Joe Woodard visited last week with Andrew Lassise on The Tech Talk for Accountants Show. Joe and Andrew chatted about the changing technology landscape, the lack of capacity many accounting professionals face, and making big money as a bookkeeper. The full podcast is well worth blocking time on your calendar for a listen. And when you listen, you will hear the metaphor of the steak dinner and what that has to do with pricing your services (which I won't tell you in this article).
Here are some of the take-aways I found in the conversation.
What are two of the obstacles that accountants and bookkeepers face?
The rapidly shifting technology landscape makes it difficult for accountants and bookkeepers. As soon as you think you've finalized your technology choices and been through all of the steps of vetting, deployment, employee training, stacking technologies, then you realize it is obsolete.
But it isn't just about what solutions you pick, it is about the nature of the solutions that exist in the space and how revolutionary solutions can disrupt what you have put together. For example, many practices had chosen to build their practices on the Google Suite, thinking they had positioned themselves for the next decade of growth. But Microsoft is a very skilled second-mover; they take other people's innovations and make them better. This is what has happened with Teams and Slack, SharePoint and Google Drive and the entire universe of small business.
The technology landscape simply isn't going to stop changing and you really don't want it to stop changing. So this is an obstacle you need to be able to address.
The second biggest obstacle accountants and bookkeepers face is practice management capacity. Proactivity is all but impossible for practice managers and owners as they deal with issues such as compliance, customer emergencies, elongated tax cycles, not to mention the volume of pandemic-related work. It can be extremely difficult to find the capacity to be intentional or proactive in anything.
Because of obstacle two (lack of capacity), obstacle one (leveraging technology that is constantly advancing) is nearly impossible to address.
How can accountants and bookkeepers address the capacity issue?
The simple (but not easy) answer is to increase your price - through a strategic and prudent plan to correct your price so that the new price reflects the value you bring to your clients.
When you increase your prices, a small portion of your clients will leave, but the majority of them will pay the higher rate. You will almost always see a net increase in revenue, you will even more likely see an increase in net profit, and you will always see an increase in capacity.
Once you start seeing that increase in your capacity, it is essential to avoid the temptation to simply add in more client work. Instead, use that capacity to navigate the shifting technology landscape.
Here are a few Joe Woodard pricing "secrets."
1. More clients do not always mean more money. You may actually be investing in someone else's business and not your own.
2. Don't bundle clean-up projects with bookkeeping services. When you bring on a new client, quote separately for clean-up projects and ongoing services.
3. Don't ask yourself, "Will they reject me if I go up on the price?" Instead, ask yourself, "Will they stay with me if I don't go up on the price?" You have clients that really need to find a different bookkeeper. Increasing your prices and letting some of your clients leave can often be exactly what your practice needs to give you the capacity you need.
4. Change the narrative from "I am like my competitors because..." to "I am unlike my competitors because...." By leveraging technology tools, you can offer services that very few of your bookkeeping competitors offer, even those that may be above what you feel is your skill or knowledge level. Technology allows you to offer financial measurement analysis, cash flow management and accounts receivable management.
What about that steak dinner?
For those who follow Joe Woodard regularly (which you can do on Twitter and LinkedIn or through Woodard's free webinar series), you know that Joe is passionate about our purpose at Woodard, which is to empower small business advisors just like you. And you know that Joe is always good for a great story as a metaphor for the point he is making. So, to learn what that steak dinner has to do with pricing - and hear more stories around these and other pricing topics - listen to the full podcast here.