It feels good to be paid what you are worth but finding the optimal price point is not as simple as it sounds. Aside from working out how long a particular task will take to complete, it’s also about how much value the completed task will add to a client’s business.
Sage has published a practical guide called “Accounting for change” which offers tips and advice to help accounting practices navigate digital disruption. The guide proposes that rather than focusing on being service-based, such as doing the numbers and completing annual audits, accounting firms need to shift their mindset and practices towards providing a more personalised and engaging client experience. This involves moving away from the transactional relationships of the past and offering a strategic advisory service around areas such as business development and risk management, amongst many others.
Cloud accounting solutions have made access to real-time data possible and it is the accountant’s job as a trusted advisor to assist their clients to use this data to extract insights about their business. These insights will help to improve business operations and processes, further solidifying the trust relationship between accountant and client.
When developing a new service offering, part of the process is deciding how to price it. Practice Ignition discussed pricing with John Thompson of F3C Advantage and offered the following valuable advice.
What do clients want from accountants in terms of advisory?
- To understand them and their businesses.
- To be proactive, coming up with innovative ideas and solutions.
- To show that you care about them and are committed to them for the long term.
The bottom line is that advisory services should be all about your clients.
How should accountants price their services?
Most firms charge a fixed hourly rate, regardless of the type of work being done. The hourly rate is based on how senior a staff member is, rather than on the value of the work itself. Business advisory is seen as a premium service which allows for a higher rate to be charged, typically from 20-50% more, according to Thompson. A potential strategy is to start out charging a small premium and then to increase it over time as your expertise and track record develops.
Success fees are an additional incentive on top of the usual rates charged, and are only billable if mutually agreed milestones are exceeded, e.g. growing the bottom line, increasing the value of the business, etc.
How should accountants package their advisory services?
Thompson proposes the following elements for a basic Advisory Package:
- Initial planning session (one day)
- Regular structured meetings for progress updates, implementation plans and reviews (monthly or quarterly)
- Annual planning session
The basic package provides a recurring income stream and a planning cycle from which additional project and consultancy work could materialise. A higher-level package could include profit improvement, risk management and team development sessions.
Advisory services can be offered to your existing client base as an additional value-add or offered to new clients as part of a broader offering or even as a standalone service. A client that starts off with only your advisory services has the potential to become a full-service client as they build trust in your expertise over time.
Thompson explains that client-centric pricing acknowledges that charging different clients different prices is not only good for your profits but is also beneficial for your clients. Each client is entirely unique with vastly different goals and aspirations, so your pricing should reflect these differences. When you build strong relationships with your clients, they will not only value your help and support, but may also be willing to pay more for your services.
FlexiFund It is a fund collection software that will provide your clients with flexible payment options while securing the full payment for your professional services. The software automates your entire funding and payment process, allowing you to control more transactions in less time and with less effort. Your margins will be positively impacted as you maximise both time and money.
Get in touch to find out more about FlexiFund It Fee Funding Software, a cloud-based, easy-to-use solution developed to serve accountants and accounting practices.