This is one of the most common questions I get asked.
First we need to understand, what does value pricing mean?
Simply, it means that we come up with a price based upon the clients’ perception of the value of what we do.
You can watch the video here, if you prefer. Or carry on reading.
Get rid of time-based billing
When we increase the value, and when they see and understand that value, they will pay a higher price. The price is based on value, not on old-fashioned redundant ways of pricing based on time.
There was a study done back in 2005 by a major software company, that asked thousands of business owners “What do you hate most about your accountant?” The most popular response was surprise bills.
With time-based billing the client doesn’t know the price until all the work has been completed.
Therefore, clients actually love value-based pricing. It’s in their interest because we are moving away from the shock of time-based bills, which customers hate. Value pricing gives the client a price upfront - it gives them certainty.
Give value to you and the customer
The other great thing about value pricing and the reason why customers love it is that it aligns our interests with the clients.
You both want to deliver as much value as possible. The client wants more value and more benefits. When you deliver that value, the price goes up.
It’s a win-win way of pricing.
The way to moving clients onto this way of pricing is to communicate to them the benefits. You may use language like this:
“We’ve been listening to what our clients tell us. They have been saying they hate the way the accounting profession prices, based on the hour. What we are now going to do is give you a fixed price upfront. But we have also been told that everybody is different. There is no such thing as a one-size-fits-all solution. So we are going to sit down with you and present some different options to find the package and the price that is just right for you.”
When you explain it in those terms, you will make perfect sense and the client should be satisfied that this new method is a better and fairer way of pricing.
They get choice and they get certainty.
We just have to become better at explaining to clients why we are now pricing in this way. Explain it in terms of the problems with the old system and the benefits to the clients of the new system.
If you want more help from me with your value pricing journey, then you can join my Facebook group where you can ask me questions. Click here to join.
Wishing you every success on your pricing journey.
Mark Wickersham FCA
Chartered Accountant, public speaker and author of Amazon #1 best-seller, “Effective Pricing for Accountants”
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