Begin Your Value Pricing Move with Existing Clients
You may think that in order to make headway with new revenue streams, it requires acquiring new clients – but that’s not necessarily the case. Rather than start from the ground up, it makes sense to expand your service footprint with your existing clients initially and step into value pricing.
Not only will this deepen the client relationship and increase revenue (always a good thing) but it will also give you a chance to evaluate the internal/operational demands of these services before presenting it to your market at large.
Once you get traction within your existing base, you’ll be better equipped to answer the following:
- Can you effectively scale the offering to a larger client base?
- Do you have enough internal expertise to support the offering?
- Can you price the service reasonably while protecting (or increasing) margins?
- Do you have a plan to market the services?
- Do you have a plan to “bundle” related services into a productized offering?
- Have you defined what success metrics might look like?
If the answer to all or most of these is “yes,” you’re probably ready to take it to market. If not, you may want to spend some more time fine tuning, avoiding hiccups that may damage your firm’s reputation or cause operational headaches.
Specialized Industry Meets Specialized Services
This is where market-differentiation really hits its apex, since it provides clients with a hyper-focused and relatable context into their business and pain points. And while all industries have their own operational nuances, the good news for you is that most of these also come with some type of corresponding accounting component.
The Question of Pricing
Many accountants feel compelled to compete for business based on price, which can not only adversely affect the perception of the quality of service, but also cut deeply into margins. As we’ve seen earlier, price sensitivity may not be as heavily-weighted as one might think.
Of course reasonable pricing is important, but as The Sleeter Group indicates, the fact that price doesn’t even rank in the top five criteria for businesses addressing their choice of accountant should give you latitude to consider a new approach to your model.
For commoditized services like tax returns, it may be difficult to demand premium pricing (virtually requiring that you compete on price), but the introduction of strategic or advisory services provides an opportunity to deviate from competing on cost alone, and instead begin migrating a portion of the business to higher-margin services.
It’s also a great opportunity to begin the shift away from hourly rates, and focus on value pricing your services. If you’re still among the 66% of accountants primarily utilizing hourly rates (Source: Intuit® Rate Survey 2015) combining the rollout of specialized services with value pricing may be a feasible way to test both initiatives in a manageable way while you iron out any internal costing issues that may need work.
