In just over a month, crowds will be lining up at stores at midnight on Black Friday to get that $100 widescreen television or $10 video games. Why are these events worth our time? Plainly put, everyone loves a great deal. We are always looking for a bargain, to pay less for the things we buy.
Because of this love of deals, many accounting firms consider offering good deals and promotions. While it seems like a logical way to bring in new business, it actually may be counterproductive to your future success. How can you tell if offering discounted accounting services is right for your business?
The Upsides of Markdowns
The biggest benefit of discounted services is clear. Customers love them! Many business owners also see an increase in business when they offer a loss leader or a new customer deal. Accounting and financial services are no exception. If you are offering the lowest prices around, you will be the first choice of clients who are oriented toward cost. In addition, many business owners offer discounts to clients when they have been inconvenienced or otherwise are disappointed with their delivered services. In these cases, the discount can make the client more likely to stay with your firm.
When Discounts Go Wrong
In the case of most discounts, the goal is to convert the potential client to a full price payer. However, this does not always happen. In many cases, people who choose a firm due to prices will eagerly go to another firm when you are not offering the lowest price. They will never "convert" to higher profit services. In fact, many clients will perceive your services as being worth what you initially charged and feel ripped off when you ask for a more reasonable rate.
Offering discounts also trains your clients to see your services as less valuable. It gradually lowers the amount that people are willing to pay for accounting services, the way Walmart has made $4 t-shirts seem normal. The kind of clients that you seek will be looking for more than a great deal, but rather a relationship with an accountant will can provide the high quality services they seek at a reasonable (but not bottom barrel) price.
A Balanced Approach to Discounted Accounting Services
When are discounts right for your business? There are a few times when slashing prices actually can help your business rather than undercutting it. The first case is when you offer a better than average deal to an existing client who upgrades to new and more lucrative services. This deal can convince them to try a new and useful service that they might continue to use. Because they are an existing customer, there is no need to worry about them firm hopping when you charge a normal price.
A second case where discounts can be beneficial is when the discount is offered as a reward. Many accounting firms in new york, for example, offer discounts for referring new clients. This often leads to an increase in your client load and profit, so these discounts more than pay for themselves. There is no way to abuse this kind of discount, as referrals are a behavior that most firms are willing to reward repeatedly.
We all want to offer a fair deal, one that gives our clients the best price while allowing us to maintain a good profit margin. Discounts, however, are rarely the right choice. Most accounting firms are better off asking for a fair price from the beginning and taking steps to reward existing clients.
Gary Kaplan’s desire for excellence shows in his training, experience and service he provides as a top rated Boca Raton CPA. He completed his undergraduate degree at Nova Southeastern University. He went on to earn both his Masters in Accounting at Nova Southeastern University and his Masters in the Science of Taxation at Florida International University. Gary has been practicing as a Certified Public Accountant since 1997, attaining his expertise in all aspects of accounting, business and personal tax and strategic planning. He listens to each client and helps them achieve their own, unique goals. Gary values educating others and giving back to his community: he has served as an Adjunct Professor of Accounting at Florida Atlantic University, and gives accounting presentations at St. Thomas University School of Law. In 2013, Gary Kaplan received his certification for retirement planning and is now a Certified Specialist in Retirement Planning™ (CSRP).
Gary is licensed to practice in Florida, Maryland, Utah, New York and Washington D.C. He has gained a reputation as a professional who provides quality work, value and personal attention to his clients.