How to put your price up!

How to put your prices up

Pricing is a regular discussion point with bookkeepers. Increasing prices can be challenging – for any business. Earlier this year a group of Smart Bookies discussed ‘Increasing your prices’ in a Smart Books forum on this sensitive topic. Here are some of the key takeaways:

Pricing strategy
Have one! Consider your current pricing and how fees are determined. Research the different pricing methods (value-based, cost plus, competitive) – you could consider a hybrid approach. Know what your base costs are (fixed operating costs, team costs, your own time, etc) and track these regularly. Make sure you review this strategy often – and consider factors other then price. Look at productivity, client satisfaction, internal fulfilment – you get the idea! Your pricing strategy should align with your key messages – measure it against your website content and other marketing.

Know your VALUE
As you grow and develop your business and your own skillset your value grows too.  Take note of what gets good results AND gets you excited. Do more of the things that you love doing Don’t be afraid of sticking to your rates and watch for requests or extra work that wasn’t part of the original plan. Be aware of the market rates in your industry too – consider where your experience level sits within these benchmarks. Look at the benefits you provide from being professional, knowledgeable, and operating with integrity with your client’s best interests at heart.

Review – evaluate – refine
Know your own numbers and profit margins. Review these regularly. Pay yourself! Your approach should reflect your own business objectives and personal working style. Over time your service offerings will likely change. This can mean discontinuing with some clients where there is no longer a ‘good fit’. Cultivate relationships with other professionals that you can refer these clients onto. You don’t have to do what you have always done – change can be for the better! Survey your customers – this can provide really useful insights, particularly on identifying the value benefits you provide. Your team can contribute to this also – they’ll let you know who the dream clients are to work with, and those not so much!

Tactics for price increases
Armed with your pricing strategy be clear and confident with using your updated rates with all new clients. Don’t be tempted to discount. (Often the business owner is the handbrake on price by offering discounts or lower fees when the client may be happy with standard rates.) With legacy clients instigate a review. It’s OK to give an initial higher price increase – explain they have had a bargain up until now! Or you could consider a staggered approach to move clients onto your new market-based rates over the next few months. Explain the value you bring to the work you do from your continued learning and development, and the professional memberships and standards you have. Consider having a couple of clients who would be happy to act as a referee for you- this can be really useful for big projects and high-priced one-off jobs to highlight your value.

Having confident conversations
Ask yourself (with hand on heart) if you are happy with what you are charging. If not – take action! Before sitting down with the client be prepared. Have your review results noted and analysed. Include your own feedback and that of your team as well as the client’s to form part of the discussion. Ideally have the meeting face-to-face. Where this isn’t always possible conduct over the phone or virtually and have an agenda that you have provided prior. This meeting should be about your services and related performance, not just about your rates. Effective listening and asking open-ended questions helps – and could well provide new opportunities or more effective ways of working together. Set good lead times for any resultant fee increases – eg. advise in February for an increase to take effect from 1 April. Follow-up in writing as soon as possible after the meeting for the key points, resultant changes, and next steps.

Pricing is a critical element of business success. Spend time on getting this right and achieve real job satisfaction, happier clients, and deeper professional relationships – as well as improved profitability. Get to it!

Price is what you pay. Value is what you get.

Warren Buffett – Businessman, investor and philanthropist

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