Setting Goals and Pricing Your Services
In This Episode
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Accountants are supposed to be the most trusted advisors.
We’re supposed to have integrity.
So it surprises me to hear about conversations with accounting professionals in which they say they don’t want to be more efficient, because they want to continue charging by the hour, and the increased efficiency would mean they made less money.
These accountants are missing the whole point, and they will soon be out of jobs and careers.
A few years back I got a call from a client. Long and short, he had a project and he estimated it was about a $5,000 job. There were two companies, and he needed assemblies set up in two new QuickBooks Companies. He also wanted me to fly out to Vegas for a day to train his accountants from China on how to use QuickBooks once I had the files set up.
I immediately agreed to the $5,000. There were 1,000’s of line items for the assemblies and it didn’t matter. I know I was going to be able to import them. All I had to do was set up a template in Excel to enable his accountants to give me the item list. Where the parent item in one column would be repeated on a each line item where it’s components appeared in another column. The rest was very straightforward.
Once I got the Excel file back from the client, I had the item lists imported and both QuickBooks companies set up within 30 minutes.
Outside of that, I flew to Vegas and spent the day training them.
It was from this experience that I knew I could no longer charge by the hour. I was losing so much money by doing that.
The world of the cloud has enabled us to work with ridiculous efficiency. We can automate so many things. We use Zapier to set up new clients in QuickBooks Online using information the client submitted.
I just created a Zap that adds new 97 & Up subscribers to a mailing list. Then I created another zap that unsubscribes them when they cancel their subscriptions. This saves me time, and now I know that the weekly emails I’ve started sending them are only going to active members.
Now in an upcoming 97 & Up call I will teach the group how to do this.
And when you learn how to do this stuff for yourself, now you can do it for clients and get paid. Imagine that? Another stream of income doing what you are already doing for yourself.
Efficiency and automation is not something to be feared. It is something to be embraced. Something to take advantage of.
But you have to see the whole picture, otherwise you’ll miss the point.
So you can’t work in the cloud and get more efficient while still charging by the hour. It doesn’t work that way.
The idea is to find ways to take what used to take hours and turn it into minutes. Taking the time to set up bank feed rules now will dramatically speed up the bank feed process, and then reconciling should rarely be more than 2 clicks.
There should be no outstanding checks. It’s 2018. Time to stop writing checks and start paying things online. It’s faster, more secure, and your reconciliations will be faster when there are no outstanding checks to be concerned with.
Recently we were faced with reconciling an Ebay sales clearing account. The sales have to be matched up with the PayPal payments. There is no bank feed process for this. But the Ebay sales report has the PayPal transaction ID. So with some basic Excel skills (vlookup formulas) I was able to create a template the reconciled the account for me. Now it takes us 5 minutes. Instead of checking off everything that clears against one another, we uncheck the things that don’t.
This took a 6 hour process and cut it down to 20 minutes. This is NOT an exaggeration.
If you use a product like QuickBooks Payments, your customer payments are processed online. The payments are automatically applied to the invoices, and deposited into your account – both in QuickBooks Online and in your actual bank account. This saves time.
The time these things save is worth far more than the fees you pay.
You know what else saves time?
Not having to do my billing every month. I do NOT miss that. Since every client is on a flat fee, they are simply on a subscription with me.
You can do this with WooCommerce like I do, or use Chargeover.
In the past, businesses had to choose 1 of two approaches to business:
- High Volume, low price
- Low Volume, high price / service
When I looked at revamping my business model I saw an opportunity.
I could do both.
I could offer a high level of service, charge a lot, AND do a lot of volume.
The extreme efficiency is exactly where this opportunity lies. You can charge a lot, get more efficient, and have a lot of extra time to focus on delivering value to your clients.
I don’t worry about giving each client a dedicated Slack Workspace to communicate with me. In fact at first I only offered it to my higher level clients. Then I realized it makes MY life easier, so now all clients at all levels get it. I don’t get inundated and the clients love it. Even the ones who aren’t tech savvy.
In most cases, you should be able to update the bookkeeping for your clients in under an hour per week. On this basis when something comes up that takes a while, it’s no big deal, because most weeks it is taking up so little time to maintain your clients.
So the question is, how much do you charge and what do you offer?
The answer is it depends.
First I would want you to think about what your core accounting or bookkeeping service would look like:
- Bank feeds for all bank and credit card accounts.
- Reports (with QBO you can automate this, and since the model is built around keeping the books up to date weekly, you can send the reports weekly on a schedule).
- Managing documents
- Bill Pay
- Sales Tax
Those are the basics.
Payroll should be outsourced to a service. It is neither valuable, nor worthy of your time to do your own payroll. You may think you are saving money, but you are wasting valuable time, and that time is probably worth a lot more than what you are saving by doing payroll.
Sales tax is also a waste of your time, not to mention you are probably getting it wrong. Here are your options:
Pick one! Stop worrying about the cost. The time is worth more.
So the above list of basic services may well be the makeup of your middle plan.
Then we scale it down, and up to come up with the other two plans.
Your lowest plan should include just bank feeds and monthly reconciliation. Nothing more.
The highest plan should offer something by way of a CFO level service. Something where you get into analytics and KPI’s. You’ll offer to review this monthly with your client.
Now we’re ready to figure out the pricing. And that’s where the real curveball is in this whole process.
Everyone has been telling you to base it on value. How much is this worth to the client? If he shows up at your meeting in a BMW his time is worth more, so your services are worth more to him. I’m not sure where the integrity is in that, but ok!
Forget value! It’s subjective.
We’re going to set some goals.
This process I am about to show you in the short time we have together this morning is a small piece of something we get into much more detail on in our 97 & Up program.
We’re going to back into your pricing based on your goals.
Someone asked about how the industry might drive pricing. On this basis it doesn’t. But it will definitely shape what you offer. For example if the nature of the law practice you are going to work with involves trust accounting, then you should charge more for that because it’s something you have to manage.
The value is in the fact that you are managing these things for your clients. You are managing their bank accounts and credit card accounts. You are managing their accounts receivable to make sure they are collecting. This means you are also managing cash flow for them.
So let me ask you a question. When you think about these basic services you can offer in your core service. What amount of money gets you excited to do the work?
When I knew how easy it was going to be for me to set up those books for that company in Vegas, $5,000 got me very excited. I even included the cost of the flight in that.
I call this “Power Pricing” because the power is in your hands to decide what gets you excited to do the work.
Let’s look at a spreadsheet!
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Billbeez – Finance Made Simple
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