Oh pricing. You minx. How vexed we all are with you.

Oh pricing. You minx. How vexed we all are with you. 

You’ve probably found this article because we’re connected somehow on social media.  Or you know someone who knows me.  This basically means that you use social media the same way I do: As everything from an enlightened educational resource to fodder for blog posts.

Earlier this week, a friend confided that she had left a bunch of industry Facebook groups because she ‘couldn’t stand the newbies posting the same old questions time after time’. And I get it.  I do, but we were all new once.  While she and I are both comfortably floating in the cloud apped up to our eyes, most of the industry isn’t. Which means these questions are totally fair, but instead of answering the same old answer in increasingly grouchy language, I thought I would collect together a mini manifesto for all of you to enjoy.

The question is often something along the lines of, “What do you include in your packages?”  It hits me in a part of the brain just the same as when someone posts, “Are you having trouble getting clients?” Here we are again.  Our copious sales coaches aside, “What do you include in your packages” is a fair question, so let’s break it down.

This individual is clearly looking to generate a goldilocks approach to a sales pitch. You present three options with the intention they pick the middle option, and you always have room to upsell to the most expensive.  The pros tend to put the most expensive option on the left and cheapest on the right.  If you’re really gimmicky, you bold or highlight the middle one and tag it “Best Seller”.

For transparency, please note I don’t prescribe to this approach and favour a more direct route, but we’ll circle back to that later on.

In order to generate our pricing we need to do four things:

1.       Thoroughly Vet the Prospect

2.       Determine what their Base Requirements are

3.       Outline what would provide them Optimum Support in running their business

4.       Haul out every app known to man in an attempt to dazzle them. 

Let’s talk vetting. 

If you’re just starting out, the way you vet, or approve, a client will be vastly different than when you’re 18 months in.  By the time you hit year two or three, you should have this down.  When you’re first starting out, you will probably be more hustle than worried about the right match. This is okay.  You have bills to pay, and a company to grow.  If you take on the wrong clients, it will only serve to provide practice for client firing later on.

This changes entirely when you’ve been around long enough that your income is steady, and you can get choosey.  Maybe it was six months for you and maybe you’re ten years on and haven’t hit it.  For me, it was around a year of slow, cautious growth.  I defined what I wanted to do and committed.  (I wanted to be Xero based, virtual, paperless, and tech forward for those inquiring).

Vetting the client can include a lot of things.  Here’s a basic rundown I go through:

·         Are they willing to use Xero?

·         Can they go paperless?

·         Do they consider themselves tech forward and able to work in an app ecosystem?

We get more technical and intuitive when we start running through these:

 ·         Are they passionate about their business?  Or have they checked out of it? 

o   This is important to me because a passionate entrepreneur is more likely to be interested in the numbers, and if they are interested in the numbers they will value what I do for them.

·         Will this person communicate with me?  If they miss the initial call and need to reschedule asap now now NOW, I get anxious.  They don’t respect my time, and it’s a huge red flag.

·         Are their timing expectations in alignment with my ability to take on the work?  This is a key point because some people are willing to take on five years of catch up and turn it around in a week.  I simply don’t have the capacity to do that.  I’m not going to kill myself with hours to appease someone who has been behind for half a decade.  My business doesn’t work like that.

·         Now this is a difficult one:  have they worked with a bookkeeper before and how many have they gone through recently?  If it’s someone new every year, it’s not us it’s them so run.  If they have never, EVER, worked with someone, are they aware of the financial investment?  Are they emotionally invested in the data and conversation that great books spark?  Are they willing to commit to the monthly ritual?

·         Finally, I need to make a pretty instant judgement call if I can engage in a bad news discussion with this person and not get my head chomped off. This is vital and could include anything from me being hospitalized and unable to action their request or having to tell them they are bleeding money and need to pivot now. Sometimes I’ve come right out and said, “Are you comfortable with me telling you bad news?”

 Splitting Out Packages

Now the client is vetted and we need to determine their base requirements.  This would be our cheapest offering.  This is just the bare bones.  Consider what they NEED to stay compliant. Stuff like this:

·         Payroll

·         GST filings

·         PST filings (I’m in British Columbia, eh?)

·         WorkSafe or other worker insurance filings

·         Annual tax return prep

·         Are these things monthly, quarterly, annual

 Your most basic offering is the one that keeps the tax man from banging on the door or closing down their bank accounts.  This is pure and simply compliance.  If you are a solely “run the books and leave it there” type, this is the work for you.  If you love the discussion of what the numbers mean, this work will not inspire you.  Be wary of knowing who you are and what work you want. If you use this model you may need to tinker with your pricing between base and goal to ensure your base isn’t more appealing.  

 Option two, or your ‘Best Seller’ would be all of this plus whatever this client needs to feel taken care of.  This is emotional in many ways.  What is going to make them feel safe, and what is going to free them up to focus on other parts of the business? This is what puts the value in value pricing.  They may need someone to take over payables, and as an aside I always have my clients manage their own receivables.  That’s their communication with their clients and it’s their responsibility.  Perhaps this entrepreneur needs help with budgeting or forecasting.  I have run into a lot of clients who have a bad relationship with money and basically need a little counselling. A lot of people really just don’t understand their most basic financial statements and need someone to chat it out with.  Some clients just need someone to say, “yep, you’re still fine.  Full steam ahead.”  When you’re vetting the client, it’s your role to determine what the client’s pain point is and how you can solve it.

 My favourite way to add value to a client is some actual genuine conversation about what is happening in the company financially.  I think this question of ‘whatever this client needs to feel taken care of’ is really what my hypothetical original poster is getting at.  This seems to be the mystical land of fixed fee or value pricing.  What are those ‘others’ that people are adding on to increase billing.  My opinion (hey, it’s my manifesto!) is that this is the emotional connection with the client.  This is the EQ that has to gauge what issues this entrepreneur is having and what tools you have to solve them.   No one can advise on this.  No one else is in the conversation.  It is a skill you learn and develop over time.  This a muscle you have to build with patience and time.

 Finally, you have your high tier client willing to pay top dollar.  In this instance, ultimately you’re communication heavy and that takes time and costs money.  You’re managing budgets, providing metrics, and doing forecasting.  All with shiny, shiny apps.  In this instance, you are ultimately providing more of your intelligence and don’t undervalue what that is worth.

 As mentioned earlier, I don’t use the goldilocks method.  I’m highly tuned in to my initial conversations with the client and determining exactly what service they need from me.  I dive deep into what is working and what isn’t.  I then offer a package and confirm, “Does this provide you with the level of service you need now?” and fix a price to it.

 So Pricing . . .

Now we come to the crux of the entire conundrum.  What value do you place upon a package?  This is the wizardry of experience, and the most devilish of questions to ask.  Because we all give out different answers.

 This, ultimately, is what pains me about the pricing comparison questions. I never (ever!) price based on what I think other people would price at.  I don’t have a mindset of competition—there’s me, I kick ass, they should work with me, I give them reasons why.  By removing the concept of competition, I can look at the file and say to myself, “what needs to be done, and how much is this going to cost me to do it?”  If I were to then think ‘well so and so will charge less’ it takes the mind down a horrible rabbit hole. Down that rabbit hole, there is doubt and judgement and comparison and an unending sense of lack of personal value.  Just don’t do it. Don’t go down the rabbit hole. It’s just a conversation between you and the client. No one else is invited.  What is the job worth to you and the client?  Then articulate that to the client.

 The above is my most vital guidance on basically any part of life: just be relentlessly you.  No one else has that advantage.  That said, I can offer this—My three-basic metrics for pricing:

 ·         Fundamental app costs 

o   I keep seeing people miss this! If I start off with Xero and Hubdoc, I need to know my time is on top of that work

·         Complexity and volume of work

o   Start thinking about how many accounts and what their complexity is.  I had one client with low volume and high complexity—I had to price accordingly. Similarly, if they have low volume but twelve accounts, they all need to be tended to, so this needs to be considered

·         How hands on is this client going to be (the PIA ratio)

o   Beyond doing the books, how much time is this client going to take up?  Are they going to text you three times a day or reach out once a month?  Are you offering out more high level services?

When I’m evaluating all of this, it then comes down to how much is it going to cost for me to show up and do all this work brilliantly month over month.  Is it $300?  Or is it $1200?  And THIS is where we all tend to disagree.  My $300 file could be your $400 file. But I don’t work for you and you don’t work for me.  Price to what is fair for the client and fair for you and you can’t go wrong with that. 

 Well that’s a lie.  You will get it wrong. Maybe in a big way or maybe in a small way but you will get it wrong from time to time. Learn from it, kindly and humbly correct the issue, and move on. Keep being relentlessly you.

 Lastly, and perhaps most critically, don’t take every client that comes to you.  In the first year, fine, grab whatever work you can get, but after that, you must select who/what you can do best and build your business from that.  Old joke—if everyone is working with you, you aren’t charging enough.

 I hope this helps.



Alexis Harrington