Many CPAs experience low pricing self-esteem. At the first hint of fee pressure, some might lower rates, suggest write offs or absorb costs that directly impact engagement profitability. When we do this, though, we devalue our expertise and services and we train our current clients and prospects to negotiate based on fees.
Instead, we should follow the lead of those who base their fees on the value of services delivered and, as a result, are able to compete effectively without lowering fees, maintaining better margins and profitability. So, how can you compete on value versus price?
First, recognize that clients buy services based upon a number of factors – only one of which is price. According to the Hinge Marketing research study "Professional Services: How Buyers Buy,” the three questions that client business owners said they want answered when they select a firm are:
- Can you fix my problem?
- Will you make my life easier?
- Do I enjoy you as a person?
None of these factors directly relates to price. Instead, they relate to your expertise, your ability to solve problems and your ability to forge an authentic and enjoyable relationship with your prospects and clients – three things most CPAs do really well!
Building a Genuine Relationship
To build that enjoyable relationship, we have to build rapport, which begins the first time we meet someone and then continues throughout our relationship. It requires that you show a genuine interest in the other person by asking questions and listening to their answers, that you look for areas of common interest, and then remember this information for future conversations (which may mean documenting it in your contact management system or client file).
Part of relationship development with your clients and prospects is understanding who is involved in decision making in their organization and how those people each relate to one another. Sometimes you will be dealing directly with the decision-maker, such as the president or owner of a company, and other times you will be interacting with a key influencer, stakeholder or committee – like a referral source, board member or entire board. To ensure that you appeal to the different desires or expectations in a multi-decider opportunity, consider the following questions:
- Who are you trying to engage?
- Who are the decider(s)? Who are key influencers or other stakeholders that may impact the decision to choose your firm?
- Is it an individual, committee, or board?
- What sort of relationship do you have with each and at what point will you have the opportunity to meet with them?
Demonstrating Your Expertise
Before you can demonstrate your expertise, you first have to understand the problems, needs or issues your clients and prospects are facing. The Identify & Prioritize Tool in the Trusted Business Advisor 2.0 Toolbox can help you identify questions to ask your prospects and clients and it will enable you to capture their responses. As you work to understand each of the decision-maker, influencer and/or stakeholders’ needs, you can ask follow-up questions and begin to determine if you have a service or idea that will provide a valuable solution for that prospect or client. Some possible questions to ask include:
- What are your top challenges?
- What do you feel are the key concepts surrounding the challenges?
- How do your decision-makers feel about the challenges?
- How would you like to see these challenges addressed?
- Beyond traditional accounting, tax or audit services, what other financial support or assistance do you need?
Once you understand the need, you can then demonstrate your expertise in a variety ways, such as sharing relevant information related to their industry, their challenges or their needs from recent articles, blogs or training you’ve attended, sharing certifications you hold, or providing references, testimonials or case studies from similar clients you’ve helped, including the service approach and outcome.
Making Life Easier
Once you understand your prospects or clients’ needs and can demonstrate you have the expertise to address them, it’s important to articulate the benefits or results that your client or prospect can expect by engaging your firm. And, it is usually not the completed tax return or the audit report that’s the most important to them!
Clients will engage you because you can make their life easier or better or help them solve a problem or achieve a goal. Prospects and clients look to CPAs so they can have peace of mind knowing that they are in compliance with regulatory agencies, confidence that they have access to accurate information for planning and decision-making for the future, and the ability to save or make more money. Knowing and appealing to your clients and prospects’ needs and objectives and showing them how you will make their life better by engaging your firm is the “value” they are looking for that will differentiate you from your competitors.
Pricing Your Solution Based on the Value You Will Deliver
Once you have developed rapport, identified need and explored how your expertise will deliver true value, it’s important to understand the client or prospect’s budget for each project. Sometimes this can be tricky because people are inherently uncomfortable talking about money. It’s critical, however, to have a sense of any pricing sensitivity early on in your relationship so that you do not waste your time – or the prospect’s time – if they are not a good fit with your firm’s pricing structure. While you may not know the entire scope or price for your services at this point, you can still understand:
- Does the prospect have a budget? What were they paying previously for a similar service or solution?
- If they don’t have a budget in mind, consider giving them options. Provide pricing tiers and empower the client with choices. Consider using the Pricing Tool in the Trusted Business Advisor 2.0 Toolbox to help you create these options.
- Are there resources to leverage (inside their company or yours) to reduce the financial investment?
- If their budget is less than the cost of the services you’re anticipating, what can you eliminate from your scope to reduce the budget?
Then, use the Trusted Business Advisor 2.0 Toolbox Engagement Management Worksheet and Pricing Tool to help you identify, estimate and then articulate the scope of your solution. When developing your solution to present to your prospect or client, be sure to put it in writing and include:
- How the problem or opportunity will be solved or the need addressed and the expertise you’ll bring to the solution
- The resources – in your firm and the client’s or prospect’s company – that will contribute to the solution
- The budget and timing of your project
- How your solution is different or better than others they may be receiving, if applicable
- The benefits or end results (the real value – what will be better) when they engage your firm
When you build a genuine relationship with your prospect or client and they believe that you truly understand their needs and have the expertise to solve their problems and make their life easier, then price becomes less of an issue. If your client or prospect does raise pricing objections at this point in the process, approach the questions as a sign of interest by the prospect in engaging your firm and work to address them or understand what you may have missed. You can use the Overcoming Pricing Objections Tool in the Trusted Business Advisor 2.0 Toolbox to help you prepare talking points for some common objections that may be raised.
Your prospects and clients will engage your firm when they can clearly see the difference you will make for them and their organization or business. Your relationship and ability to demonstrate how you’ll solve their problem and make life better will diminish any price concerns!