)

All decisions are emotional

What many people don’t realise, including accountants, is that their prospects make decisions based largely on how they are feeling. That’s why something as simple as a first impression can have such a big impact.

To help you understand just how much this is true, you can look at the science behind the decision-making process. For example, neuroscience shows that emotional input and input from our gut stimulates the process of decision making in our subconscious brain. This means that the whole process starts without our awareness in our subconscious brain (aka our Prefrontal Cortex). Only when our conscious brain starts to become aware of our decision do we start to construct the rationale for our decision.

When it comes to thinking about how to price accountancy services, knowing that decision making is not rational, but rather based on our emotions, past experience and emotional state at the time, is a huge advantage. Why? Because only when you understand how the mind makes decisions, and therefore the process your Prospect goes through when buying from you, can you be confident in charging what your firm is really worth and get the conversions that you want.

Decision-makers tend to take the path of least resistance

Whilst understanding that ‘decision-making is largely based on emotion’ is advantageous to you, it is also important to know that your prospects, just like everyone else, also tend to favour the path of least resistance when making their decisions. What we mean is this:

There are two types of thinking:

  • System 1 thinking: fast and automatic
  • System 2 thinking: slow and takes lots of mental energy

While System 1 thinking is quick, automatic and based on our intuition and experience (e.g. 2 + 2 equals what?), System 2 thinking is slow, rationale, and attention-hungry (e.g. 34 x 27 is?). As System 2 thinking is so attention-hungry, when we use it we struggle to do anything else at all, e.g. walk, talk on the phone. This is why the type of thinking that the brain wants to default to is System 1.

How the brain takes ‘shortcuts’ when decision-making and how you can use them

The brain is the most energy-hungry organ in the body; it uses up to 20% of our available energy and oxygen. It’s for this very reason that our brain is always trying to find ways to be more efficient and conserve energy.

When it comes to decision-making, the brain takes shortcuts in a number of ways (outlined below) especially if they feel that there is too much information, a lack of meaning or a need to act fast. If you can help your Prospects and Clients use these shortcuts (e.g. default to this System 1 thinking), then you will find it much easier to charge what your firm is worth.

Contrast effect

One of the ways our brain helps us to avoid getting overwhelmed with information is by ‘priming’ or noticing when something has changed. Our brains struggle to make sense of a number in isolation, so comparing it to something else gives it meaning.

→ How to price accountancy services?

Anchoring is where you ‘anchor’ a figure to a recent number. So, for example, if you lead on your pricing page with a cheap-as-chips package, say, £50 per month, your potential clients are going to be relating the quote you give them to this figure of £50. That means it is going to be hard work to sell them a package of over £500. As well as anchoring, our brain doesn’t look at the new figure in isolation. It uses the Contrast Effect Bias (amongst other biases) to measure it up against the old figure and places significance on the amount of change, whether positive or negative. This Contrast Effect is very significant when you are renegotiating a fee increase with an existing client.

This is why we always recommend to our members that they (a) put their prices on their website (because you want to be anchoring your prices not someone else’s in the mind of your prospect) and (b) display their most expensive package first.

Within a month of joining the club, I had paid for the club several times over.

 

I have only been a member of The Accountants Millionaires’ Club for about a month, but in that time I have already been helped to increase my fees and sort out my client base which will make us more profitable and also cover my membership fees several times over, and that's in the first month.

 

Using his coaching Ashley was able to make me feel confident about what I should actually be charging my clients and this has given me a boost to have these difficult conversations with some of my clients.

 

Kerrie Jenkins - Atek Accountancy

The amount of resources, assistance and advice has been nothing short of mind-blowing

Within a month of joining the club we have:

  • Attracted a client who have committed to fee just shy of £500 per month that we would have historically charged £200 per month
  • Have proposals out there that would more than double our clients paying over £300 per month including one where; subject to acceptance, would be in excess of £1,000 per month

Graeme Tennick - Graeme Tennick & Co

Confirmation bias

People become more aware of details that confirm their own beliefs. Not only this but they will also continue to seek out information to support a strongly held view or opinion. Therefore, if a client or prospect has decided you are too expensive or possibly may struggle to manage their affairs, they will seek out ‘evidence’ that confirms their opinion.

→ How to price accountancy services?

When it comes to pricing, making a good first impression is absolutely vital. Make sure your website looks up-to-date, modern, and of a high-quality as this is going to impact your ability to truly charge what you are worth. (Discover the 5 Ways Your Small Accountancy Firm’s Website is Stifling Your Ability to Win Bigger and Better Clients)

 

I’ve won 2 clients in 2 weeks due to my Quickbooks Advisor profile on the Quickbooks Directory

 

In the past I’ve not really bothered about my directory listings. I’d discounted the power of a good and prominent directory listing. Ashley, my Growth Specialist, constantly nagged me to get my profile up-to-date on the directory. In fact, Heather in the club even wrote the narrative in my profile.

 

Just in the last 2 weeks I have signed up 2 clients via phone and email (no meeting in person) with a significant factor being they saw our profile on the QB directory and we said the right things on our profile. They both paid a good fee, and were happy to pay for things we had historically not charged for. Last time I checked, we were ranked no 1 on search for accountants within a 25 mile radius. And that will cover Manchester City Centre. This has all happened before our new website has gone live. You could say the marketing plan we worked out with Ashley, our Growth Specialist, is working nicely.

 

Paul Wareham - PS Accountants

 

Affection bias

People buy people, therefore, before you can make a sale, your prospect needs to know, like and trust you. This is often because of the Affection Bias which is where your brain assumes if you like a person you will like everything about them.

→ How to price accountancy services?

If a prospect likes you then they are more likely to buy from you so be able to charge what you are worth, make sure you are building your relationships from the get-go.

Mental Accounting bias/Automation bias

The subconscious brain is very weak at maths. Given that maths requires logical thought and your subconscious brain only gets emotional inputs into its decision-making processes, it’s not really surprising. As a result, the brain uses a cognitive bias called Mental Accounting which is a way of categorising and dealing with our expenditures. One of the impacts of Mental Accounting is we don’t look at an expense in the context of our whole wealth, just our current budgetary period and the expense category. This is why it is often easier to make a sale of £300 per month rather than a one-off price of £3600. It’s also why a Client or Prospect may baulk at the fee you are proposing because it is much higher than the figure they had originally budgeted for accounting and bookkeeping fees.

→ How to price accountancy services?

Our brains are more likely to trust the answer from a machine rather than a human (due to the Automation Bias) this is why using a quoting tool in a sales meeting with a client works so well. When “the computer says…” your Prospects and Clients are less likely to push back against the fee quote you have proposed.

Bandwagon effect

Without realising, most people tend to choose the most popular option without really thinking about it and this could be partly due to the Bandwagon effect. Why? Because the more something has been adopted, e.g. social proof, the more likely it will be adopted by others.

→ How to price accountancy services?

On your pricing page, call out one package (the one you would like most clients to be on) as ‘Recommended’ or ‘Most Popular’. (Read Why your accountancy firm’s pricing package names really matter)

Post-purchase rationalisation

When people HAVE to buy something, they tend to identify a whole host of positive reasons why they really needed to make that purchase. This justification that it was a good purchasing decision is a phenomenon known as Post-Purchase Rationalisation.

→ How to price accountancy services?

If you provide value by addressing your new clients specific pain problems and onboarding them well, you will stimulate this post-purchase rationalisation so that they justify your price themselves. This is also the reason why new clients often make the best referral sources.

Get your prospects to choose you

Before you can sell anything to anyone, many decisions need to have taken place. For example, as a minimum, you need to decide what you want to sell, who you want to sell it too, and how much you want to sell it for. Then your Prospect needs to decide that they need your services and they want to buy it from you.

As none of these decisions are made rationally, it is essential that you understand the decision-making process that the Prospect goes through when buying from you. Only when you understand this can you adapt your firm’s sales, marketing and account management processes and systems to help your Prospects and Clients use System 1 thinking so that they choose to buy from you.

Want to know exactly how to price your accountancy services? Read the first 4 chapters of our new book “Profitable Pricing for Accountants” for free here!

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