There has been a lot of talk about Value Pricing in the past decade. The theory is simple. Don’t price by the hour as it does not value your intellect. Instead, price your client project based on the ‘value’ that you create.
Easy – just work out the ‘value’ and price accordingly. Easier said than done!
I’ve been teaching Accountants about Value Pricing for more than 10 years. Based on what I teach, I’ve seen dozens of projects priced at $50K or more and only two at $1M or more – for a single invoice.
I’ve come to the conclusion that there are just three things (but they’re big things) you need to get right when you value price.
Do you believe in yourself and your abilities?
Are you actually contributing to your client's’ condition?
Are you able to articulate your value and sell the project?
Everything starts here. Do you actually believe you’re worth it? Or do you only believe you’re only worth an hourly rate? The first sale is to yourself. Unless you can sell yourself on the idea that you’re worth the fee then you’ll never sell it to your clients. Value pricing is both art and science. The science is the step-by-step approach – how you conduct the meeting and what you say when. The art is all about confidence – how you carry yourself and how you come across.
Are you actually contributing to your client's condition? Think of it this way. On their own, your client can achieve ‘X’ result. With your help, they can achieve ‘Z’. Your value contribution is ‘Y’. To work out your value contribution, you need to scope out the project before you do it. You need to understand exactly how you’re helping your client. That means asking loads of questions (in a particular sequence) to determine your value.
This is the bit most Accountants fall down on. This is all about articulating the value of your project to your client. With confidence, you must explain to them why they need the project, what the benefits of the project are, who is involved, when the project starts and how it will work. The WHY and the WHAT are the keys to articulating value.
Once you have held the meeting, then you need to put it in writing - what we call an implementation plan. The document you prepare is all about how you implement the value you’re suggesting.
I can help you do this. But before anything else, you need to gauge your firm's current performance status.
Rob NixonCEO & Co-founder at PANALITIX
About the Author
Rob Nixon is the world’s foremost authority on how accounting firms can achieve peak performance. Since 1994, he has been running businesses that specialize in helping Accountants run better, more profitable businesses. His speaking work has taken him around the world where he has spoken to in excess of 170,000 Accountants. Currently, his landmark strategies and products are used by Accountants in over 30 countries.
On average, clients increase profit by 75.5%, enhance capacity by 30.6% and achieve sustainable revenue growth of 52.1% - in just 12 months.
Rob is the author of two best-selling books “Accounting Practices Don’t Add Up – why they don’t and what to do about it” – and “Remaining Relevant – the future of the accounting profession”. Both have received rave reviews from Accountants and industry professionals from around the world.
Rob’s latest book “The Perfect Firm: Your Playbook for Building a Perfect Accounting Business” aims to help Accountants build their perfect accounting firm.
In 2005, he created the revolutionary coaching model called coachingclub. The coachingclub model enabled firms to be accountable, to consistently learn and to share ideas amongst their peers. So far, over 800 accounting firms have graduated from his coachingclub program. The vast majority of firms have doubled or tripled profits because of the program.
Rob is a keen golfer (single figures) and adventurer (he is ticket holder 293 on Virgin Galactic to go into space). He lives in sunny Brisbane, Australia with his lovely wife Natalie and three children.