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Why Pricing Matters More Than You Think

Jody Padar
Posted by Jody Padar on Jan 24, 2024 8:32:54 AM

Pricing is an underrated powerhouse in the accounting profession. It's not just a numbers game. It's about the value you deliver, the trajectory you set for your firm and the relationships you forge with your clients. It's about making a bold statement in every financial interaction.

Firms have been stuck in the old-school mindset of billing by the hour for too long, and honestly, it just doesn't cut it anymore. In an age where accounting is increasingly about advisory and strategic partnership, pricing models need to step up. Value-based pricing is a future-focused approach that ties fees to the real value you provide, not just the time you clock. This strategy speaks to the heart of your expertise and your ability to make a significant impact on your client's success.

But there's more to pricing than just the figures. It's about how you're perceived, the type of clients you draw in, and the strength of the partnerships you build. Nail your pricing strategy, and you elevate your firm from a traditional service provider to a sought-after strategic partner. Your pricing approach can make or break client perceptions, trust, and the longevity of your professional relationships.

The way you handle pricing is key to your success and growth. It's time to explore why pricing deserves a major re-think in the profession.

Reflecting Value Beyond Time

Let's face it, billing and pricing are not the same. You bill after the work is done and price up-front. Being able to have conversations with clients about value is critical. Whatever technology you are using is part of your costs of delivering that service and it has to be included in your price. It also has to be used consistently. When clients look at your packaging, and you let them pick apart what they want and the technology they'll use, the value weakens.

Think about it. When you work on a complex tax strategy or provide business restructuring advice, you're tapping into years of experience, continuous learning, and a deep understanding of the industry. This isn't something you can neatly package into hourly slots. Value-based pricing gets this. It aligns your fees with the real benefits you deliver to your clients. It's about charging for the impact, the breakthroughs, and the long-term benefits you provide. This approach underlines the depth and the transformative impact of your work. It tells your clients, "We're not just accountants; we're partners in your financial success." 

Catalyst for Firm Transformation

Embracing new pricing models in accounting is like hitting the refresh button on the whole firm's identity – it's a game-changer for clients and talent retention alike. When you start pricing your services based on value, you communicate that you're more than just an expense; you're an investment in their business success. This shift in perception is powerful. It elevates the client-accountant relationship to a partnership where you're working hand-in-hand toward common goals.

And here's the real beauty of this transformation – it changes how your talent perceives their role within the firm. Under this new model, your team members evolve from viewing themselves as just number-crunchers to recognizing their role as indispensable strategic partners for your clients. They start to see the true value they bring through their skills in predictive analytics, business strategy, and custom-tailored advisory services. This shift is not just a change; it's a complete redefinition of the traditional accountant's role. By elevating their sense of purpose and contribution, you address challenges in attracting and retaining top talent more effectively. This is a win-win situation. Your team feels more empowered and valued and your clients receive top-notch service.

Building Stronger Client Relationships

Value-based pricing opens up a dialogue about what really matters to your clients. It moves you away from the traditional hours and rates and into the realm of outcomes and impacts. This approach makes your conversations more about strategic goals and less about clock-watching. Accountants fear that a change of this magnitude will result in a total loss of all their clients. But that's not the case. Clients who value you will be okay with this; some may even recognize you've been undercharging in the past.

It may seem counterintuitive that fewer clients equals more profit, but the reality is that you now have time to do more for those clients who want it. And they don't push back on the price. Not only do you have happier clients, but you also have happier staff doing work for people they like. These are the relationships that last, where loyalty is built not just on the quality of work but on the value-driven partnership. It's a shift that turns clients into long-term collaborators.

Supporting the Shift to Advisory Services

The future of our profession lies in being strategic advisors, not just compliance experts. This is where value-based pricing becomes a key player. By adopting this model, you're not just changing how you bill; you're supporting and fueling the transition to offering more strategic, high-impact advice.

Today, you're expected to be the navigators of complex business terrains. Value-based pricing aligns perfectly with this advisory role. It encourages you to delve deeper into your clients' businesses, understand their challenges, and craft solutions that drive real results.

Focusing on Firm Sustainability

Sustainability depends on revenue streams. This is where value-based pricing plays a critical role, far beyond what traditional hourly billing could ever offer. By adopting value-based pricing, you're not just setting prices; you're building a foundation for profitability and your firm's long-term success.

Revenue stability is like having solid ground under your feet. It allows for strategic planning and investment in areas that truly matter like growing your services, enhancing the quality you deliver, and investing in new technology. In the digital age, staying ahead in technology isn't just a luxury; it's a necessity. Value-based pricing gives you the financial predictability to invest in cutting-edge tech, which in turn, propels your efficiency and enhances your service offerings. You're talking about state-of-the-art software, advanced analytics tools, and automated systems that not only streamline your work but also elevate the level of advice and insight you can provide.

Now, Go Find an Alternative to the Billable Hour

Pricing is much more than a line item on an invoice; it's a strategic tool that has a profound impact on every aspect of our accounting practice. From enhancing client relationships to driving firm transformation, and from reinforcing the value of your services to adapting to market changes, the way you price your services is integral to your success and growth.

As you navigate the complexities of the modern business world, understanding and implementing effective pricing strategies will be key to not just surviving but thriving in the accounting profession. 



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Interested in hearing more takeaways from ADP’s Radically Change your Pricing Model webinar series? You can access the entire series on demand.

Topics: Practice Growth


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