value pricing

The Radical Pricing Model: Start with $25K

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Deliver more value to clients while freeing your team from timesheets.

By Jody Padar
The Radical CPA

Consider the $25K Rule.

Because this method requires heavy lifting on the front end, a good rule of thumb is to only value-price engagements of $25,000 or more. If the client falls below $25,000, they are eligible for a fixed price or fixed price plus a value add. This rule is important because if your client is a small business, it doesn’t matter how much value they perceive in your services; they will not be able to afford value pricing above a certain level.

MORE: Three Critical Factors Drive the Value Pricing Trend | Accounting Disruptors Are Heading Your Way … with Deep Pockets | The Convergence of Trends Makes Pricing Changes Imperative | Stop Looking for Talent that Does Not Exist | Advisory Work Must Be Priced by Value, Not Hours
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Most services are fixed-priced, but based on conversations with the client, those prices may drop or be raised accordingly. Some of the data points used to set pricing are the PITA factor (pain in the a#%) and the client’s gross revenue.
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The Convergence of Trends Makes Pricing Changes Imperative

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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

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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.

MORE: How Hard Do You Work to Keep Your Clients? | Four Things to Know About Social Media | Internal Communications Are Underrated | Four Things Better Than a Company Song | Let’s Lose the Word ‘Image’ | The Risk In Not Understanding Risk | What Your Marketing Program Can and Can’t Do | Nine Reasons That Prospects Say Yes | How Marketing Evolved to 3.0
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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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Jackie Meyer: Be a Problem Solver, Not a Number Cruncher

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Jackie Meyer: Redefine your boundaries and stop conforming to inappropriate behaviors.

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

Jackie Meyer is a fan of value pricing and niching your practice. Her favorite area is tax planning, which doesn’t require a huge investment of time to provide huge financial benefits for clients.

Her own firm tripled revenues by focusing on tax planning.

MORE: Randy Crabtree: Follow These Three Rules to Keep Employees Happy | Erik Solbakken: Yes, You Can Work Less and Make More | Donny Shimamoto: Future Firm Growth Requires a Mindshift | Jennifer Wilson: Empower Young Workers to Build the Firm Everyone Loves | Mike Whitmire: Re-Think Your Hiring and Training Practices | Hector Garcia: Success Strategies of a Quickbooks YouTube Superstar | Blake Oliver: Why Tax Work Yearns To Be Free| Private 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 Wilkinson | When Financial Statements Go Extinct with Corey Schmidt | Can Geraldine Carter Save Accountants from Themselves? | Re-Inventing Accounting with Tyler Anderson

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Firms that focus on low-volume, highly-niched areas solve several problems at once.

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Clayton Oates: One Way to Keep Clients for Life

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Play the infinite game and 11 more takaways

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

“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 Happy | Erik Solbakken: Yes, You Can Work Less and Make More | Donny Shimamoto: Future Firm Growth Requires a Mindshift | Jennifer Wilson: Empower Young Workers to Build the Firm Everyone Loves | Mike Whitmire: Re-Think Your Hiring and Training Practices | Hector Garcia: Success Strategies of a Quickbooks YouTube Superstar | Blake Oliver: Why Tax Work Yearns To Be Free| Private 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 Wilkinson | When Financial Statements Go Extinct with Corey Schmidt | Can 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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Ron Baker: Monetize the Relationship, Not the Transaction

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Ron Baker: The subscription model optimizes lifetime customer value.

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

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 Mindshift | Jennifer Wilson: Empower Young Workers to Build the Firm Everyone Loves | Mike Whitmire: Re-Think Your Hiring and Training Practices | Hector Garcia: Success Strategies of a Quickbooks YouTube Superstar | Blake Oliver: Why Tax Work Yearns To Be Free| Private 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 Wilkinson | When Financial Statements Go Extinct with Corey Schmidt | Can 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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Why Value Pricing Works

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And how marketing fits in.

By Bruce Marcus
Professional Services Marketing 3.0

We’ve seen accounting and law professionals learn to work as partners with marketers. Typical proponents of this new form of marketing are accountants who have learned to think and act like marketers, accountants who have developed new kinds of accounting firms and new kinds of governance structures. It’s a system that in at least one aspect draws upon a product marketing practice – in that the marketers participate in designing aspects of accounting and law practice.

MORE: How Marketing Has Evolved | Accountants Don’t Sell Soap. | Why Competition Matters Most | Nine Fundamentals for a Healthy Marketing Culture in an Accounting Firm

EDITOR’S NOTE: CPA Trendlines was privileged to have a long relationship with Bruce W. Marcus, who was ahead of his time in his thinking and practice in marketing for accounting. We are publishing some of the late expert’s evergreen work, which retains wisdom for the present.

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It’s a system in which accountants relate to clients in more constructive ways, and in dialogues rather than monologues. In accounting firms in which the barriers between partners and associates who are skilled and talented have eroded, and client service teams that not only serve clients better, but function as marketing instruments, by virtue of developing better ways of demonstrating the possibilities of extended service.
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Eliminate Mystery through Communication

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What could be shared that isn’t?

By Rita Keller

Improved communication can be achieved with many different approaches. Some tactics may primarily affect intrafirm understanding and teamwork, while others focus more on increasing clarity and frequency of communications with clients. No matter where they are directed, when these efforts are successful, they benefit the firm and its clients.

MORE: Leadership Growth Is a Two-Way Street | How to Encourage Firm Ownership | Change When? Continuously | Win with an Intentional Culture | Each Generation Must Change
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When I begin to work with a new CPA firm client, one of the most common issues I encounter is the lack of open, honest, ongoing communication between firm leadership and team members.
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