A pricing strategy that aligns with client needs and expectations need not be an hourly rate card – tailored pricing based on value can simplify billing, offer decent profit margins to help firms to thrive and grow, and provide peace of mind to clients.
We asked accountant and University of Cambridge Institute of Continuing Education Course Director Doug Williamson for a step-by-step guide to building tailored pricing for higher-value clients.
1 Avoid mechanistic pricing
Recognise that every job and every client is unique.
While it may be tempting to set a standard fee or hourly rate for tax compliance work, for example, it’s necessary to consider other factors beyond the service category.
Higher-value clients may always expect the price and service offering to be tailored separately, rather than accepting headline pricing, says Williamson.
But no matter who the client, he urges you to consider separately cost (to you), price (to the client) and value (to both you and the client).
2 Engage in meaningful conversations
If you’re in the habit of saying yes to every prospect, you need to take a step back.
“The first question to ask yourself is ‘Do I want this work?’,” says Williamson.
The answer to this question may only become evident if you keep the conversation going with a prospective client, to understand more about the job and determine the objective.
“Try not to be too rigid in your approach to price until you have gathered all the necessary information related to the services you will need to perform or believe you can offer.”
Be friendly, professional and open-minded, he says.
3 Distinguish recurring and non-recurring work
One-time projects or urgent jobs should potentially command higher rates than you would usually charge for predictable, ongoing work.
Firstly, you will have only one exposure to the client – not build an income from their business over time, so you may need to charge upfront to cover for the time you’ll spend on essential information-gathering.
Secondly, a client wanting a job done quickly will require you to prioritise their work over others – this may carry an opportunity cost for your business in needing to turn down other work, or to bring in additional resources for a limited time.
Pricing should reflect that, says Williamson.
4 Establish value on both sides
“Most accountants would like to feel they are offering a premium service and, on the whole, don’t want to be working with people who are shopping around on price,” he says. “If you feel this is the situation, you may choose to not even begin to negotiate.”
This is especially true if you are looking to work smarter, not harder, and raise your annual revenue.
To that end, your services must be seen as being of high value to a client, especially those who contribute significantly to your revenue or have the potential to do so.
“Invest time into building your understanding of the client and their perceptions of value, both by talking to them and talking to colleagues about them,” suggests Williamson.
5 Consider non-monetary benefits
While it’s easy to become caught up in fee structure, not all of the value of work lies within its charging capacity.
“There are other reasons to accept work besides money and these may increase the value of a project or a client to you or your team,” says Williamson. “Will the work improve your brand or visibility for example?”
Consider what you will gain from the work – a great case study, the opportunity to offer a team member a pro bono or low-bono client that will increase their job satisfaction, or taking on and helping a client whose business aligns with your personal values or a field of interest.
If none of this applies, then taking and pricing the work is only about money – being satisfied with pricing becomes even more important.
6 Take your ego out of pricing strategy
While it’s important to get the maximum compensation for your labour, approach negotiations with a client without ego. Focus on finding a mutually beneficial agreement that meets the client’s needs while ensuring a good price for your services.
“At the end of the discussion, you both want to be feeling comfortable,” says Williamson.
A professional attitude is more likely to generate good word of mouth.
7 Avoid under-pricing
In a competitive market or during challenging economic times, you may believe you need to offer below-market rates.
Williamson suggests instead having a clear idea of the minimum price for your services, and at what stage you say “win-win or no deal” and disengage courteously – underpricing can lead to resentment.
“You define your business by the work you turn down,” he says.
8 Explore alternative pricing models
As costs rise and businesses come under increased pressure, value may be an even greater focus of the client-accountant relationship.
Rather than charging an hourly rate, you may want to charge an annual cost for tax compliance with an agreement that you will be available to deal with business-related queries by the client or provide value-added advice at any time during the financial year.
“In this way you are taking a holistic view of the entire year and looking to deliver higher value, as well as differentiate your service offering,” says Williamson. “This can also appeal to clients who are conscious of every minute of conversation being charged out at an hourly rate.”
This shift away from hourly accountability and towards recognising outcomes can also enable greater flexibility within teams, especially in a tight labour market.
Register to join our face-to-face ‘Starting out in practice’ workshop, in London on 24 October 2023.
