Setting your price, positioning yourself in the market and using tech
This is part two in our series, The Big Book of Accountants and Advisory: How Accountants Can Move from Compliance Services into Advisory.
How much should you charge?
Clients value good advice. It’s ironic then, that a common complaint from the industry is that clients are often unwilling to pay for advisory services, which they see as an unpaid add-on, rather than a stand-alone service. So given the sometimes gulf between clients’ and advisors’ expectations, what should accountants charge for advisory?
While accountants often bill on a simple per-hour basis, Colin Dunn, accountant and contributor to Accountants Daily, says that the underlying principle when pricing business advisory work is this: “The price must be based on value, not time.”
“What this means is the more you can quantify the value to the client, the easier it becomes to price the job,” he says.
Consider this: Most clients don’t care how long it took you to produce a compliance service – they simply want the result. So when it comes to discussing the value of your advisory services, talk about what’s really important for your clients – what’s in it for them. A conversation about outcomes is a conversation most clients are very ready to have.
Dunn points out that this has three important ramifications.
You should price to the customer: The value for similar projects can be different from client to client (If you save a client $20,000 you’ll charge less than if you save the client $200,000)
All value is perception: The price you charge is a negotiation between the client’s perception of value and your belief of the value you create.
To price a piece of advisory work you must truly understand what it means to your client (Is it a make-or-break piece of work for your client? Or just a nice-to-have?)
At the end of the day it again comes down to communication. Spend time having your client articulate what the work means to them. Similarly, communicate the value well to your client in the beginning and go from there.
It’s common enough wisdom, but in 2016 content creation, ‘thought leadership’ or whatever you choose to call the sharing of your expertise, is a crucial step in creating and nurturing long-term relationships with advisory-seeking clients. It doesn’t have to be complicated, and there’s no need to over-commit yourself, but it has to be consistent. The secret to good writing? Write what you know. It’s the surest way to add value, build credibility and trust.
“Ask yourself the question,” says Angus Ogilvie, CEO of Generate Accounting. “‘What is it I’m doing that’s going to make a difference to the client’s business?’”
“What too many accountants fail to do is actually explain what advisory is. They too often talk about waffly stuff that’s essentially ‘sell more’ or ‘buy at a better price’. They just talk about ‘helping you build your business’ and that’s not really precise enough. Most business owners really just need a firm plan.”
“Our clients come to us because we portray ourselves as advisors online and in the way we talk to people,” says Margaret Holmes, CEO and director at Engine Room. “The biggest problem for most accountants is that they don’t know how to sell. If you can’t have a good conversation to sell your services, and you aren’t prepared to learn those skills, you will be stuck doing compliance work because the customer doesn’t always know what they need.”
“You can’t go in and say ‘I’m going to add numbers up and come out with an answer. You need to make them understand what the numbers are made of.”
Staying on point, or, at least staying on message is the key to attracting advisory-hungry clients and converting current compliance-focused customers into advisory consumers.
“When we don’t get out value proposition right is when we haven’t sold it properly,” says Hamish Mexted, Wellington-based accountant with iif. “Sometimes we’re good at it, sometimes not, but we know that it’s about making it a part of every single one of our conversations. Yes, its social media; yes, it’s blog posts; but it’s really about making it a part of every single conversation. To us, compliance and advisory are one and the same. Our whole model has to be geared around it. It’s not the selling of a different set of products. It is the product. That’s where other people fall down.”
Use tech to help you master soft-skills
In a service-based industry, the soft-skill is essential. Many accountants however openly admit that they have a great deal more technical than social skill.
That’s nothing that can’t be managed however.
“The universal for all business owners – whether they wear a suit or a tool belt – is: ‘I don’t know where my money’s gone’,” says Ogilvie.
“With a good piece of analysis software you can break that down and that’s what an advisor’s clients are looking for. It’s your job to bring these numbers alive for the client and give them meaning. Then the client will see, ‘Oh, I can make a quid here’.”
“Tech can give the client a whole bunch of data - Xero for example is really good for that - but they don’t get the human element around it and that’s what really important. The role that technology plays is giving us the raw data. We then need to tell the story and paint the picture to help our customers make better informed decisions.”
Look out for the third and final part tomorrow!
Article by Jonathan Cotton, content marketing manager at Debtor Daddy