5 Ways to Get Clients to Accept a New Pricing Philosophy

Don't just anticipate questions, plan for them.

By August J. Aquila
Price It Right

Once your partners are sold on a new pricing philosophy, you will need to communicate it to your clients.

MORE: How to Get Partners to Accept a New Pricing Philosophy | Preparing to Change Pricing Philosophy | Ethical Issues in Pricing | How Utility and Value Affect Pricing | Understanding the Product Pricing Life Cycle
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There are five ways to get clients to understand and accept the new pricing methods. Each of these methods is discussed below.
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How to Get Partners to Accept a New Pricing Philosophy

Businessman putting a card with text "Don't resist change, embrace it" in suit pocket5 common objections ... and 5 reasons to change. BONUS: an 11-point fee audit.

By August J. Aquila
Price It Right

Before you announce new pricing policies to your clients, it is critical that you and all the partners in your firm embrace the new pricing philosophy. The entire process begins with the following:

MORE: Preparing to Change Pricing Philosophy | 11 Alternative Pricing Methods | Applying Cobb’s Value Curve to Your Firm | The Four Types of Competition | Marketing and the 5 P’s | Why Choose a Marketplace Orientation?
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  1. The firm's willingness to make some changes
  2. An analysis of existing engagements and the economic impact that a different pricing strategy will have on the firm
  3. A review of how the firm is currently delivering and producing its services
  4. The firm’s overall relationships and communication style with its clients

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Preparing to Change Pricing Philosophy

Businesspeople chatting around a water cooler5 factors to consider.

By August J. Aquila
Price It Right

Once you have decided to adopt an alternative pricing philosophy, what do you do next?

MORE: 11 Alternative Pricing Methods | 12 Pricing Factors Beyond Cost | 13 Questions about Providing Value | How Demand Affects Pricing | How to Shift from Production to Marketing Orientation | How Traditional Fee Methods Hurt Firms
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Changing your firm’s pricing philosophy is really a three-step process. First, you need to consider several factors before suggesting a change. Second, you need to get your partners to agree that it is a good idea, and third, you need to educate your clients so that they accept and understand the new approach.
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11 Alternative Pricing Methods

Woman in officeWhen to use each, plus the marketing and operational perspective.

By August J. Aquila
Price It Right

There are many ways to price professional services.

MORE: 12 Pricing Factors Beyond Cost | Ethical Issues in Pricing | How Utility and Value Affect Pricing | Understanding the Product Pricing Life Cycle | 4 Ways a Production Orientation Can Harm a Firm | Price to Get the Maximum Fee | 7 Issues in Partner Retirement Planning | Is It Time for a Partner Compensation Checkup?
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Alternative pricing methods in the legal profession have received much more attention than in the accounting profession. In fact, entire publications have been issued by the American Bar Association (ABA) on this particular topic.
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12 Pricing Factors Beyond Cost

Man with net chasing winged moneyCost-plus is a starting point, not the end point.

By August J. Aquila
Price It Right

Accountants face only two major restrictions in determining their fees – the restriction against contingency fees under certain circumstances and the taking of commissions or referral fees.

MORE: Ethical Issues in Pricing | Applying Cobb’s Value Curve to Your Firm | The Four Types of Competition | Marketing and the 5 P’s | Why Choose a Marketplace Orientation? | Why Value Pricing? | Solving Underperforming or Dysfunctional Partners | The 3 Types of Partners You Need
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We have also seen that for the most part, accountants bill their time based on a cost-plus method.
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Ethical Issues in Pricing

August Aquila: "If someone is going to be unethical, it will not be a result of the billing method he or she uses."Specifics of Rules 302 and 503.

By August J. Aquila
Price It Right

In the old days you could go into a shoe store and purchase sneakers or gym shoes. Nowadays, there are tennis shoes, running shoes, cross trainers, aerobic shoes, basketball shoes, soccer shoes and the list goes on and on. Perhaps the billable hour paradigm soon will go the way of the gym shoe.

MORE: Applying Cobb’s Value Curve to Your Firm | 13 Questions about Providing Value | How Demand Affects Pricing | How to Shift from Production to Marketing Orientation | How Traditional Fee Methods Hurt Firms | 6 Questions for Planning Your Succession | Underperformers Come in Many Shapes and Sizes | 6 Focuses for Managing Partners
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Accountants need to realize that in pricing their services, one pricing method will no longer do. As with athletic shoes, accounting and consulting services can be priced in many different ways. This post will explore ways for you to move away from the hourly billing paradigm.
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Applying Cobb’s Value Curve to Your Firm

Hand turning a knob up to the maximum with a dial where it is written "value added""Pricing – that is, fee-setting – is above all a marketing decision."

By August J. Aquila
Price It Right

There is a completely different way of looking at value and it is tied into the type of accounting or consulting work that is available in any given market and the type of accounting or consulting work that your firm provides.

MORE: 13 Questions about Providing Value | How Utility and Value Affect Pricing | Understanding the Product Pricing Life Cycle | 4 Ways a Production Orientation Can Harm a Firm | Price to Get the Maximum Fee
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Nearly 30 years ago William C. Cobb wrote "The Value Curve and the Folly of Billing-Rate Pricing," providing a great deal of insight into the concept of pricing and value. Many of the ideas that follow are based on Cobb's article.
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