Tax Return Reveals Pricing Lessons for You

tax return lessons learnedHad some interesting conversations with business owners about pricing lessons learned from their tax returns.

Of course, the first topic was the total amount of taxes due. Many companies made more money than they ever had before, which increased the total taxes due. Some made less money and although taxes were less, the owners weren’t happy with the financial picture of the year.

We drilled into the details of their revenue. It turned out that most of the companies with higher revenue made two decisions:

  1. Revising their “great fit” client profile upwards;
  2. Phasing-in value based pricing.

Two Factors Dovetail

These two factors dovetail because great fit clients include those that want to and willingly will pay for value delivered. They know that:

  • Knowledge services do not unfold in neat 60-minute increments
  • When the quickest deployment of knowledge commensurate with the desired outcome is deployed, the client is significantly better off sooner
  • The only “accountability” that’s important is the life changing value they receive from the provider.

A few companies that retained their time-based pricing model did better, and some that did worse phased in value based pricing. On the whole the higher revenue companies had adopted value based pricing in 2021 or earlier.

What Do Owners Say about Value Base Pricing?

As their pricing strategist, I was gratified with these results. But I don’t live with their firms day in and day out, so it was important for me to hear their own words. How did the combination of redefining great fit clients upward and value based pricing work?


“I first balked at value based pricing because I was afraid many of my clients would resist. They liked getting a detailed list of every task and its cost based on our hourly rates. They often told me that was transparency, which they valued. So I knew those would not be the clients who would accept value based pricing.

The upside-the-head moment for me was when Susan asked “Do you like those clients so much that you wouldn’t do anything that might upset them?” And I knew right away that the answer was “no.” I was used to them, but I didn’t really like them as clients. (Many were very nice people).

That’s when I asked Susan how start phasing in value based pricing. We followed her PREPARE process, which opened my eyes in big way. Within 7 months all the clients I wanted to keep embraced value based pricing. I also asked for introductions to their colleagues, and we added  number of new clients to our client list.

I only wish I hadn’t resisted for so long!

Safety Compliance Expert:

“We had excellent, long time working relationships with many clients. I felt shy, in a weird way, about bringing up the topic of our pricing model. They never complained about our billing, even when we increased the hourly rate. I worried that I’d be creating a problem where there wasn’t one.

But I also worried that our firm was not being properly compensated for the extreme value we deliver to our clients.

I began to overcome my reluctance when Susan took me and my team through her PREPARE process. We looked at the range of value delivered and the fees for those different types of value. The hourly billing model was not generating enough compensation for the high value we delivered. That’s why our growth stalled. The only way we’d increased revenue significantly was by bringing on new clients, which was sometimes quite exhausting and challenging.

Client Meetings

I followed Susan’s recommendations and asked to visit our top 18 clients. To prep them, I told them in advance I wanted to learn more about their needs and desires, and how we might help. I also mentioned that I’d be discussing with them some new thoughts we had about our fees. Just left it at that.

Fifteen out of the 18 clients were eager for this conversation. We set aside 75 minutes for each one. Most went beyond that because they were so pleased to tell us about their needs and desires. And there was no cost for this conversation, which they loved.

By the time I got to the part about how we could meet their new needs and desires with value based pricing they needed to , they were excited. Almost everyone asked, “You mean we won’t receive an invoice for telephone calls or emails anymore?” “Nope” I said, and they smiled.

We phased in value based pricing for those clients. That is now our normal pricing model for all new clients. We will slowly either convert existing clients to value based pricing or we will refer them to other SMEs.

2021 was our best year ever!

What About You?

If you’re recognizing the resistance and the fact that you settle for clients “just because,” maybe you’d like to schedule a STARTER Call with me. You get to ask me questions and you’ll take away 2-3 action steps to begin your own journey to value based pricing.

I’d love to hear from you in the coming months about how value based pricing changed your life and the lives of your clients.

Prefer to text? Text STARTER to 703-801-0345.

Leave a Reply

Your email address will not be published. Required fields are marked *

More Articles

Learn to LOVE this Question

Want to overcome pricing objections? Stop giving prospects prices to object to! Whether it’s hourly rates, flat or fixed fees, or fees built on value,

Read More

IMPACT Based Pricing

Subscribe to IMPACT Based Pricing, TCG’s original content newsletter that helps Business Owners and Executives understand everything about pricing for impact, not for inputs.