Rethinking your pricing strategy to create greater value and profitability for your accounting firm
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What would happen if you increase your fees by 20% – remembering a price increase goes straight to the bottom line into your profits?
Last year, Ignition carried out research that led us to publish an open letter for change, calling on accounting and tax professionals to reclaim the profitability they deserve.
We did it because the research showed that accountants have a tendency to prioritise their clients’ needs over their own business health, which can put their business at risk and lead to burnout.
As a recovering accountant and previous firm owner, I know all too well the fears faced in the accounting industry like changing prices (pushing them up), the fear of asking for payment upfront, and saying yes to all clients' needs without any concerns for yourself or your firm, when we don't have time. These are some of the main reasons Ignition exists today.
In a recent podcast with Ryan Lazanis from Future Firm, we looked at various pricing strategies and methodologies, as well as ‘how big an increase is too big?’
What determines the right amount of value exchange between a firm and their clients?
Based on that interview, we learned that price increases and the confidence to implement these are crucial elements of the program to correct the firm’s margins and create capacity to enhance the service and the bottom line.
From qualitative insights and firsthand experiences shared on the Future Firm's online platform, a pattern emerges suggesting the most immediate and impactful strategy for a firm's growth could be increasing pricing.
It’s important to note that this observation is based on anecdotal feedback and professional discussions, rather than empirical data.
While these qualitative insights provide valuable perspectives, approaching pricing adjustment with a comprehensive understanding of your firm’s value proposition is key.
It's not only about adjusting rates, but understanding your Ideal Customer Profile (ICP), for example, size, location or industry, and recognising and communicating upfront the value and quality of the services offered.
But the prevailing fear that raising prices significantly (ie, by greater than 50%) for standard services could spell disaster for a firm seems to be a myth.
The real challenge, and opportunity, lies in the firm’s confidence and mastery of the tactics involved in re-evaluating its worth.
The evidence from numerous success stories within the Ignition community suggests a well-considered pricing strategy doesn’t lead to the ruin of a business.
Instead, it contributes to its significant growth and profitability, because a well-calibrated pricing strategy reflects the true value of the services provided, attracts the right clients, and supports the firm’s financial stability.
In the firm I started, we increased prices by 25% during the same end-of-financial-year period that I stopped being an active member of the team. I think we lost one client out of however many hundreds we were dealing with, and the revenue went up.
So here lies the controversial stance: Is the traditional caution against raising fees a byproduct of undervaluing our services?
And more importantly, are we – as a profession – ready to reevaluate our worth and take the leap?
From Ignition data, I can tell you that the average price increase rolled out with our price increase feature in December last year, was 9%.
This is a far cry from 50% or even 25%, but with 9% being the average, and inflation being a factor (the old standard way to boost a price), there’s a significant range for consideration.
Let's challenge the status quo together and redefine the value of our services in the eyes of our clients and our community.
