What is Value Pricing?
Value pricing is simply charging the optimal value for services. Setting fees can vary by client, service offered, or specific engagement. Fees should be set based on what you think the engagement is worth and not what the client is willing to pay.
Hourly Rates. This is a traditional fee structure using higher rates combined with a client change process, adjusting fees based on discoveries with the client, or for client delays.
Fixed Fees. A core value pricing strategy is fixed amounts, regardless of the hours. The key is managing client expectations and charging if they go out of scope. This is a core value price strategy.
Success Fees. Payment is based on a percentage of an amount sold or saved. There is more risk in this, but the fees can be extremely high when successful. A simple example is the sale of a business. For CPA firms, success fees need to be carefully evaluated.
How Would Your Firm Look?
The Graph Tells a Story.
- Red dots in the lower left side are smaller fee clients.
- The dots above the green line are where you want to be.
- Red dots below the green line can be draining profits.
- The black dots are the higher paying, higher profit clients.
Rethinking Clients. Clients you built the firm on may not be optimal going forward. How many existing clients would you accept as a new client today? We will help you create more black dot clients.
Selling Skills Gaps
Low Fees. Over time clients “stack up.” It is easier for partners with less advanced skills to sell prospects at lower fees or a prior merger may have added clients that never grew. The key is reallocating resources to the type of client you want moving forward.
Handling Fee Objections. Confrontation is a fear for many professionals. It creates an uncomfortable conversation a professional may not be capable of handling. Visionary will teach your firm how to price engagements, sell value, set and manage expectations, and how to demonstrate significant value.
Find the Pricing Ceiling
Is there a pricing ceiling? Pricing can be impacted by the size and type of client, as well as the sales skills of the people involved in the process.
Sell to the Pain
Solutions to pain have the highest value. Compliance can be a pain point, but typically not a highly valued pain point.
If you are not losing opportunities, it can be a sign you are not selling to the right client or not pricing high enough.
The Waterfall Effect
Larger firms are shedding clients. This creates a “waterfall” of premium prospects that are used to higher fees.