Are You Charging Enough for Bill Pay?
What are you selling? I ask this because I truly believe today’s accountants don’t know what they actually sell.
If you don’t know what it is you sell how will you ever know what you should charge?
Do you think you sell time? Wrong answer!
Do you think you sell software? Wrong again!
Do you sell a productized service that solves a small business owner’s problem? And within that productized service, is there a certain amount of technical know-how and peace of mind that you are selling in the most efficient and effective and transparent way?
Bingo, now you know what you are selling.
As CPAs, we have the wrong idea on how to implement new tools today. We’ve been having a hard time developing a solution that can really help us get closer to our customers.
We need to step back and create a “productized service” for each new technology or service that gives us a complete result we choose to implement. This productized service needs to be for a specific customer as well.
It must be customized yet standardized so that it is so perfect for a specific customer and easily scales across that customer base. In our firms today, little is standardized or even customized with intention.
It’s just a haphazard approach of different software and services. We need to strategically think about the end user (customer), our price, our roll out, our value-add, our marketing, and most importantly why our customer or a prospect could and would purchase this solution from us.
Firms have tried “solution selling” but really that is just a renamed version of selling time. They never really created a solution; they just promoted it differently. That needs to stop now, and here’s how…
Consider the following when you create a productized service:
- Define Customer
- Define Outputs and Scope
- Define scope creep and seep so you know what and where it could happen. What makes it out of scope and what is a newly priced option?
- Define Costs
- Determine Price
- Package & Market
Here’s a more specific example for Bill Pay services:
Take a small business owner who grosses less than $1 million annually. He experiences gross revenues and business growth predictably.
It’s him or his spouse writing checks. Bills are being paid late because of lack of attention, not lack of funds. He pays approximately 100 bills a month.
When you productize bill pay services around technology, your customer benefits. Your client will now have a complete outsourced A/P department, which includes real-time access and updates in his payables.
This is something he never had before. In addition to monthly bank reconciliations and online reports (priced separately), A/R will still be done by the owner.
His spouse will be freed of these tasks and do all bill approval via smart phone. Payables can be scanned and/or emailed directly to the firm’s bill pay solution.
The firm will get regular updates regarding new bills and will make sure payments are up to date. The firm chooses the bill payment solution and includes all fees. The owner is not told about costs.
Take the above inputs specifically for define costs: Make sure to include software fees and labor. I always include a little “extra.”
Price is not determined by cost. It’s determined by value, conveyance of that value and expertise of knowing what’s best for a small business client. Sure, it’s subjective and related to the customer after you evaluated their business needs. However, it would be no less $800 per month or double what your costs are. It could even be more based on other services and overall value delivered to the customer.
Finally, we market this as one solution specifically directed to a specific market or niche. In this case, Joe Small business.
Develop your service into a product
Product management is what technology companies do when they create new technology. It’s the organizational lifecycle dealing with the planning, the forecasting, the production and marketing of a product or products in all its stages.
If you look at this definition from Wikipedia, product management “integrates people, data, process, and business systems.”
Isn’t that what we do as CPAs? I mean, think about it, don’t we integrate people, data, process, and business systems? Don’t we do this to provide the best service possible to our customers?
It’s a brain change, to be sure. We haven’t before thought of ourselves as a product. We always think of ourselves as selling service hours, but if you move to fixed pricing, or a value-pricing model, we’re in a whole different ballgame. We’re selling a product now and really a result or even transformation.
Here’s my solution to that issue and a solution, I think, will be what we need to do to stay relevant for our customers:
First things first: Let’s stop and figure out the actual value of the tool attached to the value, we as CPAs, bring to the table.
Then let’s create a solution with the software tool, the CPA, the process, and the data collection and create a complete product solution…not just a software implementation. Finally, we market this as one solution specifically directed to a specific market or niche.
Now, do you understand what you are selling?