Do You Need to Lower Your Rates to Keep Clients During the Pandemic?by
As you navigate your clients through the COVID-19 pandemic, you may be wondering, "Do I need to lower my rates?" Value pricing expert Loren Fogelman offers some insight into this difficult question. The answer may surprise you.
In the midst of the pandemic, accounting professionals are busier than usual for this time of year. You, along with your peers, are stepping up to rescue our economy.
You’re now on the front lines as one of the first responders. There’s an urgency to apply for monies before they dry up. And, some banks already suspended accepting new applications. As you tirelessly navigate your clients through the process, you’re privy to each client’s story of disruption.
In response, you may wonder, “Do I need to lower my rates?” If so, you’re not alone. Accounting professionals across the globe currently question whether to adjust their pricing for COVID-19. Many have already done so, although their clients didn’t ask for a lower rate.
The answer depends. Take a moment to consider why you want to lower your rates. What’s underlying those thoughts? It either stems from scarcity or community.
First, decide if this thought is a kneejerk reaction to our current circumstances. If so, then don’t lower your rates. Scarcity and fear always question your value and worth.
People connect price with quality, even in today’s economy. Low prices equal low quality. Reducing your rates is a short term solution, which could trigger potentially long term consequences.
Keep reading. I’ll share several ways to adjust your services without reducing your rates. As always, I seek the win-win to satisfy you and your client.
Maybe your reason to lower your rates isn’t related to scarcity. You’re primarily thinking about the community; not about the money. For you, it’s an opportunity to contribute and give back. If so, then follow your heart.
As a trusted advisor, you naturally prioritize the relationship over the revenue. It’s why your clients continue to work with you. When considering what’s in the best interest of the greater good, you place others before you.
With that in mind, you still need to pay your bills and your assistance is highly valuable. Don’t automatically lower your rates across the board. I prefer you seek a win-win solution, which requires a conversation.
Let’s set some protocols on how to approach this. I’m sharing the solutions I successfully apply when my clients fall on hard times.
1. Set Payment Terms: Some clients will request a temporary reduction. Rather than take a cut, talk with your client about a payment schedule. Work with them to spread out the repayment over time.
2. Delete the Extras: Adjust the packages to reduce the pricing. Not all parts of your services are equally valued or essential. Discuss with your client what matters most right now – determine what’s essential. Remember to remain open-minded as your client answers this question. Consider the feedback as you adjust her package.
3. Find the Money: When you look at her books, can you find extra money? Is there a non-essential expense she can cut right now?
4. Make a Scholarship Slot: In my previous agency we created scholarship slots for special circumstances. Each of the 11 agents had one scholarship slot available. During staff meetings, we reviewed the request. This was our way of supporting our clients if they fell on hard times.
We developed specific guidelines for this policy:
a. Limitations: When we awarded a scholarship, it wasn’t open ended. We set an expiration date. The time ranged from 30 to 90 days.
b. Existing Client: Only existing clients in good standing could be awarded a scholarship.
c. Pricing: Once the scholarship expired, the original pricing was reinstated.
Many accounting professionals mistakenly lower their rates for all clients, new and existing. Although it’s a common practice, this isn’t the best pricing strategy. Yes, slashing your prices does resolve an immediate concern. However, it opens the door to unforeseen complications down the road.
If you never competed on price before, then don’t adopt this pricing strategy now.
Consider the essence of value pricing - you price the client, not the service. This means your client determines the value, not you. Clients who believe their gains are greater than your fees will continue to invest in your services.
Reach out to your clients. Check in to ask how they’re doing. If they request a lower rate, you now have several options available. If it’s someone you enjoy working with and she respects you, then discuss solutions. Overall, aim for the win-win.