The pricing-income-time
-trap that traditional marketing of Accounting services sets
up for us
 Pricing Accounting
services isn't all that easy. Justifying the hourly rates is
a constant pain for most Accounting firms.
To say the
least, it is embarrassing to have to EXPLAIN hourly billing
rates.
Whether or
not a client actually enquires or complains about the rates,
it is known to be a top item of complaints among business
owners. Any survey ASKING about this will show just how fixated
business owners are on "high pricing of Accounting services."
But WHY?
Do they
want you to work for NOTHING?
Or, do they
so NOT value Accounting service that they consider it not worth
paying for?
Well, I've
got good and bad news for you.
The good
news is that there's nothing wrong with what you deliver and
the price is not too high.
The bad news
is that we've been on the wrong road with pricing of services
for quite a while, due to traditional marketing methods.
We are selling
the WRONG thing and therefore we're in a PRICING TRAP that cannot
be escaped by use of traditional marketing principles.
Which businesses
complain about the price of Accounting services?
Not every client
or company feels bad about the pricing of Accounting services.
Roughly, one
could compare the reaction to hourly rates of Accounting firms
to two categories.
Medium sized
companies with "professional-buyer attitude" don't
usually complain.
Instead, most
complaints or negative viewpoints on the pricing of Accounting
services come from smaller companies - those with the owner personally
running the company and paying (or authorising the payment of)
the bills.
Unfortunately
this is also our bread and butter: SME companies are the biggest
category of clients for any Accounting firm.
To disregard
the issue of making your pricing attractive to owner-run small-to-medium
sized companies would thus cause the problems to continue with
the MAJORITY of your existing clients - and it would, of course,
be the same story with NEW clients as well.
Traditional
marketing of Accounting services - taking the wrong route
One can hypothesise
endlessly on the cause of these complains targeting the price
of Accounting services. It is all too easy to think that people
are naturally unappreciative or mean.
It is all but
impossible to set precise mathematical values for appreciation.
Yet, there
are some fundamental building blocks to creating value
and a sense of receiving fair exchange for what one has
paid for.
Let's look
at what creates the feeling of having received ample exchange
for moneys paid.
First of all,
it's not the same thing than what we see as a "good bargain."
A good bargain
is a one-time happenstance wherein we get something of known,
well-established value at much lower cost. While we TAKE these
bargains whenever we can, the motivation behind them is to achieve
ONE-SIDED GAIN and the motivation is anything from commonsense
frugality to just straightforward greed.
To utilise
the concept of a "good bargain" means you need to EVOKE
that feeling of "here's an exceptional opportunity to
get one-sided gain."
This concept
is easiest to recognise in consumer marketing. In essence, the
buyer is tempted to "STEAL" something at a "ridiculously
low cost." Supermarkets spend untold fortunes in advertising
these bargains - and often sell the item itself at a LOSS to
the consumer.
These so-called
"loss-leaders" - items sold at a price lower than what
the supermarket pays for them to the wholesalers - are used under
the assumption that it will pull in new clients that will then
REMAIN faithful to that chain of supermarkets.
But will it,
really?
If someone
is offered a product or service at a fraction of its cost - with
the actual cost well known to those it's offered to - then is
that going to lay a healthy foundation for mutually beneficial
trading?
If you encourage
him "to steal" something of value at
half-a-price or less, will it really help to build a better
client-relationship?
Will it increase
or decrease the perceived value of the item of sale itself?
Or - will it
only serve to REPEL clients, inadvertently turning them into
"unintentional thieves" as they KNOW they're not paying
the true exchange value of what they get?
The "bargain
lure" is most prominently used in consumer marketing.
But, unfortunately,
it is also the approach traditional marketing of Accounting
services is BASED on, regardless of how well-refined the
messages.
It is the basic
strategy that it all builds on.
And that's
how the traditional marketing approach creates a cul-de-sac of
kinds - a glass ceiling for the pricing of Accounting services.
The business community has a high awareness of the "fair
price" of Accounting.
This approach
doesn't establish any VALUE at all.
Instead, it
sells LOW PRICE, fixating the buyer's attention on PRICE, not
on the value of the service itself.
The fundamental
mistaken assumption of traditional marketing strategy
is that your target audience already understands the full
value of Accounting services.
But they don't,
do they?
Establishing
high value for your Accounting service
What establishes
value in a person's mind for something?
Sense of value
is, of course, a subjective viewpoint. What is valuable
to one person can be worthless to another.
Value is something
each person decides independently. It is attributed to
your service by way of self-determined decision of a potential
client.
The traditional
marketing of Accounting services assumes the target audience
has, at large, already attributed great value to the services
of an Accounting firm. Only, they haven't.
Failing that,
the traditional marketing advises us to TELL the prospect that
our service is valuable. But will a business owner meekly ACCEPT
this self-asserting claim from us?
Doubtful, isn't
it?
No - what works
is something totally different.
It is a
PROCESS through which you need to take each and every potential
client.
It is
YOU whose task it is to allow that sense of value become attached
to YOUR services.
Don't expect
your prospect to HAVE that understanding conveniently pre-installed.
The concelt
of VALUE could be defined (in its ideal state) as:
"An
idea of worth, usefulness, and desirability associated with Accounting
services — and the expectation OR understanding of the benefits
that follow from receiving the service."
Well, you KNOW
all of this, of course. But how would you define the concept
of "Accounting services?"
How would
you verbalise the valuable in what a client receives?
Interestingly,
very few of us actually ever write down and define WHAT exactly
IS VALUABLE in what we deliver.
And let me
assure you that unless WE know what it is, unless we USE that
precise definition in marketing... it isn't going get communicated.
It won't be
understood by our target audience. Our CLIENTS are definitely
not going to figure it out about our services!
So, let's explore
this a little. Let me suggest TWO alternative viewpoints
of what a client receives from Accounting services.
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1. |
Accurate, time
information enabling the business owner to make correct decisions,
find and handle problems when they're still small, and utilise
positive trends right away - all resulting in additional monies
SAVED and EARNED if compared to NOT having this information.
Additionally,
taking care of the mandatory keeping of records and filing of
taxes. |
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|
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2. |
Taking care of
the compulsory paperwork that authorities mandate businesses
to report. |
Now - which
of these two would be closest to what YOU consider
the valuable item of exchange delivered to clients by
Accounting firms?
And which of
these two would be more likely to correspond with the awareness
level of an average small business owner?
All right -
indulge me for a while longer.
Let's suppose
that number two above would really represent the level and extent
of the AVERAGE client's thinking. After all, he probably hasn't
figured out all that thoroughly what is valuable in his OWN service
to HIS clients... so one cannot expect him to bother figuring
out the "valuables" of YOUR service, wouldn't you say?
To establish
value, we must first DEFINE what is valuable. To this, there
are again two sides.
One is figuring
out the OBJECTIVE valuables - those that the service has the
potential to deliver.
The second
is the SUBJECTIVE communication of these values. With this, I
simply mean that we must use the values, wordings and concepts
of our TARGET AUDIENCE in explaining those objective values to
them.
For if this
step is missing, they just won't understand it,
will they? And if that's the case, they won't BUY your service
- or, if they're already clients, they won't SEE the value of
it.
In establishing
value, EVERTHING hangs on whether or not a business owner UNDERSTANDS
what he gets.
Significance
plays such a decisive role in marketing, selling, and
delivering of Accounting services.
It's all
in the mind of the receiver - if he doesn't SEE value, if
he doesn't UNDERSTAND the usage and benefits of it... then there
is NO value in it for him.
To create
value for your service, you need to BUILD IT UP with each
potential client individually.
(And, to GET
potential clients to build it up with you need a very different
approach from the traditional marketing of Accounting services
- see the article on selecting a prospecting system!)
You build
it up within the mind of the potential client.
In other words,
you don't TELL him what's valuable - you ask him questions
so as to get HIM to invent that value.
Let me say
in NO uncertain terms that the average business owner's LACK
of familiarity with Accounting & finance makes it impossible
to realise the value of your services directly and without your
help.
It's a fatal
mistake to assume HE understands it just because YOU do.
We are talking
light-years and megawatts of difference here between your expertise
and his!
Thus, it is
vital that you BREAK DOWN the "principal value definition"
of your services.
The above definition
1) breaks down to about 30-40 SUB-VALUABLES - smaller
values and benefits to be realised by potential clients - and
you need to take that "scenic route" if you EVER want
it to result in "getting the overall picture!"
Now, here's
a vitally important piece of information on that:
In order
to make these points TRUE, you have to get each potential client
to INVENT these sub-values on his own.
Significance
of worth, the concept of value is a subjective thing. It is a
very PERSONAL conclusion which can only be born in the mind of
the person himiself, "invented" BY himself.
You cannot
do his thinking for him.
You cannot
just TELL him what he should think and thus, try to bypass the
business owner's own (often time-consuming) thinking process.
That won't
produce the goods. He MUST go through it in his own mind, he
has to focus his attention on each point and EVALUATE the issue
on his onw in order to reach at those conclusions which you already
know.
There's
NO substitute for personal learning when it comes to understanding
the VALUE of something.
Don't assume
that just because most people agree on (amazingly FEW) physical
things being of high value - Rolls Royce, Rolex, other such status
symbol trademarks - that this would mean people would agree on
the value of Accounting services.
They don't.
The vast majority of business owners don't understand what you
do. They DO associate you with mandatory taxation and Accounting
regulations and, consequently, there's NO HOPE that the average
business owner would automatically assing a HIGH valuat to Accounting
services.
Quite the contrary,
in fact.
Accounting
service is a classic example of something whose value depends
almost TOTALLY on the individual's own experience, data, understanding
and opinions.
For there to
BE ANY VALUE attributed to Accounting services, the person
MUST have thought it out on his own.
But see - that's
not how Accounting services have traditionally been marketed
in the past few DECADES. The traditional marketing strategy IS
nothing but giving people those "already-thought-out facts"
and then spending endless hours in trying to JUSTIFY these claims.
The truth is
that very FEW business owners HAVE any personal
value attached to Accounting.
Instead, there's
a tremendous VOID where "value attributed to the
service through personal evaluation" should be!
The PERSONAL
value-setting does not exist with most business owners.
In English,
this simply means that nobody ever bothered INTERVIEWING them
with pertinent questions allowing for this evaluation to take
place.
And where a
void on VALUE exists, the attention is fixed on mostly NEGATIVE
data instead.
Which brings
us right back to the COST of Accounting services - and the hourly
rates in particular.
Knowing this,
it isn't really surprising that surveys show a LOW VALUE attributed
to Accounting services in general and/or a consideration that
these services are quite expensive.
That doesn't
mean that Accounting services would be bad.
But it definitely
shows that there's SOMEETHING MISSING in the service. Accounting
firms offer an identical basic service (as understood by clients)
and it's hard to assign value to something which is so abundantly
available everywhere.
And it also
shows that very few business owners have been given the chance
to EVALUATE these services on their own terms. Or, put another
way, very few have been taken through a process that allows them
to reassess the value of Accounting services.
"Expensive"
- translated - means that a person hasn't been able (or hasn't
been allowed, either or) to PERCEIVE the VALUE of what he pays
for.
Thus, he compares
an understood value (money) to a hazy image of missing values
(Accounting services)... and that's an equation that can only
bring one result:
It FEELS expensive!
In other words,
you need to go through all that is valuable in your service with
EACH POTENTIAL CLIENT - and do it in form of questions that will
get him to THINK ON HIS OWN and form the opinion of the value.
You don't have
to control WHAT he answers - or WHERE on that "value-scale"
he sets each of those smaller parts of your service.
The "magical
trick" is simply that he ASSIGNS A VALUE to each of those
30-40 smaller parts.
See, he hasn't
DONE that before - he has NEVER accredited any of these smaller
parts of your service with the concept of VALUE.
That's the
trick.
Doing this,
he will figure out the "HOW valuable?" of each smaller
part. It doesn't really matter HOW HIGH he sets the value of
them.
What matters
is that he SETS a value to where "no value" previously
existed.
The assignment
of ANY value is a HUGE improvement when starting from nothing.
A value is much better than "nonexistent" or "not
even aware that this thing existed" or "never thought
of its value, actually."
It makes
a tremendous difference!
But that still
leaves you with the problem of how to tempt anyone to CHANGE
Accountants.
I mean... if
you help the business owner understand the value of Accounting
services, he isn't going to CHANGE Accountants. Instead, he'll
be much more satisfied with his current one, now that he understands
the value of the service!
And we want
freedom from hourly rates combined with a higher profit margin,
right?
So, how are
you going to get him to CHANGE over to you AND PAY MORE for...
what?
For getting
exactly the same service he already receives from his current
Accountant?
Fat chance,
right?
Right.
If you want
to achieve freedom to price your services at value, you must
also get yourself a UNIQUE basic service — something that
includes compliance services but also offers exactly what the
business owner WANTS but can't get from his current service provider.
Offer what they
WANT MOST — a service others don't have — and you can
name your
price
To tempt anyone
to change over to your firm, you obviously have to offer him
something he isn't GETTING from his current Accounting firm.
But how?
Firm to firm,
the basic compliance services are really IDENTICAL as seen by
clients. Obviously, you're not going to be able to price your
services freely — let alone get anyone interested in changing
Accountants — unless you can offer something totally unique.
I've got good
news for you; such a service exists already. It has been extensively
researched and piloted... and it offers a freedom from hourly
rates while allowing you to increase your profits with an average
22 percent.
This service
is built to fulfill the researched wishes and needs of businesses
to the point.
It is a
service that the majority of your target audience WANTS - but,
amazingly, they think it isn't AVAILABLE anywhere!
It is the way
to separate your income and profits from the hours spent earning
for it.
It is truly
your hidden gold mine.
The new way
of Accounting is within the INFORMATION INDUSTRY. Instead of
selling mainly SERVICES you should be selling INFORMATION.
That's what
business owners uniformly want - to understand their finances better,
to be able to USE that time-sensitive information that monthly
accounts provide.
The only problem
is they don't understand it.
They need a
translator.
To them, it
is PRICELESS.
And to you,
it will be very, very profitable!
CLICK HERE
to read about Monthly Financial Consulting Service, the uniquely
desirable basic Accounting service that allows you to name your
price!
OR
CLICK HERE to
get a briefing on the contents of Modern Accountancy Marketing
& Sales Course!
Alternately view the presentation
of our famed THEME SEMINARS on various subjects of accountancy
practice management to see how you can add value to your
services and start value-pricing!
Best wishes
Harry Kafka
HDK
Consultants Ltd
32 Manning Close
Richmond Square
East Grinstead
West Sussex RH19 2DR
United Kingdom
Tel. (01342) 328 116
CONTACT
FORM
E-mail: info@accountancymarketing.co.uk |