Mel was both happy and frustrated.
His company had just recorded the sale that put them $1 million ahead of the past year.
In fact, it was ahead of the past three years since revenue had been stubbornly stuck that long.
It was a great achievement—and yet, as he looked me in the eye, he said “I wish I had done this three years ago. When we first talked about it, I was too set in my aways to listen.”
I didn’t sugar coat my response.
“Yes, we should have done this at that time. It was quite the challenge to move your thinking from “we can’t do this” to “what will the clients say?” to “okay, let’s do it.”
I did tell him he’s not the only one who did that or has wished they’d taken the leap years before.
I recall that feeling myself. I knew that time based pricing was killing me–too many hours or not enough hours. Long waits to get paid. Clients asking for a lower rate because they heard someone else paid less.
And still I delayed making any change. “What would clients think? What if I was underpaid? What if I failed?”
It wasn’t until I had a cash flow crisis and was utterly exhausted at the same time that I put my own foot down and looked for a better way.
What turned Mel around?
Ironically, it was one of the clients he was most worried would resist a change. The guy was a long time client—15 years at least—and one day he started reminiscing with Mel about all that had happened over that time.
The guy recalled how much their industry regulations have changed. They are almost unrecognizable from 15 years earlier.
He said, “You know Mel, you’ve been helping us stay on the right side of the regs all that time. How have you done it? You always know when things change. Thanks to you we’ve never gotten into trouble. It must take a lot to keep up.”
Mel thought “Yes it does. You really have no idea of the whole picture.”
- Have to receive and digest every single update. Sometimes there are dozens in a month.
- Have to figure out which updates apply to which clients.
- Help them stay in compliance even as they have the rest of their work to do.
- Represent our clients during inspections and have to know it all in order to answer questions and make any corrections.
- Read a lot after hours and on weekends to stay up to date that we don’t bill for.
- Attend conferences and meetings to build helpful relationships.
Mel told me “I finally understood what you meant when you said ‘each time you work for a client you get smarter and build your capability for the next project or engagement. A predetermined hourly rate never takes that increase in capability into account. You help more and never make any more money.’”
Could Mel’s story be your firm’s story?
If you and your associates:
- Get smarter with every client project.
- Stay on top of every new trend, regulation, or innovation.
- Ensure clients get the benefits of these trends, regulations, and innovations
- And drop anything outdated or harmful.
Please ask yourself if your current time-based pricing model is compensating your firm for the life changing differences you deliver to your clients.
Sixty days will change your life
Once Mel chose to adopt IMPACT Based Pricing, we partnered for 60 days to prepare. It’s never smart to flip a switch from time-based pricing to IMPACT Based Pricing.
But you only need 60 days.
A rough timeline is:
- Analyze current financials and sales reports.
- Identify the best opportunities for the first implementation of IMPACT Based Pricing.
- Update as needed any systems that are tied to time based billing.
- Bring all associates/team members together for practice conversations about IMPACT Based Pricing. Get deeply comfortable talking about how your firm delivers life changing differences to clients. I cannot emphasize the importance of this step too much!
- Set a date and implement.
But ask yourself: “Can we possibly do this ourselves just from reading Susan’s material?” If the answer is “hmmm, not likely” then send me an email or text IBP to 703-801-0345.
Although I believe pricing models should be under scrutiny all year long, many CEOs and Owners think about it at the end or beginning of the calendar year. If that’s you, let’s get started so your 2023 can be the year you make your additional million.