The Radical Pricing Model: Start with $25K

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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Three Critical Factors Drive the Value Pricing Trend

Embrace the value pricing perfect storm.

By Jody Padar
The Radical CPA

Ron Baker is known as the value pricing guru in the accounting space. He was way before his time in separating the price of labor from the value of a product. Labor-based pricing is based on the difficulty of doing a task. Value pricing looks at everything from the client’s viewpoint. His argument is as follows: the value you provide your customer, regardless of the deliverable, is worth way more than the hour.

MORE: 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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While value pricing isn’t new, automation has driven it to the forefront. Automation gives CPAs up to 90 percent more time to provide valuable services based on their expertise, knowledge base and experience.

Although it was clear the cloud was going to have a disruptive impact on our business model, Ron Baker would always explain: it’s not the technology that’s going to make value pricing the way to go, the value’s always been there.

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Accounting Disruptors Are Heading Your Way … with Deep Pockets

If you’re not ready to make your move, you’d better hope your competition isn’t.

By Jody Padar
The Radical CPA

Change isn’t just knocking at your door; it’s kicking it down. We’re in the middle of a major transformation because of new players, cutting-edge technologies and a financial surge. The rules are being rewritten before our very eyes.

MORE: 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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If you consider accounting a giant chessboard, many players are making strategic moves. You have the old-school firms on one side who are navigating a rapidly changing landscape. On the other side, you have the new-school disruptors. These innovative entities are reshaping the industry with cutting-edge technologies and fresh approaches.

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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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Stop Looking for Talent that Does Not Exist

Change processes to pivot from people problems. 

By Jody Padar
The Radical CPA

If you’ve posted a job for an accountant in the past few years, you know people are hard to come by. The number of responses you received was likely down if you were lucky enough to find any at all.

MORE: Advisory Work Must Be Priced by Value, Not Hours | 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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According to a recent AICPA Trends Report, the number of people graduating with a bachelor’s degree in accounting is down, and we’ve seen a steady decline since 2015. All this while half of U.S. CPA firms have increased the number of new graduates they want to hire. A lot of us are looking for staff that simply does not exist.

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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.

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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Technology Helps in More Ways Than You Think

Retention? New clients? Check, check.

By Jody Padar
The Radical CPA

The owners of “very prepared” firms say “technology is having a very significant impact on my firm,” vs. the less prepared who view technology as a utility, a mechanism for greater day-to-day efficiency. “Very prepared” firm owners report seeing and using the technology as an enabler of better business results.

MORE: How to Be a Small Business Advisor | Center Your Firm Around Your Client | Commit to Change | Your Client Base Is Global | Ready for Change, So Now What?
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This is exactly what the radicals believe and implement. Technology has already disrupted our core and we are proactively adapting to the changes it has created.

bar chart
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How to Be a Small Business Advisor

Two businesspeople meeting over coffeeYou’re more than what you think you are.

By Jody Padar
The Radical CPA

To me, to be the most trusted business advisor is to be a small business advisor. That’s what my customers see.

My firm serves small businesses from the ground up to $10 million. Yes, we look at their numbers, but practically speaking one gains a lot when you’re in their financial underwear drawer. Most of our conversations are around their questions. It’s a natural extension of the work we already do – financials, taxes, payroll, cash flow and forecasting.

MORE: Center Your Firm Around Your Client | Commit to Change | Your Client Base Is Global | Ready for Change, So Now What?
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These people are not asking complex tax questions. They’re asking about IT, human resources, general licensing, and for help with some decision-making. We’re small business consultants.
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