The idea of becoming a trusted adviser and offering added-value services is a well-trodden one. But while it can present opportunities, in one case it has thrown up more questions about how to justify the fees.
A recent discussion started by AccountingWEB member Claire Whiter pondered this very subject. Whiter recounted a recent quote she presented to a new client. Because they were in the midst of setting up a new company – with the added complexities of worldwide sales and contractor employees – she factored the initial hand-holding that would be involved into her quote.
Her quote included accounts, tax return, tax-efficient extraction advice, software support, adhoc phone support and four face-to-face meetings a year, director's tax return, secretarial support on board minutes and confirmation statements.
While this may sound good, the prospective client played their ace card: they had another local quote which was about a third of what the AccountingWEB member had estimated. The shrewd haggling from the client hinged on whether Whiter could justify her added value.
Value is in the eye of the beholder
And this then uncovers the problem, as Paul Scholes would later offer: “value is in the eye of the beholder on each side of the arrangement.”
Such discussions around added services go to demonstrate how nebulous the phrase can be, and the difficulty in pricing and communicating this to clients. As AccountingWEB regular Red Leader offered, “It's very difficult to demonstrate added value to a prospective client. The reality is you have to come across as the more credible, impressive accountant than your competition.”
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If you can genuinely demonstrate that you can impact a client's business, then all of a sudden the price doesn't matter"
So how can practitioners justify added value services fees? “It's about impact,” says James Ashford, business consultant and AccountingWEB contributor. “If you can genuinely demonstrate that you can impact a client's business, then all of a sudden the price doesn't matter.”
And just because another firm offers substantially less, it doesn’t mean that they won’t offer the same services. As Scholes reveals, “I don't need new clients, have loads of spare time, only take on interesting work and have very few overheads so can easily charge far less than the firm up the road, the money is no longer that important to me.”
Of course, there are always clients who shop for the lowest price, but when software such as TaxGo can offer compliance for £20, the idea of low fees being the deciding factor goes out of the window. The difference maker, as author and coach Steven Briginshaw says, is through understanding value from your client’s point of view.
Briginshaw believes the member’s conundrum creates the opportunity not just to educate the client, but also for the accountant to understand the value that they provide. “Value is all about the results the client wants but sometimes they don't know what they want because they don't realise what is available,” he said.
“So the value discussion tends to be an education discussion with the client in terms of what the accountant can help them with and the return on investment they will get for the price paid. All value needs to represent a great return on investment that is relevant to the client, otherwise it simply isn't valuable.
The moment you start to address fundamental issues in their life they'll stop thinking about price - you've got to get them off the price.”
The question at the forefront of a practitioner’s mind should be: ‘what is the client’s urgent need?’ In order to communicate this, Ashford has boiled the idea of justifying value down into three questions:
- What are the client’s goals?
- What are the client’s personal goals?
- And what are the obstacles preventing them from doing that?
For many clients, overcoming these obstacles overshadows price. “There are very few accountants out there who will be asking, ‘If we are able to do this for you and achieve these things what does that mean for your life; what difference will that make for you?’”, said Ashford.
“The moment you start to address fundamental issues in their life they'll stop thinking about price - you've got to get them off the price.”
But even this approach may be too little too late. Ashford, ultimately, believes this situation is a symptom of another problem: marketing. “If they [the accountant] had their marketing correct where they had a flow of their dream customers, then by the time their ideal clients come to have that conversation with them, they would be coming to buy.”
How much is pricing a factor when you charge added value services? Or are you able to bring other factors into the client conversation?
About Richard Hattersley
Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.