Stop Selling Time

If you’re billing by the hour, you’re selling yourself short.

By Jody Padar
Radical Pricing – By The Radical CPA

Amazing things happen when you stop thinking about what you’re selling and focus on what clients are buying.

Many of the things clients don’t value are compliance-related like:

• Tax returns
• Payroll
• Accounting services

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But much of what they do value is less defined, though of higher value to their business lives:

• Small business expertise
• Management support and confidence
• Any service requiring specific knowledge or experience

These high-value services are focused on results. Clients want to be able to rely on your expertise, education and industry knowledge to deliver those results. They want someone knowledgeable to bounce ideas off of. They want to know what’s happening with financial regulations and if they’re doing things the right way. When it comes to taxes, they want to be sure they aren’t paying too much, and they are always interested in ways to make their business more profitable or efficient.

Most clients aren’t astute enough to look at the numbers and really understand what they mean; that’s not their background or education. They want and need your support to make sense of all those numbers and all those forms.

Your clients want to buy peace of mind, and your knowledge can help give it to them.

Notice how time is not considered when discussing what clients want to buy. In this new client-centric model, the value of time is dwarfed by the value of deliverables, insight, services and communication.

The collaborative, aligned relationship you and your clients want can’t be measured or valued by time increments.

In fact, if you’re beholden to the billable hour, you and your clients will be less aligned because of the adverse incentives of the billable hour. Most clients resist answering the phone if they know the meter is ticking. You might as well shout your opinions into the wind. All your knowledge about financial planning, business metrics, tax planning, valuations or anything else becomes meaningless when your relationship with your clients is expressed in the number of hours you work rather than your value to them.

Time has no inherent value.

Your time could be spent having an in-depth conversation with them, but it could just as quickly be spent trying to hunt down a paper receipt. The billable hour attaches the same value to these two distinct activities. If you don’t know what they want, they will let you focus on compliance work while they consult with someone else more focused on learning what they really value.

By removing the fear of the ticking clock, you and your client can talk freely, building trust and reliance. Ultimately, your client wants to be able to disclose all the intimate details of their personal and business financials so you can come up with the best plan for them and their business. This takes time, which is free. The deliverable and advice, however, are not.

So, why are we spending so much time selling time if that’s not what our customers are buying?

I contend that firms have to shift what they’re marketing, how they’re marketing it and how they’re pricing it to be more aligned with clients.

In the history of accounting, a client has never said, “I want an hour of time.”

They want deliverables and services. They want a compliance document or industry expertise. They want to know that what they’re paying for is good so they can sleep at night knowing they’ve shared personal information with someone who can help them facilitate growth, success and compliance.

As a CPA, you are in your client’s financial underwear drawer. You’re that trusted.

How many conversations have you had with your client in which you’re told confidential details as one of a handful of people who actually understand what’s happening in their business? Being in the financial underwear drawer is the definition of an intimate and reliable relationship.

It is an honor to hold that spot. It’s one of the great things about being a CPA. Clients trust us enough to ask us for advice and share personal issues concerning their finances with us.

When you think of clients as individuals, you think about wealth management or financial counseling. When you think about their businesses, you think about things like profitability and how they can fix their margins or adjust their business. You may be even more valuable to clients when their businesses have problems. When business is going well, clients can afford to be sloppy. When business is not going so well, they really need to make the right decisions.

If nothing else, COVID-19 proved we are the financial first responders who kept businesses alive. It’s important to remember that’s what we’re selling, not just the tax return or a financial statement, and certainly not time.

As accountants, we help our clients price services and products and help them keep their businesses going during tough times. If we could only turn that acumen and market understanding on ourselves, think of how well we would do. All we need to do is understand our value in the eyes of our clients, and know what it takes to meet a deliverable and how to scope our services.

Posted on May 8, 2024