In this episode of the CFO project podcast, we discuss how to stop competing on price.

Adam, thank you so much. I am looking forward to our conversation today because we are both on the same page.

Actually, a sports psychologist turned business coach. And what I found while going through my training was that my education gave me all the things I needed to do to be able to kick start my profession and be able to start making a difference for people. But it also prepared me to be an employee working at someone else's business instead of an employer.

So what happened to Adam for me was that when I made the switch over to business ownership, I found that there were actually three gaps. The very first one was how to communicate my value. I didn't really understand the difference between features and benefits, and what would hook someone in to want to have a further conversation with me.

The second one was how to price my services when I didn't want to connect my fees to time. And then the third one was how to be able to enroll new clients into engage my services when I really didn't like to be salesy, pushing or pressuring anybody and working with me. And that's some of the things that I found firm owners can benefit from as well, is communicating the value.

Pricing strategies are separate the fee some time, and then how to enroll new clients when you don't like the sales part.

Yes, yes. One of the things that I see is that when an accounting firm owner is you're talking to either a new client who's interested in you for your, in your services or may be marketing material at a network meeting way sharing about yourself. Or maybe you want to, increase the rates of a current client. So what happens is that we sell the features instead of the outcome and benefits.

And I'd like to give an example.

So say that you are ready to buy your very, very first home. And you're talking with the general contractor about this for the first time you're meeting and the general contract goes on and on and on about the 10,000 nails and where the lumber is sourced from and whether they're using W-2s or 1099.

And that's not really what you care about. That's important to him to build your first home. But for you, you're looking to go from renting and paying someone else's mortgage to home ownership and finally getting the keys to your first home and moving in. And that's what happens. The difference between features and benefits is that so many firm owners are selling the 10,000 nails, the workflows, the functions, and not the home ownership.

And what's possible because of the fact that you know how to build that perfect house for them.

And one more thing. Before we get off of that, I just want to say is that the most firm owners are not as marketing savvy as someone. When that goes through the marketing, in the palm in a business. So they might not really understand the difference between features and benefits. That was true for me also. And when you hear everybody talking about the workflow and the reports and everything like that, you think that that's what you ought to be talking about when you ought to be doing something a little bit different.

But that might feel risky, because that's not what everybody else is talking about. And what if. So, it takes a little bit of courage and education to understand what it is that creates attention, as opposed to what everybody else is doing.

Sure. The benefit that I can see is that they all have the best tax advantage possible. They maybe they've been playing penalties or filing late because they weren't tax ready or they didn't understand some things and they didn't take advantage of all the different opportunities available. So they don't have to worry about tax surprises at the end of the year any longer so they can remove that tax stress that happens.

And then the third thing is that, they don't have to wonder, you know, can I do this or can I take advantage of this or how much should I be paying myself? And they'll have all that insight and guidance from someone that does this all day long, is an expert at it, and is looking out for your best interest.

And I just want to say, there's also the difference between the type of tax preparer that you use. And I don't want to go too much into it, but are you using someone who has more of a factory style firm, as opposed to one that is more client centered? And that's going to make a difference as well?

Exactly. Well let's go ahead and invest more money in your for one K instead of paying a higher tax rate.

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The mistake that happens is that when someone's coming to you, whether it's a new client that you're looking to engage and do their services or maybe have a project with a current client is the very first thing you're thinking about is how much time will this take me. And then let's multiply it by my hourly rate to figure out how much I ought to charge for that.

And what happens is that when you're charging for your time, it commoditize your services, and it's actually the lowest way to price your services. Out of all the different pricing models out there.

And the three that are the most common for firm owners are the hourly rate, which is what the majority start out with. The second one that most will start to move over to is a fixed fee.

And then the third one, which some start to move up to is about value based pricing. So when you're charging for your time, of course it may be a little bit of profit margin, which would be the elevate or the fixed fee. Then you're focusing on what's important to you, which is your time, your operational cost, and maybe a little bit of profit margin when you switch over to value based pricing, then you're looking at things from the client's perspective and how they benefit from engaging you for these services.

And as a result of that, you can actually charge 2 to 3 times more than the other pricing structures.

Right. And that's because when you're selling the tasks the functions you're tying them out at year end, you close them out at the end of the month. You're going to give them all these reports. It commoditize your services because you're focusing on the technical parts of what you do. And that matters to you. But to your clients, the value to them is what you know, not what you do.

So knowing how to do these things, to help them to a build out a year early than they thought, or that they can actually take a much needed vacation because they haven't taken any time off for the last three years. Those are the things that are important to them and and them. And guiding them to be able to achieve those things is much more important than the actual things you're going to do to get that job done.

Absolutely. And I think the thing to look at is what clients once again highly value is not what's happening right now in the after the fact compliance side of accounting. What they appreciate is that you can help them achieve something future focused. And the more that you can take that data from the compliance side and help them achieve something that's a milestone or meaningful for them, that's the sweet spot as to where your value actually lies.

Absolutely. And living in Florida, you want a hurricane proof dream?

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Go to the CFO project.com and click on Free trainings to register.

Yeah. I want to share about this one person that had a firm and small firm. So I think that she had a team of two already and they weren't. And she was tolerating some things with one of these employees. So let's go with that also. But as much as we saw that she had a team of two, she was tolerating some, which meant that some things were on her plate as opposed to being able to really delegate them effectively because she couldn't fully trust this person to follow through.

What? That they didn't have the skill set? It meant that she was working 60 hour work weeks and she had some children at home also that needed her, so her time was split. She was charging about $75 an hour at that point, and because of that, she was maxed down and struggling to just make ends meet. She was offering primarily bookkeeping services.

And, and the other part of it is that she felt that all of her clients were price sensitive. So they would question her bills. Some of them ask for discounts. And yes, she was able to make a reasonable living, but not as well as she wanted to. And so what we did is we focused on really fine tuning her niche because she already had one.

She just wasn't really, out there promoting it as well as she could. So she actually had a niche of working with people in the trades in the entertainment industry. And what she started to talk about instead of the end of the month and the compliant sign up bookkeeping, she talked about the fact that she was helping her clients eradicate the starving artist syndrome.

Because these would. And yeah, so these were creative people that were creative so working and but they were in the trades. They were like the set designers and the lighting people and the costume designers. So they were doing the trades part in the entertainment industry, and they were still this whole starving artist syndrome. So she was able to help them get rid of this starving artist syndrome, that that's her mission.

And by being able to talk to them in that way, that you can do something that you love and be well paid for it, and that I'm going to take care of your financials so you can focus on your trade. She started to attract more of those quality clients, and because of that, she also made the transition away from an hourly billing of the $75 an hour over to value based pricing.

We created packages, silver, gold and diamond because she had business owners at different levels of their business evolution that, you know, small, single, maybe two on staff would be a silver. They wanted primarily the compliance, the clients and most of them who had a little bit more as far as payroll goes. They had a little bit more financial complexities.

They fit into the gold because they wanted more business insights as they were making decisions moving forward. They didn't want to just deal by gut feeling any longer. They wanted to really make decisions based on information. And then the business owners that had more complex businesses, maybe they had more than one location. Some of them might have had real estate as well.

That, and they needed more of that outsourced CFO level services. Those were their diamond level packages. So it was recognizing that she wanted to fine tune and focus on what these particular business owners need. And also about the fact that not everybody was at the same place in their business. So she had different packages for different levels of their business evolution.

And because of that, she found that they weren't price sensitive. They appreciated the advisory services along with the compliance side of it. And she no longer was selling her, accounting services. She was now enrolling them into having strong financials for their trade business.

And they all know each other. So once she started really fine tuning this and speaking to her right clients, they talked to each other. So she was getting referrals from other clients as well. And, and just recently, because I know that this is her niche, I met, CPA who has a similar niche, and I introduced two of them together because they both speak the same language and work with a similar type of client.

And I can actually talk from personal experience on that because my, my niche is really about working with firm owners on how to be able to price and, raise the value of their client and how to have those conversations. I've had people come in to me say that they appreciate the fact that I only work with accounting firm owners, and I understand the nuances of their business and how to be able to help them navigate through that process.

Absolutely. And I think that one of the hidden things that you start to talk about, and I just want to bring out also is that from being attracted to a particular client, confidence sells. So if you come across as you know, what you're talking about, you know how to help them achieve that. They're going to have more trust in you being able to deliver on that than if you're apologetic and if you have the lowest rates around.

So confident sales and that your rates are typically a reflection of how confident you feel about your services or yourself.

I think the first thing is some of your clients that you're already working with might be a require for moving forward also, and some of them might have been great clients when you first started out. But they're not the right kind for where you're taking your firm to. I want to acknowledge that. And if you're looking to be able to change your business model away from the alley, based over to the packages and value pricing, there's, couple of steps to be able to do that.

And I want to talk specifically about with your current clients, because too often we change our business model with the new clients, and then the existing ones, we just leave good enough and we never touch them because you don't want to rock the boat. So I'm going to focus on getting your current clients up to your new business model.

And the very first thing you want to do is send some type of client centered communication, whether it's by email or by an actual letter in the mail. It doesn't matter me and you want to make it about the fact that you're making some changes to your business model to be more client centered and don't say anything about, well, my prices have gone up the cost of doing business, I'm passing it on to you.

Nobody cares. We've all had that experience too. It feels like punishment when they hear that. So you want to make a client center. You change your business model to be, to really take care of your clients better. And then you want to let them know that you're open, having a conversation with them and you want to get something on the calendar.

If you have a staff person that can schedule those meetings for you, that's great. You can include a link to your calendar in the email, or you can reach out to them personally and set something on the calendar. Then you want to have what I call a value conversation. This is not a sales pitch. This is where you're asking specific questions to be able to understand what it is that they want to achieve.

Remember we talked about the dream of home ownership. We want to know what their dream of home ownership is, what's important to them? What's a milestone, what would be very meaningful. And you want to get insights about that. So then during that value conversation, after you have that understanding, you can educate them about how you could help them achieve that and what it would be like to move forward.

Expect these a long standing client. There will be some objections. Let's just put it out there instead of that objection of why are you charging them more, throwing you off, you get flustered and then you cave in and you negotiate and lower your price again. What I want you to do is prepare for what the top five objections will be.

They're going to be why you're charging me more. What are you going to do differently? I'm going to have to talk about this with my partner and get back with you. I'm going to look at your competitors and see what everybody else is charging. And then there might be one other one that would be unique to your particular client to help you come up with five.

Write down a response that you would like to have already prepared. So it's not throwing you off. And then an advanced move would be take that response and actually practice it out loud, whether in front of the mirror, with your fur babies or with, someone that you can actually roleplay with because how you script something out and how you actually say it are two different things.

So get ready for some objections. And then after you answer those objections, talk about the new packages moving forward and what that would be like and which option would be a best for them. So those are the five steps for being able to convert your current clients over to your new business model is let them know you're making some changes.

Get something on the calendar to talk to them, especially your best clients. Have that conversation be about what they care about that value conversation. Get ready to navigate the objection and then talk about the packages that they can opt into moving forward. And the thing to know is that if you've already invested in your client and you have a client centered firm, you can expect between 82 to 100% of those clients to convert over.

And the ones that typically leave are the ones that you secretly, quietly wish would go away anyway. So this is a recalibration, and even if you have less clients, you're still going to be bringing in higher revenues, working with a better client, and creating the capacity to either do more project work, bring in advisory services, or bring in a new client at your new rates.

So the main thing is less stress, more money, and better clients as you follow this through. And I do have a resource that goes with this. Can I share that Adam. Okay. So if you would have like those five steps, that would have been more detail that I just shared. Go to business success solution.com/res. And you can get that free resource that goes along with getting your clients up to your new pricing and business model.

Yes.

Well, what you really want to do is show them how you're going to help them to be more profitable, be able to increase their top line as well as the bottom line, maybe expand. And the difference it's going to make for them. And by doing that, this is going to be the way we're going to move forward and work together and how to invest in that new level of working together.

So you wanted them to see it as an investment as opposed to a cost? Yes.

Absolutely.

I appreciate the opportunity to talk with you. We are on the same page. We're both looking to raise the bar for accounting professionals and firm owners.

Yep. We need to make it sexy.