Cutthroat pricing competition may be the norm in many industries, for accounting services? Moreover, do your clients push back on pricing?
You tell yourself: “This shouldn’t be happening.” Accounting is a profession historically on the same tier as medicine and the law. No one says to their doctor: “What’s that heart transplant going to cost me? I’ll hold off a bit to shop around.”
The same goes for attorneys. If you are wrongfully accused of a crime, you want someone to prove your innocence. Doing it at the lowest cost doesn’t [or shouldn’t] factor into the equation.
Accounting is Different
Many clients, individuals or businesses, see accounting services and tax filing as a required procedure they pay an intermediary to deliver. They see the service as a commodity, therefore they look for the lowest price.
Add in the impact of mass market tax preparation services and “do it yourself” software and it gets even more challenging. Not to mention when you see advertisements boldly stating: “We can cut your bills in half” or “We will file for free” gets clients wondering about the actual value of the service you provide.
The accountant’s job, at its most basic level, can easily be described as keeping a client in compliance with the law. Here are a few points to consider to help explain your value:
Filing vs. Minimizing – If all clients cared about was filing standardized tax returns, there would be no need for accountants. The government could automate the process and send out refunds or bills. The Free File program is a step in that direction.
However, Americans have a right to pay only the minimum amount of taxes legally required. Understanding your situation and coming up with a strategy is where the accountant adds value. The client is paying money to save money, perhaps those savings are down the road.
What are the “All In” Costs? – “Free” is certainly an attractive price. Does that mean the entire filing process is free? Federal, state and local taxes? What if they earn rental income from a two family house? Have a charitable foundation? Is that free too?
In all likelihood, only a very basic service is free (as with the IRS File Free program). Once the client’s situation becomes more complicated, the costs add up.
Does Expertise Matter? There’s a difference between a CPA and a tax preparer. The first is also the second, but not the second is not necessarily the first.
If many returns are completed using software programs, it doesn’t require much expertise to enter data and press “Send.” For the simplest returns, the government has the data anyway.
“Blowing out someone else’s candle won’t make yours shine any brighter.” Running down the competition might make your client defensive.
Bringing them up was their idea. They provide a service that’s good for some, but your client’s situation is different.
You might consider unbundling when explaining pricing. What basic filing services does your client need? What additional services do they use?
Those additional services likely won’t be free elsewhere. They likely aren’t best delivered by a tax preparer either.
The Big Picture – Your life isn’t just salary earned, taxes out, it includes saving for your children’s education, managing your investments in a tax advantaged way and owning income producing property. Clients work with you because you need someone who understands the big picture.
Continuity – It’s very important if a client is older. What happens when one half of a couple passes away? Are both involved in the day to day finances of running their lives? Often the answer is no. Their accountant is a trusted advisor acting in the client’s best interests.
What’s the worst that can happen?
- The client forgets to file.
- They forget to make payments.
- They get audited.
- They aren’t going to show up alone.
- “Innocent until proven guilty” doesn’t apply to the IRS.
Clients want someone with whom they keep in touch periodically. Like the doctor and attorney, you want a specialist who can help in serious situations.
Transparency – Clients might sound like they don’t want to pay. A more accurate translation is they want to know what they are paying for. They want to know it’s a fair, competitive price.
Often accounting services for individuals are bundled, presenting the client with a final price. You’ve seen medical bills, they are itemized. Insurance providers demand it as well. People want to know how you arrived at your pricing.
In short, not everyone needs an accountant but for the many that do, you need to explain why.