A clear-cut way to price and package your services
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Warning: I'll reveal a critical mistake many firms make – one you'll want to avoid at all costs.
Key takeaways
- Strategic pricing and packaging can significantly enhance your firm's profitability and operational efficiency.
- A three-tiered pricing model gives clients clear options, improving satisfaction and boosting firm revenue.
- Breaking down your services into detailed components prevents client misunderstandings and enhances the perception of value.
- Effective pricing strategies contribute to better work-life balance and staff retention.
- Future-focused firms must shift their mindset to embrace selling, viewing pricing and packaging as dynamic tools for clear communication and strategic growth.
Ever feel like you’re guessing – or second-guessing – when you’re pricing and packaging your accounting services? You’re not alone.
In my experience as Ignition’s Managing Director of the Americas, it’s a common headache that accountants, bookkeepers, and other professional services providers experience – but a challenge that’s fortunately curable.
Read on to explore how to turn this often fuzzy area into a clear-cut strategy.
I’ll slice through some of the complexities to lay out the real deal on how smart pricing and packaging can revolutionize your firm – from boosting your bottom line to keeping you and your team happy.
I’ll tackle some of the big questions and highlight how a few smart tweaks can transform an unknown problem into a known solution. Stick with me.
The keys to getting pricing and packaging right
Accounting and tax professionals in the Americas face what I like to call an “unknown unknown” when strategizing pricing and packaging at the firm level.
Essentially, there are often underlying issues affecting their revenue streams and profitability that they may not be aware of, so these challenges go unresolved.
This challenge centers on the need to create more efficient workflows within the firm and improve profitability.
The first step to fixing the problem is recognizing this challenge.
Many firms are using outdated ways to price and package services without even questioning: Is this really an issue unique to us, or are others struggling, too? Has anyone successfully tackled this problem before?
Understanding and defining the profitability problem is crucial to solving it.
Start with the following four steps:
- Identify the services you're offering.
- Determine the value you will put against each of those services.
- Determine the price you will put against each of those services.
- Modify your firm’s business model accordingly, such as switching from hourly rates to fixed-fee or value pricing strategies, which entail a new approach to scheduling invoices and client payments.
What's key here is there are sophisticated technology and workflow solutions you can embrace – beyond tedious data-entry tasks or basic invoicing and receipt-capture apps – to help you implement these changes.
These tools can significantly enhance revenue realization, operational efficiency, and profitability.
Impacting your firm with three-tiered pricing and packaging
The firms that are pricing and packaging well are those that have deployed a three-option pricing system – say, bronze, silver, and gold, for example.
As Ryan Lazanis, CPA and Founder of Future Firm (and collaborator with Ignition), would say, by moving to a three-tiered system, you’re eliminating the potential client reaction of, “I don’t want any of this, because you've offered only one price.”
With three options, you’ve now given clients the menu, and they can choose the best package for themselves.
Each tier aims to meet different needs and budgets.
What’s more, by establishing your three options, your service packages are likely fully defined and detailed – a huge time-saver.
This helps you avoid repetitive back-and-forth questions with new clients around your offerings.
With this time-savings comes a revenue boost and the ability to more strategically go after your target market.
The hope is you’ve identified and are working within a niche or niches that allow you to really know who you’re servicing and the value they're looking for.
Conduct a needs assessment so you know exactly what they need – positioning your questions less as a traditional accounting and tax professional and more as a trusted advisor to their business.
There is repeatability, scale, and efficiency in this.
For instance, using a platform such as Ignition allows you to predefine these packages and easily adjust them to cater to various niches, which often have similar needs.
This familiarity with client segments enriches your service delivery, making the engagement process smoother and quicker, enhancing both client satisfaction and firm productivity.
It’s simply a much more effective way to get work done once the client signs the engagement.
Three-option pricing also means communication and clarity with clients are better; there's no room for guessing:
You've got the packages.
You've got the services.
You've defined the prices.
And you've sent out that engagement letter.
Clients understand exactly what they’re getting, when, and for how much, which improves communication and sets clear expectations.
Effective pricing and packaging leads to greater revenue
However, the most important aspect of pricing and packaging – when it’s done well – is that it impacts your firm with greater revenue, and “scales how you can sell”.
The short and simple message here is you can sell more quickly. You can get buy-in more quickly. And the best part is, as you work with those clients, it's easier to upsell and cross-sell to them.
With current clients, you can upsell based on those highly valuable clients you want to serve.
But you can also use price as a strategy to eliminate those customers you no longer wish to work with.
Ignition will also soon give you the option to further enhance your firm's revenue-generating potential by leveraging proposal add-ons.
This new feature, soon being released, allows Ignition customers to effortlessly add extra services that best meet their needs, directly improving client satisfaction.
This capability not only simplifies the cross-selling process with just a click, but also offers your firm more ways to maximize revenue and profits without additional effort.
By integrating proposal add-ons into your three-tier pricing model, you can provide tailored options that increase both client engagement and your bottom line.
What do firms get wrong with pricing and packaging? How can you prevent mistakes?
One critical misstep many firms make in their pricing and packaging strategies is not breaking down their services into their individual components.
For example, simply listing “tax prep” without explaining what it encompasses can lead to misunderstandings – and missed opportunities – that can have major downstream effects on your firm.
What’s more, this lack of detail can result in potential clients walking away because they don't fully grasp the value your firm is offering.
Using AI in Ignition though, you can quickly craft professional service descriptions to communicate your value effectively and sell with confidence.
Another factor firms get wrong with pricing and packaging?
They often fail to thoroughly consult with new clients before moving forward with them.
Without this conversation upfront, firms risk not fully understanding a client’s specific needs or the nature of their business.
This can lead to mismatched service expectations and excessive client demands.
You don't know what they're going to be like; you don’t get that gut-check.
Are they going to be needy?
Are they going to need cash flow analysis?
What sort of compliance work do they require?
Basically, you’re walking in blind, and you don’t know what the result will be.
By skipping these initial conversations, firms expose themselves to potential scope creep and the challenges of managing unexpected client requirements.
How often you touch base with them is something you should be charging for, for example.
The importance of pricing and packaging for staff retention
More than just firm profitability, pricing and packaging also have a big impact on your team – the two Ps are crucial for boosting staff morale and retention.
From new hires working their first tax season to firm owners, when staff members know they're being compensated what they’re worth – for the value they’re bringing to the firm and to their clients – it can significantly enhance their job satisfaction.
Plus, proper pricing strategies lead to smarter, not just busier work, which in turn leads to a revenue boost.
This shift can then allow for additional firm resources to be allocated to bonuses, raises, and career development opportunities, such as conferences or team outings.
By moving away from a focus on busy work and seasonality peaks, firm teams can achieve a better work-life balance.
Moreover, well-defined packaging results in more predictable workflows, removing the constant pressure of looming deadlines and allowing staff to focus on delivering quality without the unpredictability.
This all contributes to a more supportive and engaging work environment, making staff feel valued and secure in their roles.
Effectively pricing and packaging advisory services with compliance services
As accounting firms evolve toward offering more advisory services, effectively integrating these with traditional compliance tasks is key.
This again involves a thorough needs analysis of your prospective customers to understand their specific situations and tailor your offerings accordingly.
And often, we again see great firms that are doing this well, offering both client accounting services (CAS) and compliance services within those three tiers of bronze, silver, and gold packages.
This shift to advisory again signifies a change in the accountant’s role – from a numbers-focus to a more client-centric approach.
As for pricing advisory services, it’s certainly not an exact science.
It might start with setting the pricing bar high to see what the market will bear – a strategy that has worked surprisingly well for some.
It’s a learning curve, but one well worth navigating.
Last but not least, always send the engagement letter, and always get a signature inked.
This is where Ignition fits in – from start to finish in this process.
The future of pricing and packaging – and how firms can position themselves for success
The future of pricing and packaging is being able to embrace the mindset that, as a firm, you're always selling something – that you’re offering a product and need to effectively communicate what that product looks like very clearly and put a price to it.
The future is no longer having fear or hesitation about having conversations that start with what you do and what you charge – instead, it's all seamless and streamlined.
The future is the people who take the time to learn the whys, whats, and hows of creating better packaging and pricing, then taking that leap of faith.
What’s more, the future is understanding what the right technology is for your firm. And more than anything else, the future is that this is no longer an “unknown unknown”.
This is a known problem now.
People understand that every firm is going through this.
Selling is not a dirty word.
Increasing prices isn't something to fear.
The result?
You've got more time with your family, more time to take vacations, happier employees, and a successful firm.
You're not in the weeds anymore – you're working with people you love to work for.
To set your firm up for success, recognize that this is a problem every firm has, and it's okay to ask the questions: How should I define my services? How do I price?
Be brave to take that step to learn and then just do it.
