Lesson 2 – Why Charging Flat Monthly Fees Will Create More Wealth for Your Firm

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4 Replies to “Lesson 2 – Why Charging Flat Monthly Fees Will Create More Wealth for Your Firm”

  1. I’ve been trying to move my clients to flat rate for this reason, but the majority of my clients are growing. Significantly. It’s difficult locking in their flat rate when the volume of work, even once streamlined, continues to increase. I’ve tried a flat rate, with volume contingencies but worry this too could backfire. It’s a constant struggle.

    1. Hi Alicia.

      The trick to this is not to price based on # of transactions or any nonsense like that. In the other lessons in this course I go through how to set it up as a goal based number. Moreover, an increase in # of transactions shouldn’t actually matter. If you’re using bank feeds, and setting up rules, as well as putting as much as possible on Autopay, then it doesn’t take any extra time, just because there are more transactions.

      If they add a major function, however, like Payroll, that has to be an add on. If they start doing business out of the country, and you have to start handling foreign currency, that is an add on. Its about clearly defining what services you will offer at a price level, and then charging more for add on services, or upgrading them to the next plan up, if they want those services.

  2. You corrected yourself and said “monthly” rather than weekly -but you didn’t change your formula. You are doing hourly rate times 52 weeks – when it should be hourly rate times 12 for monthly. That decreases the dollars significantly. And while the principle is the same – the impact is less in my opinion.

    1. Nope. The math is correct. I only mis-spoke. We are looking at total annual revenues over total annual hours.

      In scenario 1, you have 52 hours (assuming one hour per week, times 52 weeks a year).

      In scenario 2, you take the total annual revenues ($17,680) divided by the total number of annual hours (52) to get the effective hourly rate.

      Even if the impact WAS less, the point would remain the same – flat rate is a much better way to go, but the impact isn’t less.
      The math is correct, you can check for yourself here:
      Power Pricing Model

      Click file, then make a copy if you want an editable version.

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