9 big pricing mistakes accountants and bookkeepers make

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These are the mistakes people in the accounting profession make all the time. You need to avoid them, it’s costing you money.

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https://youtu.be/xFSAf0hLy_0

The first mistake is we’re too cheap. We have to rectify that by putting our prices up. Second mistake is copying the competition. This is crazy, because most accountants are too cheap. Most bookkeepers are too cheap. And yet when we try to win new business, we look at what the competitors are charging and use that as a basis. But if they’re too cheap, then it’s crazy to copy them. But all too often, that’s exactly what we do. If it’s a prospective client that we we’re trying to win them from another bookkeeper, another accountant, we usually do everything we can to try and find out what is it they’re paying their current professional right now. And then we’ll use that number as the starting point for coming up with our price.
Sometimes we compound that error by going in at a lower price, which is crazy when we think about it. Because why are they talking to you? Because there’s something about their current accountant or bookkeeper they are not happy with. So, we should be more expensive than the existing accountant.
The third mistake is putting prices on a website. I worry about this. It’s an increasing trend in the profession of putting prices. I think it’s because of this misconception that fixed pricing and value pricing are the same thing, and they’re not. Fixed pricing is very often the way it’s done, fixed pricing is just another form of cost plus pricing.
We shouldn’t put prices on a website because I ask people, “Well, why do you do that?” And they tell me, “Well, I want to put the price on there to win more business.” Okay, so are you going to win more business by having high price on your website or low prices? I’m always told, “Well, low price, of course. If I put high price on my website, nobody will ever contact me. So we put low prices on our website.” What that does is that attracts the wrong type of client. That attracts the price by the people that want to shop on price.
If you want to get better prices, higher prices, if you want to price based on value, you have to have a conversation with the customer. Number four pricing based on the hour. We have to stop doing that. Time based billing is crazy. It’s crazy for a whole host of reasons. But the first one and probably the only one that really matters, I think is the fact that it’s not fair on the customer. The customer doesn’t know. We know from research that customers hate not knowing the price right up front. Yet that’s what we get with pricing based on the hour, the customer doesn’t know until the work is finished, and the time sheets are printed out, and the hours added up, and then we present a bill. It’s always a surprise. It’s a shock. Some people call it ambush billing.
Customers hate it. For no other reason, we should certainly stop doing it. There are many many other reasons of course as well, but customers hate it. Another one linked to that is quoting hourly rates. That is mad. You will know this if you’ve ever done it. If you ever give somebody your hourly rate, they always say, “That’s expensive.” The reason for that is because there’s no value in an hourly rate. Nobody sees the value in that, nobody comes to you to buy an hour of your time. But what happens is when you give that number, we learn from price psychology is that at a subconscious level up here when we’re customers, we always make comparisons. We want to compare prices with something else to see if it’s a good price, a bad price, about right.
If you quote an hourly rate, then the customer’s mind is going to go away and compare it with something else. Usually, almost every time, something tha

Comments

PAK BOOKKEEPING SERVICES says:

Please sir let me, demand advance payment from client is a good habit?? Specially if we as a new bookkeeping firm.

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