How I Repriced My Bookkeeping Clients (aka Raising My Prices)

I have a confession. I was in business for five years and never raised my prices. I even had one client only paying $150 per month for 20 hours of work. I felt stressed and like I was always running on a treadmill. I never had enough time to get anything done. I didn’t raise my prices because I didn’t have time to think not to mention look at my five-year-old contracts.

Okay, if I’m totally honest, I didn’t even have contracts with these clients.

Phew, confession over. That was hard, but I know I’m not the only one out there who feels this way. And I know I'm not the only one out there who has run their practice this way. 

The repricing conversation is the most uncomfortable conversation to have with your clients, and the most necessary. I remember talking to my clients about how they needed to raise their prices as they gained skills or the cost of production increased or even just a cost of living raise.

One day, I heard myself and knew it was time to raise my prices. I researched, read, took courses, and planned. Only then did I raise my prices. I went from charging a fixed monthly fee to having a three-tiered menu pricing structure. Only after I developed my new pricing menu did I start having conversations. 

Caveat: If you are charging hourly, I would suggest moving to a fixed fee first.

Here is how I repriced my clients. 

Steps to repricing current clients

First, I made a three-tier pricing menu.

Step 1. I decided which services were in each tier. My bottom tier was compliance only and my top tier was advisory services.

Step 2. Next, I determined my tier one pricing. To do this, I figured out the base price for whichever client I was working on repricing. A system that worked for me was using 1% of the client's previous year's revenue as the base annual fee for that client. Then I would increase that base price based on complexity, using things like more than two accounts, payroll entries, sales entries, a bank I didn't like, etc. I did have a minimum monthly charge that I wouldn’t change no matter the revenue size.

Step 3. Once I determined my tier one pricing, I multiplied it by 2.5 for my middle tier and multiplied it by 4.5 for my top tier. 

Steps for conducting the pricing conversation

Step 1. Demonstrate how you have helped them to date. Rather than starting with the new prices, I started the conversation with their business growth over the past year or years that I had been working with them. I specifically tried to show revenue growth.

Step 2. Define their pain points. From working with the clients, I already knew some of the pain points they had. I dug deeper into these pain points and asked questions to find out others.

Step 3. Break the price anchor. For me, I was way undercharging for a long time, and my low fee had become their price anchor - the amount in their head that all other offers would be compared against. I had to break that anchor.

This may not be the "right" way, but I simply said, "Your business has grown over the past 5 years, and I have grown as well. I've spent hours learning and gaining skills that I've honestly given you for free. If you were to hire someone with my skill set, you would be paying a minimum of $50,000 per year.”

Step 4. Explain the new menu structure. At this point, I would tell them how I was reorganizing my services into packages so they could choose the level of service they wanted. I would show them my menu (without any dollar amounts) and talk about where their current services fit in the menu. This also allowed me to tell them about some of the other services I offered in relation to the pain points they had shared.

Step 5. Show pricing. Finally, it was time to show them the prices of each tier. I prepared them by saying, “You have been receiving tier two services for less than tier one prices.” Then I brought up the pricing for each tier and worked with the owner to add in payroll or sales tax or cash flow analysis. This became a conversation in which we were working toward a win/win. I get paid more, you get the services you need for your business now and the growth that will take place.

How your clients may react to repricing

Your experience with your clients may be slightly different, but my experience was quite positive! 

I started with the clients that had been with me for the longest and had more movement in my pricing with them. One client actually tripled what they were paying me without even blinking! That compared to the other end of the spectrum with a client that couldn’t quite stomach any price increase. However, we worked together to remove services until we were able to arrive at something acceptable to both of us. Although the revenue didn't increase, my services decreased. 

Final tips for repricing conversations

Start the repricing conversation with these two types of clients. And think of the first couple of conversations as practice. 

1. Pick a client you wouldn’t mind losing. Go ahead and practice the awkward conversation. One of two things will happen - you’ll be relieved when they are gone or you will be surprised at how much they are willing to pay you! Either way, it is a great outcome!

2. Pick a client you consider a friend. Run the conversation past that client and have them give you feedback.

3. Bonus third option. Practice with a colleague who is in the same industry as you are. Have them pretend to be your client and provide feedback. Even better if this person is also wanting to practice the pricing conversation.

My final bit of advice is to acknowledge the misses, but don’t get stuck there. It’s okay to not get this perfect. Keep practicing until you get it right. Take every failure as feedback for improvement then quickly dust yourself off and try again. DO NOT LET FAILURE DICTATE YOUR SUCCESS.

Celebrate big when you conquer your fear. Celebrate every win. Celebrate, celebrate, celebrate – focus your thoughts on the amazing things you have done.

And I want to hear about it too! Please email me your wins so I can celebrate with you - csamco@woodard.com.