Technology is changing how accountants do business, and progressive firms are changing how they charge for that business too. Accounting firm marketers can play an important role in this transformation.
Consider the business environment today. Artificial intelligence can complete routine tasks – the most leverageable work – that is now performed by accountants and bookkeepers. Blockchain will transform the audit, requiring less time from auditors. Tax preparers will see similar changes. This means that CPAs can spend more time providing advisory services, which bring greater value to clients and makes the firm more future-ready.
Under these circumstances, sticking with the time-honored “hours x rate” formula is a recipe for making less money.
I asked two marketing partners to help me discuss new pricing methods at an AAM High webinar a few months ago: Eric Majchrzak from Tucson, Ariz.-based BeachFleischman and Bruce Walt from Ridgeland, Miss.-based HORNE. Both firms used Advanced Pricing Methods® created by Michelle (Golden) River.
In recent years, marketers like Majchrzak and Walt have promoted their firm professionals as experts, not just technicians. Moving past the billable hour can be viewed as another step in that journey.
Walt says that HORNE has been using APM® for about six years because leaders wanted to get off the time clock and focus on business outcomes, not the task itself and the hours it took to complete it. “We don’t believe that customers or clients care how long it takes us to do the work.”
At BeachFleischman, Majchrzak says the firm’s purpose is to make an impact. “It’s about the power of collaboration and what that can accomplish.” Pricing in advance, in which the client decides how much the service is worth, is more customer-centric than other pricing models, he said.
With APM®, firms explore an outcome’s worth with a buyer before proposing solutions. Once both you and the prospect have a clear understanding of the purpose of the work that is going to be done, and the effect the work will have, you can examine the worth from the prospect’s perspective.
The pricing method involves offering clients three options, which must resonate personally with the clients. Marketers are empathetic and can help customers put the options together.
Before implementing advanced pricing in your firm, what are some steps marketing professionals can take to prime the firm for successful adoption?
Do your homework.
Marketers need to track new business opportunities to calculate their win-loss percentage, average fees, average number of opportunities per month, and services sold. Use this information in the Fore Advantage Calculator to project the impact of Advanced Pricing Methods® on your firm’s new sales. This will help you define what success looks like.
Collaborate with colleagues.
Firms implementing a niche marketing strategy or that has a mature niche, provides a range of services, and are used to being consultative are good candidates for Advanced Pricing Methods®. Therefore, marketers need to collaborate with niche leaders and top advisors to create a pitch for a new pricing method. Identify obstacles and the resources or changes needed for
Transitioning to a new pricing model is an opportunity for marketers and business developers to play a leadership role. Influence your partners by communicating how advanced pricing can differentiate your firm, make it more profitable, and help it adapt to industry disruption.
How can firms measure success related to advanced pricing?
Success can be measured in very specific ways. To date more than 1,300 CPAs have learned the Advanced Pricing Methods® curriculum. Those who have executed APM® have seen consistent results:
- 25%+ increase in proposal win rate when using APM ® 3-option approach
- 60% or more of won proposals are middle or high option (or a hybrid of)
- Won proposals average 1.5-2x the low-option price
Success can also be measured in general ways, including:
- stronger client relationships
- proposing on more than audit and tax
- working as a cross-functional team to package a group of services a prospect would consider worth paying for
- no billing surprises
- reducing “scope creep”
- building trust with price certainty
- identifying the best prospects
- differentiating your firm via niche specialties
- applying a formal, consistent pricing process
New pricing includes a deep dive into the opportunities, challenges and concerns of a prospect. Going beyond audit and tax compliance – services impacted by technology – positions you as much more than a “number cruncher,” but as an advisor who can help businesses and their owners at every point of the business’ life cycle.
This article was originally published on the AAM blog.