For the next few posts, I am going to write about my journey towards Value Pricing. After hearing about it for years, I have decided to fully adopt this highly recommended strategy. Such dramatic change is unsuitable for jumping in feet first, careful planning is required. Keeping that in mind, I decided to interview a colleague who has already taken the plunge, so here are the highlights of my talk with Serah Blackstone-Fredericks of the San Francisco Bay Area, founder and CEO of Books In Harmony :
Jody Linick: Why did you decide to implement Value Pricing in your practice?
Serah Blackstone-Fredericks: I made the switch because I realized the quality of clients is easier to filter down when you are billing a reasonable, transparent rate, subscription fees included. Specific kinds of people look for this. The initial push was a result of the chaos of hourly clients complaining about monthly billing fluctuations, and having to spend time on the phone explaining what I did that made this month’s fees more than last month’s fees. There is a direct correlation between working for clients more and billing less. I realized the switch would hurt me initially, but also that clients looking for the best price are not the best kinds of clients anyways.
JL: How did you arrive at your Value Pricing packages and their rates?
SBF: I have to admit, that part was really hard. I started by researching what other bookkeepers in my area charge. I downloaded pricing guides from CPA firms to see their fees. I had to think long and hard if my new prices were reasonable. I heard at conferences to make Good, Better, Best packages, so I started there. The great thing about working for yourself is, if something doesn’t work, you can change it immediately! Originally, I had an Individual package, which was $100 less than my Basic package. I soon realized this was NOT a good thing to offer; I want clients who can afford the Basic package.
Also, I gave up all my Friends & Family discounts when I realized they are literally making me lose money. They tend to be the ones who want long meetings to review every line on the P&L. It was a really hard thing, but I had to roll out the new packages to everyone. It’s a priority to make sure you’re profitable - you can’t be losing money on certain clients.
JL: How did you implement Value Pricing in your practice?
SBF: I researched how people go about implementing rate increases. Next, I drafted announcement letters three months before the switch, so I had enough time to verify pricing, tone, and spelling. I then sent the letters, offering my clients 30 days to decide if they wanted to stay with me, or leave.
I realized that I needed to entice clients to stay by offering new and different services. I thought about what more I could offer beyond bookkeeping and monthly reports. I was not offering monthly check-in meetings at the time, so I added that. I made myself available to check-in on reports, instead of just doing the work and handing over the financials.
JL: So how many clients did not accept the Value Pricing packages and left you?
SBF: I lost three quarters of my client base, due to the price increase! One actually cried when her price doubled. Many tried to negotiate. But I told myself, “I want to stay in business, and not be obsolete, and not go out of business because I am undercharging.” If you have a skill, you shouldn’t be struggling - you should be offering what’s in your area of expertise. So now my mantra is: this is my fee, take it or leave it! Clients leaving was hard. But the really interesting thing is, my stress immediately went away. All the troublesome clients left, and I got my evenings and weekends back. Value pricing enabled me to value myself.
JL: So what would you say is the biggest benefit to your practice since implementing Value Pricing?
SBF: There were three major benefits to me and my practice. First, personally, Value Pricing has improved my quality of life. I no longer work until midnight! Second, I was able to bring on staff assistance - I hired some Independent Contractors to help me. This was a huge step, because as a Mom, I didn’t want to work more than 25 hours a week. Value Pricing enabled me to afford staff and focus on business growth. Third, by implementing Value Pricing, my revenues went up 50% in the first year.
JL: And what would you say is the biggest benefit to your clients since implementing Value Pricing?
SBF: They like to know how much to budget for bookkeeping services. They sign up for a year, and their cost is not going to change. For really small businesses, this is not so appealing, unless you find the right people. I now target businesses with revenues above a certain threshold.
Thank you Serah Blackstone-Fredericks for sharing with us your story! Your journey demonstrates that with thoughtful preparation, bookkeeping and accounting practices can achieve more success than they believed possible by embracing Value Pricing.
Note: This blog does not define or explain Value Pricing; it is a discussion with someone who has already taken the journey. For more information defining Value Pricing and its benefits, here is a fabulous link on the Intuit Firm of the Future website and Value Pricing guru Ron Baker himself.
Jody Linick is an AIPB Certified Bookkeeper, a QuickBooks® Certified Pro Advisor, and a member of the Intuit Trainer/Writer network. Her company, FitBooks Pro (formerly called Linick Consulting), specializes in remote bookkeeping services for professional services firms using QuickBooks Online. You can find her series of Blog posts here.