Raising Prices Substantially Increases Your Profits
Increase Your Profits
Every accounting professional, whether large or small, wants to increase their profits. Some choose to improve their marketing efforts; others specialize their services. Raising prices improves profits, but feels difficult.
When you don’t fully grasp the core reason for clients to invest in your service, you shy away from the “raising your rates” discussion.
Pricing and sales work closely together. Therefore, a client-centered onboarding system solves the cash flow problem.
Many accounting professionals decide to heavily invest in marketing to attract new potential clients. Without a solid onboarding system; however, you leave money on the table. What’s the purpose of attracting new leads, if you can’t enroll them? Or, you don’t have the capacity to serve them?
Before we dive into the raising rates conversation, let’s scope out the four ways to increase profits:
1. Bring in new clients
Bringing in new clients is the popular choice.
a.Increase. Find ways to attract new clients to increase your market share. You can network, increase your social media presence or develop a power team. Your power team includes strategic referral partners.
b. Expansion. Develop new market verticals. For example, if you offer bookkeeping services to attorneys, brainstorm other services your clients commonly need. Maybe payroll, billing or advisory services. Then offer those additional services to your clients.
2. Increase your sales to current clients
Selling more to current clients requires less effort than bringing in new clients. These three options increase how much a client invests in your accounting services over time.
Upsell. Offer your clients an upgrade. Fast food restaurants have nailed this strategy. Customers frequently agree to the combo meal rather than the single item because it’s a better value.
How would this work in your accounting practice? Your bookkeeping clients often need payroll. Create a package which bundles payroll with bookkeeping services. They’re happy to have one stop for all those needs and you now earn more from your client.
Downsell. Increase the lifetime value of a client by selling them less expensive services which are essential to them. When a business does their bookkeeping in-house, they don’t need you for that. However, they hire you to train their staff.
Cross-sell. Invite your clients to buy related or complimentary services. For example, if you sell accounting services, offer bookkeeping services to your current clients.
3. Cut your costs
Get lean and reduce your costs. Which software solution saves hours of time and money? What about eliminating a redundant, outdated process? You can cut down on expenses like office space, production costs or staffing. Don’t overlook your subscriptions. Cancel those automated monthly payment for services you no longer need.
4. Raising prices
A straight-forward way to increase your profits is to raise your prices. Lack of courage often derails this option.
Low-value clients take up space and time. You can’t bring in ideal clients at your new rates when you’re busy serving price-sensitive clients.
Although raising prices lacks popularity, it is the fastest way to inject cash into your business. Higher rates increases your perceived value.
Develop Your Value
If raising prices gets you nervous, then let’s discuss value. As you deeply connect with your value, others will recognize the value you offer. Doing that makes it easier to raise your rates.
Follow these effective value awareness strategies.
1. Price. Charging based on the number of hours or the cost of delivering your services leaves money on the table. Consider how to price for value, not time. Then connect your services to the outcome your client receives.
A bookkeeper improves the cash flow for franchise gym owners. A recent client of hers saved $1 million because of her advisory service. This significant savings was simply with current gym members and didn’t account for the new memberships. This client happily payed her 10% of their savings. The bookkeepers earnings would have been a fraction of that if she based her rates on costs and time.
Recognize the critical problem your service solves. When you meet during your initial consultation, ask specific questions about time saved and money earned. I teach my clients to have a value conversation instead of the traditional consultation. Your viewed as an advisor rather than a technician. With this approach, you can then value price your services accordingly.
2. Schedule. You devoted years to honing your skills and developing your expertise. You deserve to set boundaries around your time. Define how your clients connect with you. Create packages where your higher level clients have more access to you. They enjoy faster responses than clients in lower level packages.
Airlines do this all the time. First class ticket passengers board first and immediately get served a beverage. Economy seat tickets are last to board and may not have room left in the overhead bins for their luggage.
Your packages specify how to contact you and your response time. This sets a boundary around your valuable time. Of course, ideal clients highly respect this boundary.
3. Service. Packages offer different levels of service. Higher level packages are more hands on and those clients have greater access to you.
Silver. Price sensitive clients typically opt for the silver level package. They receive a basic, minimal level of service. Or they simply get instruction on how to maintain their books.
Gold. The gold level package is your most popular package. This option includes the services that the majority of your clients need along with regular consultations
Diamond. At the diamond level, your practice handles all the work from training to implementation. Diamond clients meet with you for scheduled advisory meetings.
4. Client experience. Ideal clients value experience over price. While they deeply care about quality of service, they equally care about the things you don’t know how to charge for. Your response time, communication, follow through and advisory services have value. Because your packages include all those things, you now get paid for things you used to do for free.
This approach is counter-intuitive to how most accounting professionals traditionally set up their firms. You gradually realize your clients aren’t buying things. Rather, they invest in solutions which you help them achieve.
Own Your Expertise
Step up as their trusted advisor. When your sales process includes value conversations, they quickly grasp how your solutions align with their vision. Ask great questions to illuminate the benefits of applying your solution. Remember to include some questions in your value conversation which emphasize the costs of continuing to tolerate the current situation.
As a trusted advisor, your value conversation naturally emphasizes the return on their investment without being salesy. As you know, the investment to work with you now brings enormous returns later.
The Raising Prices Conversation
Ready to raise your prices? Then focus on delivering great value. An effective enrolling process highlights what’s in it for them. Do this and your ideal client will happily pay your rates.
Yes, raising prices is uncomfortable. Base your fees on your expertise, rather than your time. Remember, when you connect with your value then others will value what you offer.
Follow these recommendations to raise your rates, and grow while keeping your passion alive. Are you tired of doing work for free because you don’t know how to charge for it? Discover how to get paid what you are worth and attract clients who understand your value. Right NOW claim your FREE RESOURCE to discover how to create value based pricing.