We’ve gone from an era where accounting firms never said anything on their websites about the prices of their services or packages to one where it seems every second firm’s website talks about their packages and prices.
There are right and wrong reasons to display packages and pricing on your website. However I fear too often is like putting an veneer over the firm without actually changing anything within and all that results is increasing fee pressure. Let’s explore the reasons.
Wrong Reason – Copying Software Companies
Many accounting firms are mimicking the the style of Software as a Service (SaaS) companies. It could be that the principle of having people sign up to packages online, put their payments details in and that is all is seen as the holy grail business model. But the reality is that a professional accounting firm is nothing like a SaaS company and nor should they try to copy their pricing strategy.
Many of the SaaS companies are sophisticated pricers. If you have a look at salesforce.com pricing page you will see many of the tactics of pricing at work. (Using packages is just one of them).
But what is really happening with Saas companies is that they are using packages to segment their customers and then price that segment. It is not used to just get people to select the middle option. The price discrimination tactics of Saas companies are totally appropriate where they are selling products on a large scale.
When you publish package pricing you remove your ability to maximise your ability to price discriminate. Your force yourself to make significant judgements on the value you propose to create for your clients before you’ve even had conversation with them.
Accounting firms have the option of pricing each individual client. The real power comes when you are pricing the client and not the service. That means that you can take full advantage of price discrimination and the subjectivity of value. This means that a service that you perform for one client can be significantly more valuable than to another client therefore your price should reflect that value.
Wrong Reason – Scale the Business
Another justification given is that through having three packages and disclosing the prices allows the firm to be scaled. This is probably one of the greatest myths that are out there about this aspect. There are companies turning over hundreds of millions of dollars internationally that price the client and not the service.
Probably the biggest example is McKinsey the world biggest consulting firm prices the customer. Leverage is most definitely doable with a price the customer approach rather than a price the package approach.
Also inherent in this statement is a focus by the firm on efficiency over everything else. The value lies in the effective solutions. That is what the customers want. Efficiency has a natural limit. Effectiveness has no upper limit.
Wrong Reason – Affordability
A firm that publishes packages with prices is essentially striving to compete on price. Price is a signal and thus the firms are sending a message through this action. If your packages are very similar to other firms then the result will be increasing price pressure on your firm. I have seen two firms (who will remain nameless to protect the guilty) where the packages are identical except one firm is over double the price of the other. There is no doubt that the more expensive firm will have their prices put under pressure.
Wrong Result – Undervalue your expertise.
As accountants you have skills in a number of areas including the core compliance work, taxation work and accounting work. But as accountants to small businesses the world over you also have the ability to provide much more important value added services. You can guide your clients on a journey of transformation. This insight you are able to provide should not be put into some generic package because it will just ensure you have undervalue and underpriced the most important part of what you can do.
Price the Customer
As a professional you have the opportunity to price the customer. This way through the process of a value conversation you can tailored the options directly to that specific customer and price it accordingly.
Lets make it clear I totally support the use of options or packages. But only when they have carefully discussed with the client and by pricing the customer. This means that you can still have a small number of packages for the sake of efficiency but these are tailored to what is of value to that customer.
By pricing the customer you are applying one of the key aspects of value pricing. Value is subjective and all prices are contextual. For you to achieve the premium pricing and maximum profitability it lies in pricing the customer.
Should you have anything on your website about pricing?
Given I have shown why I don’t like packages with prices on the website you might be forgiven for thinking that I don’t want anything mentioned about pricing on your site. There are however good reasons to have pricing guidance on the site. This is not exact prices but rather a page that sets the expectations around the prices.
There are two good reasons to consider this :-
- Demonstrate exclusivity. Price is a signal to the market and you can use price as a support to your positioning.
- Qualifying clients. Given the tools and techniques available you should be attracting traffic to your website. Thus you can use the pricing guidance as a means to sort out the wheat from the chaff. Those who take the next step will thus have a reasonable expectation of the prices they will have to pay.
Conclusion
Accountants have an incredible opportunity that is not available to Saas companies. You can guide your clients on a journey of transformation. You can have conversations with your customers. This then means you have unique opportunity to take advantage of the ultimate in price discrimination and price the customer. A value focused firm is a firm that will attract the key customers who want to pay more. More profitability and importantly freedom lie in pricing based on value than pricing based on products.
Steve Major is the founder of Pricing Power. Pricing Power is the ability to get the price you deserve for the value you deliver. We help accountants, bookkeepers and advisory businesses build amazingly successful businesses. Get our Free 7 Part Email course – Command the Prices you Deserve