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Accounting firms that are adding good value for their work should not be afraid to move their price and lose their “price-hunting” clients, says one accounting director.
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Clients that are ‘price-hunting are going to price-hunt forever’
06 August 2019
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Speaking on a podcast with sister publication My Business, Prime Partners director George Morice explained how he managed to advise a fellow accounting business to increase their price for individual tax returns by 40 per cent.
“Businesses too often let their clients choose their prices and undervalue,” Mr Morice said.
“We lost some clients without a doubt, but our revenue went up. So now you’ve got less clients for more revenue, and you’ve got the clients that value you because the ones that are price-hunting, they’re going to price-hunt forever. Their life expectancy with your firm is lower.
“I may be a bit more expensive than Jimmy down the road who does individuals and partnerships and tax returns because you’ll just get compliance from them. But when I show that there’s value, I can increase my price.”
For firms and businesses that are worried about moving their prices, Mr Morice’s advice is to simply try it with a small segment and see if it works first before implementing it on a larger scale.
“Take a little segment and say, ‘Let’s see what happens if I increase that’, and track it,” Mr Morice said.
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“See how much extra revenue you gain, and put that against how much revenue you lost by clients moving on, and make sure you don’t do it in a rough way; do it in a really gentle way.
“With the accounting firm we were [advising], we said, ‘Go out and find another firm that is cheaper than you and if the clients just can’t afford your service, say: I understand that, here is another firm. They are cheaper than us, but we wanted you at least to have somebody.’
“In the end, they may come back. They may find your service, which they weren’t valuing at the time, they now value. They’re going to come back and they’re going to be willing to pay for that.”
Adding value
Mr Morice stressed that a firm has to be adding value before it should decide to move its pricing, warning that failure to do so will ultimately see the move fall flat.
“Just increasing your price can make you seem more valuable, but adding value, if you can take what your client expects from you and do better than that and outperform and give them those little extras and spend the time… that’s genuine value,” Mr Morice said.
“That is helping people, and if you focus on that, your pricing issues sort of move away.”
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