The Convergence of Trends Makes Pricing Changes Imperative

Kill the billable hour to earn what you deserve.

By Jody Padar
The Radical CPA

The speed of change is faster than ever. How are you going to react to it? That’s what I’m really preparing you for – redesigning your entire business model to become a more client-centric advisor. Value-based pricing models are the key component but not the whole story.

MORE: Stop Looking for Talent that Does Not Exist | Advisory Work Must Be Priced by Value, Not Hours
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Today’s automation, new competitors, staffing challenges and new technologies are conspiring to bring clients more value than they could have enjoyed before. All of it is shifting the way you need to think about your services, what clients value and how you get paid fairly for the expertise you bring to the table.
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Advisory Work Must Be Priced by Value, Not Hours

Technology pushes us to handle more advisory work, which allows more value pricing. 

By Jody Padar
The Radical CPA

As a professional in the industry, you may find some of what you do easy. Just because you find it easy doesn’t mean it isn’t valuable and worth more than the time you put into it. If it were truly easy, your clients would be doing it themselves rather than paying you.

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Undervaluing ourselves and what we bring to the table is a chronic problem plaguing accountants and CPAs. Why do I say this? Because people pay more for the luxuries they value. Let’s look at a comparison:

Today, the MSRP of a Cadillac Escalade is over $81,000 while the MSRP of a Chevy Suburban is slightly under $60,000. If these automobiles were priced according to the time it takes to make them, plus the cost of their parts, the difference between their retail prices would probably be far less. To maximize profits, GM spends a lot of time and money researching how much their customers value their different products. Certainly, the brand makes a difference, but the Cadillac also offers a more luxurious package. It doesn’t cost GM a lot more money to offer these luxuries, but their customers place a much higher value on them, and GM understands that value.

Pricing according to value really isn’t a radical concept!

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When it Comes to Pricing it’s About ‘Can’t Afford Not To’

Pricing based on efforts is all wrong.

By W. Michael Hsu

How often do you hear from clients that you’re too expensive or xxx firm can do it cheaper? The lesson in having that conversation is that it can’t be ‘Can you afford it’ it’s: “Can’t afford not to.’

MORE W. MICHAEL HSU: Seven Principles to Work Less and Achieve MoreHow Do Firm Leaders Learn?Why Your Approach to CAS and CFO Services Is Wrong | Your Client Base Is Global |

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The concept of “you can’t afford not to” is a popular one in the world of entrepreneurship and one that CPAs, especially those pricing CAS services, need to learn. It is the idea that sometimes, even if something seems costly, you cannot afford not to do it because the cost of doing nothing or doing it yourself is even greater.

This idea is often applied to outsourcing or hiring, where entrepreneurs may feel they cannot afford to hire someone else or outsource a task. However, the truth is that they cannot afford not to.

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Clayton Oates: One Way to Keep Clients for Life

Play the infinite game and 11 more takaways

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The Disruptors
With Liz Farr for CPA Trendlines

“We’re ultimately in the people business. We’re in the relationship-building business. We just happen to do accounting.”

That’s how Clayton Oates, the founder of QA Business, views the accounting profession.

MORE: Randy Crabtree: Follow These Three Rules to Keep Employees HappyErik Solbakken: Yes, You Can Work Less and Make More | Donny Shimamoto: Future Firm Growth Requires a MindshiftJennifer Wilson: Empower Young Workers to Build the Firm Everyone LovesMike Whitmire: Re-Think Your Hiring and Training PracticesHector Garcia: Success Strategies of a Quickbooks YouTube Superstar | Blake Oliver: Why Tax Work Yearns To Be FreePrivate Equity Explodes in U.K. | Brannon Poe: The Status Quo Must Go  | Accounting Nerds, Unlock Your Super Powers  | Disruptor: Jason Statts Shakes Up the Status Quo | Think Small to Think Big with Matt WilkinsonWhen Financial Statements Go Extinct with Corey SchmidtCan Geraldine Carter Save Accountants from Themselves?Re-Inventing Accounting with Tyler Anderson

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Oates also believes accountants can choose whether they are playing a finite, zero-sum game with clients or the infinite game, which continues forever and results in an abundance forever mindset with clients, who will then be your clients for life. 

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Why Time Tracking Still Matters

If your team dismisses timesheets as old school, you may want to rethink that strategy.

By Frank Stitely
The Relentless CPA

Pen ready to fill in blank timesheet

Because capacity is the denominator in the Lean Six Sigma equation, and employee productivity is a big factor in capacity, employee productivity becomes a big factor in determining turnaround time.

MORE: Business Owners Face One of Three Exits | Don’t Let Clients Dictate Tax Workflow | Make Fewer Mistakes, Increase Revenue and Capacity | How Small Firms Can Win the Talent Wars | Easy Ways to Avoid ‘Done But’ Tax Returns | Six Ways to Create a Millennial-Friendly Firm | Do You Know Your Turnaround Time?
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First, let’s dismiss all the consultants who tell us time tracking and productivity metrics don’t matter. For the most part, these consultants have never managed or owned CPA firms. Rarely have they worked in firms for any length of time. They have never known the struggles of meeting payroll the first pay period in February, when employee hours are up but the tax season money is not rolling in yet.

Here’s an example that shows why time tracking and productivity metrics matter:
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Ron Baker: Monetize the Relationship, Not the Transaction

Ron Baker: The subscription model optimizes lifetime customer value.

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The Disruptors
With Liz Farr for CPA Trendlines

Ron Baker has been on a crusade to transform accounting firms for decades, first by pushing us to kill the billable hour and to implement value pricing. Today, he’s advising accountants to switch to a radically different business model. His new book, co-authored with Paul Dunn, “Time’s Up! The Subscription Business Model for Professional Firms,” explains the subscription model and why moving to this model aligns the values of firm owners with those of their customers.

MORE: Erik Solbakken: Yes, You Can Work Less and Make More | Donny Shimamoto: Future Firm Growth Requires a MindshiftJennifer Wilson: Empower Young Workers to Build the Firm Everyone LovesMike Whitmire: Re-Think Your Hiring and Training PracticesHector Garcia: Success Strategies of a Quickbooks YouTube Superstar | Blake Oliver: Why Tax Work Yearns To Be FreePrivate Equity Explodes in U.K. | Brannon Poe: The Status Quo Must Go  | Accounting Nerds, Unlock Your Super Powers  | Disruptor: Jason Statts Shakes Up the Status Quo | Think Small to Think Big with Matt WilkinsonWhen Financial Statements Go Extinct with Corey SchmidtCan Geraldine Carter Save Accountants from Themselves?Re-Inventing Accounting with Tyler Anderson

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This book began from Ron’s obsession with the question “What would happen if Disney started CPA firms?” Accounting wouldn’t be a grudge purchase with low prices, but Disney “would enhance the experience and you would pay a fortune and you would be delighted to do so.” In today’s world, your customers are no longer comparing your firm to the other CPA firms, but to “any organization that has the capacity of raising our customer’s expectations,” such as Nordstrom or Amazon. Baker said, “We need to up our game as a profession.”

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Yes, You Can Work Less and Make More

Erik Solbakken: Build the firm of your dreams.

 

Subscribe to CPA Trendlines podcasts anywhere: Apple, Google, Spotify, iHeart, Deezer, Amazon Music and Audible, Player FM, Audacy, Gaana (India), and Boomplay (Africa).

 

The Disruptors
With Liz Farr for CPA Trendlines

Q: Why did the accountant cross the road?

A: Because they did it last year.

Erik Solbakken, a.k.a. “The Heavy Metal CPA,” is on a mission to free accountants from an oppressive business model. Solbakken spent 18 years working his way up to be a partner in a firm in Canada, but when the partnership fell apart, he was liberated to create a new kind of firm, where he and his staff never worked overtime and he made more money. Today, he acts as the guide he wishes he’d had when he started out, empowering accountants to create firms they love working in.

MORE: Donny Shimamoto: Future Firm Growth Requires a MindshiftJennifer Wilson: Empower Young Workers to Build the Firm Everyone LovesMike Whitmire: Re-Think Your Hiring and Training PracticesHector Garcia: Success Strategies of a Quickbooks YouTube Superstar | Blake Oliver: Why Tax Work Yearns To Be FreePrivate Equity Explodes in U.K. | Brannon Poe: The Status Quo Must Go  | Accounting Nerds, Unlock Your Super Powers  | Disruptor: Jason Statts Shakes Up the Status Quo | Think Small to Think Big with Matt WilkinsonWhen Financial Statements Go Extinct with Corey SchmidtCan Geraldine Carter Save Accountants from Themselves?Re-Inventing Accounting with Tyler Anderson

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How do you get away from the commoditization trap? Simple, deliver to the client the transformation that they want for themselves.

Solbakken said the profession has brainwashed us into believing three lies:

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Ed Kless: Clients Don’t Want Outputs. They Want Outcomes

The Disruptors: Too busy? Raise your prices.

 

Subscribe to CPA Trendlines podcasts anywhere: Apple, Google, Spotify, iHeart, Deezer, Amazon Music and Audible, Player FM, Audacy, Gaana (India), and Boomplay (Africa).

The Disruptors
With Liz Farr 
for CPA Trendlines

What do clients – or, as Ed Kless prefers, customers – want from their accountants? It’s not the tax return or the financial statement but the outcome for the customer, which is most often peace of mind.

To remain relevant in disruptions like online tax preparation and automated bookkeeping tech firms like Pilot, accountants need to consider other ancillary services they can provide above and beyond those basic services.

MORE:  Seth Fineberg: Your Classic Business Model Won’t Allow GrowthHector Garcia: Success Strategies of a Quickbooks YouTube Superstar | Blake Oliver: Why Tax Work Yearns To Be FreePrivate Equity Explodes in U.K. | Brannon Poe: The Status Quo Must Go  | Accounting Nerds, Unlock Your Super Powers  | Disruptor: Jason Statts Shakes Up the Status Quo | Think Small to Think Big with Matt WilkinsonWhen Financial Statements Go Extinct with Corey SchmidtCan Geraldine Carter Save Accountants from Themselves?Re-Inventing Accounting with Tyler Anderson

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“When you bill by the hour, when you have to measure your time, and when you tell the customer, ‘Pay attention to my efficiency because that’s what I’m going to charge you,’ then they start looking at your efficiency instead of your effectiveness, which is the wrong thing to be looking at,” Kless explained.

Additionally, Kless said CPAs who are “too busy” need to raise their fees.

He said, “One of the mantras in pricing is innovating for growth, pricing for profit. When an organization wants to grow, the focus has to be on innovating, creating new things to offer, not necessarily what we used to be called rainmaking, which is getting more customers.”

Kless maintains that accountants or CPAs should strive to be the first person called, no matter what the customer wants, whether it’s Super Bowl tickets or a recommendation for the best medical team in an emergency. But experimenting with adding additional services or converting to a subscription-based business model will not be possible for firms that remain wedded to the timesheet, which, Kess said, quoting Ron Baker, is cancer of the accounting profession.

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