Read on Practical Pricing for Accountants (Part 1) here
The key point in all of this then is to ensure that there is a definite value affixed to the service. Who better to fix the value than you – the service provider? A general rule of thumb is to never let the client dictate the value they can get from the service. As a service provider, one should take ownership of the value of the service and then pass on the benefits and importance of these values to the client. If you’re finding it difficult to fix a definite value on your service, conduct this simple exercise. Imagine that you’re building a house: the foundation should be the important base that will ensure that the structure is sound. This is the value you place on your service. Most service providers make the mistake of placing their service as the foundation because it is the practical choice. However, by ensuring that the value of your service is exactly what your client requires and giving your client added value, you’ve pretty much already covered both the service and value aspect. Always remember that value of the service is pretty much the foundation of your business!
The next layer of your business is to ensure that your client perceives the value of your business exactly as you view it. This is slightly difficult but not impossible. Think about the fact that just as you want to maximize profits, your client would ideally prefer to pay less costs for the same service. Thus, your task is to change his perception of valuation of your service. When explaining about the value of service to your client, put yourself in his shoes. Something that seems to be apparent to you in terms of value might not be the same for him. If you are unable to convert him to your way of thinking, you’ve pretty much lost the battle. One tip that could help you would be by visualizing yourself as a client and think about what you would want to know when meeting with prospective service providers. Unless your client is able to be on the same wavelength as you with regards to the value of your service, he will definitely not be willing to pay a premium price for your service.
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The final layer of your business in terms of pricing strategy would thus be to fix a price to your value and service. Again – if you are still utilising the method of billing by hours, throw that out of the window. Your pricing strategy determines whether you will have the benefit of satisfied customers which in turn develop into repeat customers in the long term. Thus, once you have laid the foundation of ensuring your business has good value and that your client perceives that value in the same way, fixing a price to the value should be relatively pain-free. This of course is a chapter in itself as there are many methods in which you can fix the price for your valuable service. Some service providers utilise a pricing strategy that includes guarantees. This is particularly normal in the law sector where certain practising lawyers only charge clients fees upon winning a case. Then there are other service providers which charge their fees based on the percentage of savings that client has enjoyed upon utilisation of that particular service.
Continue to learn more about Practical Pricing for Accountants (Part 3) here