Do Your Rates Reflect Your Value?

Loren Fogelman
Posted by Loren Fogelman on Jun 10, 2021 11:28:08 AM

Recently, I polled a group of accounting professionals about how frequently they raise their rates and found that only 5% increase their rates more than once per year. And 81% of those accounting professionals polled admitted concerns about raising their rates.

Undercharging is epidemic

Solo practitioners as well as mega-firms undercharge for their services. It’s epidemic. And, specific symptoms appear when your rates fail to reflect your value.

  • Spend too many hours working.
  • End up tolerating non-ideal clients.
  • Workflows aren’t optimized.
  • Lowers your profit margin.
  • Burnout and exhaustion overshadow everything.

The pricing dilemma

A wide range of concerns appear as you consider a price increase. Well, you’re in good company. Accounting firms of all sizes wrestle with the raising your rates dilemma. Here is an example with one bookkeeper I know. 

Nancy started out wearing all the hats in her firm. Over four years, her team grew to five. As a result, she now straddles between the role of business owner and technician.

Money isn’t Nancy’s primary motivator. She wants to raise the bar for her clients. So, her services extend beyond number crunching and after-the-fact reporting. Clients hire her because she works closely with them to improve their financial literacy and offers business growth advisory meetings.

We spoke candidly about her rates. Like many accounting professionals, her fees don’t reflect her expertise.

The courage to raise your rates

Self-worth and beliefs influenced Nancy’s prices. It’s why charging more feels difficult. So, we discussed her specific worries about money and worth.

Her primary concerns include:

  • Nobody will pay those fees.
  • No one else charges that much.
  • I’ll lose my clients.
  • How can I justify this?
  • I don’t have enough credentials.
  • What if I can’t meet my clients’ expectations?

Do you share any of her concerns?

Remove the resistance

Your accounting accounting firm probably doesn't need a complete overhaul. A couple small, yet strategic changes, removed the resistance.

First, change your mindset about value. Don't think about taking money from your clients in terms of scarcity and greed. Update your perspective and focus on y our clients' gains, not your gains. Improving their cash flow and strategic decision-making tops the list.

Set your rates to reflect your value

Follow these five steps to up-level your mindset and set new rates:

1. Start with your strengths. Start with a strength list and define your value. Then, determine how to communicate that value to your clients. For example: You will increase your clients' profitability, help them grow strategically and reduce costly mistakes.

2. Separate fees from time. Nobody wants a price-sensitive client who watches the clock. Tying your fees to time positions your services as an expense. By emphasizing results, rather than time, clients will view your services as an investment.

3. Understand that success is messy. Doubt will most likely fill your mind when you start thinking of the possibility of increasing your rates, maybe even doubling or tripling them. Who will pay for this? How will I justify this? Can I meet their expectations? Offering new rates requires courage, not confidence. Each time a client agrees to your new rates (and they will), your confidence will grow.

4. Stand out as the go-to expert. In Nancy's case, this was easy. She had already created a well-defined niche and had become known for advisory processes, so she was able to focus on the  gains her clients enjoy as they implement her system. Nancy’s now known as the go-to expert for attorneys who want to take charge of their law firms financials. If you have not yet defined your own niche, start working on it. But for now, define your financial literacy and communicate that and the value you deliver to position yourself as the go-to expert.  

5. Solve a need. This is the #1 action which will separate you from your competition. Start holding an initial consultation that I call a value conversation. This first meeting highlights the client, their specific needs and challenges. Clients view her as an advisor, rather than a bookkeeper.

Success occurs from the inside out. Once Nancy owned her value, all the resistance melted away. Her new clients value solutions. Over the course of our work together she doubled, and then tripled, her prices.

Each change directly improves the client experience and separates her fees from time. Ditching her hourly rate offers the solution she craves – she simply didn’t know how to implement that when we first met. 

Nancy now focuses on supporting her clients’ growth. The trust she gains from her clients, in turn, supports her accounting firm’s growth. And, she replaced burnout with enthusiasm.

The possibilities are limitless

Your rates are a reflection of your self-worth. Claiming your value is uncomfortable at first. Doing something new, rather than sticking with something familiar, challenges long-held beliefs.

Your hourly rate positions you as a commodity rather than an investment. When you lead with your bookkeeping and accounting services, it’s difficult for a potential client to determine why they ought to hire you. It minimizes your expertise.

High value clients hire you for what you know; not what you do.

Like Nancy, start to transition from technician to problem solver. Along the way, you’ll realize where you give your knowledge away for free because you don’t know how to charge for it.

Leading with value, rather than competing on price, up-levels your firm. You deeply connect to the benefits your clients receive from your service. That’s when you no longer need to compete. What are you ready to let go of so your rates reflect your value?

Topics: Practice Management

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