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Comparing your prices can be damaging, and by comparing yourself to other businesses you might just end up working harder, not smarter.
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Stop comparing your prices — its damaging your business
12 July 2017
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10 minute read
So we live in a world where no two things are the same. We try to replicate products, experiences and services but alas nothing will ever be a perfectly replicated match. Apples are a great example. Granny Smith green apples in a basket will all look the same or similar on the outside. Green juicy skin with a nice shine. But under the skin you'll find the core piece of the fruit will differ based on the conditions the apple has been through. Some will be bruised, some dry, some ripe. But on the outside they all looked the same, so our outsiders' view would allow us to perceive that these apples should all be the same if not similar.
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Now we can all agree that no two bookkeepers are the same. Every bookkeeper will have a similar but slightly varied education paths, some have taken on their BAS registration, some have not. Others will have had great mentors to teach them the ins and outs of bookkeeping and others will have had mentors that left much to be desired. We play the cards we're dealt. We control what we can control. The service a bookkeeper/BAS agent provides to their small business clients is a direct reflection of their circumstance and education.
Pricing your services as a BAS agent or bookkeeper not only needs to reflect your level of expertise but much much more. Lucky me, I've had the opportunity to travel the world talking about value pricing. But the main concern or push back I get, in almost every seminar I've run, "Trent, how will I know what to charge my clients."
My first answer is always, "Well you won't know... yet."
You see, value pricing is less about picking a random feel-good number that you and your client agree on and more about you knowing your overheads, your capacity and what this job is worth to you and then pitching that to your prospective client.
The problem is when this gets all too hard for the bookkeeper. They get overwhelmed, overthink it and then start to regret even contemplating value pricing. They do one of two things, revert to hourly billing (Don't do this!) or they start looking at other bookkeepers and comparing their value pricing packages. Now, don't do this either but let me explain why.
Comparing pricing and using it as a benchmark with only an outsiders' view can be really damaging to your business. Why? Because no two bookkeeping businesses are the same. Different overheads. Different circumstances. This means you will have different financial goals you need to be hitting week-on-week, month-on-month.
You need to value price based on what the job is worth to you, be mindful that this is also creating a value perception with your new client. If a client is giving you push back on your proposal. They either A) don't understand what you do, therefor they do not value what you're doing or B) it may not be within their budget and therefor probably not the client you want to pick up.
My ultimate tip is to sit down and review your costs and set some financial goals per week, per month, per year. Write it down! From there figure out how much you earn on average per client and what your desired average is. You need to be a wizard at your own numbers. Know your stuff and then value pricing will become a breeze. And lastly, practice makes permanent. Don't give up!
Trent McLaren, head of accounting and strategic partnerships, Practice Ignition
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