One CPA tossed deliverables and doubled revenue in one year. Would double revenue make a difference to your firm?
When professional and business services firms work on their pricing, they look at what the competition charges, their own history, their industry “best practices” and expenses. They enumerate their deliverables.
Where’s the client in all of this?
Client needs, wants and desires vary. In order to serve each one to the max, you need client-centered thinking.
This CPA invested in client-centered thinking.
For years, this firm provided a Profit & Loss statement to their client companies each month. It shows the CPA has collected the necessary information, entered it in their software, and asked the software to produce the P&L. The P&L is a deliverable.
They discussed raising prices and adding reports, but P&L forecasting showed these would generate only a small increase in revenue.
When we discussed client-centered pricing, the Owner realized that value of the P&L comes from analysis, forecasting and decision-making.
The CPA could help a client deeply understand one element, for example declining sales for a specific service, and change that client’s business going forward.
- Did this happen only in one month or several months?
- Who are the buyers of that service and how do those buyers fit into the firm’s client base?
- What would happen to the P&L if that service was no longer offered?
- What would happen to the relationships with those buyers if that service was no longer offered?
- Are there alternatives that would be a great fit for the buyers and boost the P&L?
The fee for producing the P&L is a fraction of the fee for the value delivered by the P&L.
Delivering value requires:
- Speaking about value not deliverables
- Demonstrating the value with some examples
- Putting the value of one element into the context of the whole client company. “This value will change your life going forward.”
This firm phased in Value Based Pricing over several months. Revenue one year later was double what it had been.
Why? Because they charged for life-changing value. The deliverables were included in every engagement as the foundation for the value.
Increase Your Firm’s Revenue
Your own firm’s revenue depends on embracing value delivered, rather than relying on deliverables.
Are you delivering value from your knowledge and expertise? How are you implementing Value Based Fees?
Value Based Pricing is just that: a fee commensurate with the value delivered to the client.
Not to be confused with deliverables, which are only proof that you’ve done certain work.
Value delivered is value that changes the life of the client going forward.
