One trend in the accounting sector involves how firms charge for their services. Experts in the field have encouraged firms to move away from the billable hour model and shift towards fixed pricing or value pricing.
Accountant and consultant Ron Baker advocates value pricing and has been trying to move more firms in that direction since 1995. Baker believes getting rid of the billable hour model puts the customer first based on the value an accounting firm brings the client. The hourly method starts with the costs associated with the accountant rather than what the firm can do for the customer.
Value pricing starts with price-led costing. Companies determine the value it brings to a certain company based on the outcome of its services. This model changes from smaller to larger clients simply because a bigger company, with more revenue, has more complicated accounting facets. The value brought to a larger firm may be completely different from that of a smaller company.
Baker suggests accounting firms create a value council led by the chief value officer to implement value pricing. The council sets prices for the company and makes changes as needed. If a client needs more work, the council alters the billing contract accordingly and sends the client a change request. The key is to get people who enjoy pricing to take care of that side of the business. Sole practitioners can ask pricing advice from spouses and friends as a more informal value council.
The key to value pricing techniques is to make sure underpricing does not occur. Accountants and accounting firms must make it absolutely clear what kinds of value clients get with this pricing model. What kind of customer service does the firm represent? Can the client rely on the firm when an audit occurs? How much return on investment does the client get versus the cost of services? This way, expectations are clear.
One way to achieve value for a client is through digital accounting practices. Accounting software, combined with cloud computing, simplifies how companies keep records. Items only have to be entered once, and the software knows where to put the file. Accounting firms can access a client's books through cloud applications with secure logins that reduce the need for on-site visits. Anything that adds efficiency to the accounting process creates value for both the client and the firm. Software lets accountants work more on finding ways to save clients money rather than preparing companies for the dreaded audit process.
Value pricing comes in many forms. Accounting firms can start with how much money they save clients versus the cost of services. Add in perks such as frequent checkups and profit forecasts, and clients begin to see just how much they need an accountant.
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