Are Your Fees Growing as Clients Climb Each Step?

Clients have to climb each step on the way to success.

This man is missing this point. He’s looking at the top of the stairs, as if to say that “success is mine only when I reach the top.”

You know that the top is reached by achieving success on each and every step.

As a knowledge services based firm, you support your clients as they move up each step.

Think of it this way: You deliver the IMPACTS on each step. That makes it possible for them to make it to the top.

As they move up, they have new needs, wants, and desires.

When you tune into this, you can keep supporting them by delivering additional IMPACT at each step.

Supporting This Owner Step by Step

I am advising the founder of a CPA firm. One of his clients is a sole proprietor who hired his firm to do their first ever tax return. The accountant did that and the owner said “Whew, that turned out better than I thought it would be. Now I can concentrate on growing my business this year. I’ll see you next year.”

In the past the CPA would have not given this client another thought. “Small potatoes, one tax return per year, nothing worth following up with.”

However, this time the CPA requested a post-tax-return appointment with the client. The client accepted.

The CPA said, “I noticed a few things in your books that weren’t a problem this year but could become barriers to your growth in the next year. Is that something you’d like to look at?”

This CPA just demonstrated that he could be a partner helping the client grow, rather than just a provider of compliance services after the fact.

The client owner was definitely interested. He had big plans. He knew that to reach his ultimate goal—successfully selling his company in ten years–he needed to succeed at each step.

IMPACT Based Pricing Supports Each New Step

Here’s where the benefit of IMPACT based pricing to both buyer and seller became crystal clear.

In the past (before working with me) the CPA would have quoted an hourly rate for his advisory services. The total cost would be unknown and open ended. The new firm owner would be spooked by the thought of huge bills, so he would have never called to get the advice he really needed to succeed at each new step.

Instead, the CPA continued by describing how IMPACT based pricing works. He and the owner would discuss what near term IMPACTS were needed to take the next step. Not the ten year goal, the one year goal.

Based on his past experience with other early stage firms, the CPA offered two levels of advisory services, with a different, fixed IMPACT based fee for each.

When the client thought about it, he chose the offer with the higher IMPACT and higher fee because it was clearly tied to his one year goal and carried no risk.

The CPA also knew that there would be no risk to this offer. His staff were well-versed in IMPACT based pricing and how to implement the terms of an agreement.

What’s the Next Step?

We don’t know yet. We’ll see how the client does in the coming year.

We do know that there will be growth and changes for the client. The CPA firm will be ready to increase the IMPACT it delivers when the time comes. And because the client understands IMPACT based pricing, he will be receptive to the CPA’s future offers at higher fees.

Your Firm Grows Too

Why shouldn’t your firm grow as the client grows? You invest in continuous improvement, every client engagement adds to your knowledge and expertise, you stretch to help the client stretch. All of these contribute to greater impact and deserve compensation.

Hourly billing only compensates you for time spent. Even when you increase your hourly rate(s) you’re still charging for time spent.

Ask yourself this: “if a client doubles in size due to the impact we delivered, is even twice our hourly rate proportional compensation for that doubling?” Not likely.

So then you are undercompensated for the IMPACT of your knowledge and expertise.

The client grows and your firm does not!

Clients Aren’t Afraid of IMPACT Based Pricing

Too many presidents/owners/CEOs say they fear that their clients won’t accept IMPACT based pricing.

It turns out that when the firm describes the impact they will deliver and how their fees are proportional to the impact delivered (making at least two different offers with different impact and different fees, clients see how they benefit) clients are very receptive.

It’s not the clients that are afraid, it’s the firm—your firm–that is afraid.

Once you choose to embrace the practice of IMPACT based pricing, you’ll learn how to do it well. And you will never look back!

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