Whoohoo!! It's the happiest hour of the week!!!! As always, ask me anything, and today, let's focus on helping you raise your rates and pricing to ADD MORE VALUE and MAKE MORE MONEY!!! So REPLY and tell me how you are currently charging - by the hour, by the package, retainer, etc. - and from there we can talk about the best strategies to increase your revenue, increase your income, and ultimately your FREEDOM too! Soooo good!
And @lynda, @Peter_G_Stone, @jessbru99568, @kschreiber, @QcFinancial, @MariPullen, @LisaMarie, @redrosestudios, @girlFRIDAY, @Cowgirl100, @souiljad33, @activemode, @NiltonServa, @WalkersLegacy2, @JohnSadler, @ElaineTay-TGW, @Li-Madhu and @hvacguy, please get us started!
OK, I'm standing by, so READY, SET, GROWWWW!!
The business I work with PayorCRM charges a nominal 49 USD per month for the small business plan . We basically automate some stuff businesses do to help them get paid on time .The pricing is something we struggle with .We always keep asking ourselves the question ---Are we providing enough value ? Would love to hear your thoughts on this
Hey @Megan-Payorcrm! Great question and thanks for jumping in! Are you concerned that you are not adding enough value because what you do for your clients happens quickly on your end (through automation, etc.)? If that's the case, I hear that a lot. When a service provider achieves a high level of expertise or competency, the work can be done quickly creating a feeling that you might be overcharging for what you provide, when in fact, the exact opposite is true!
The reason a client is paying you is for your high level of expertise, so as long as they are achieving their desired outcome, you probably don't need to question your value. With that said, if it's possible to add additional value and still remain profitable, you may be in a position to actually increase your pricing!
Am I heading in the right direction for you?
Are you concerned that you are not adding enough value because what you do for your clients happens quickly on your end (through automation, etc.)?
That is exactly what I was thinking. Since we are living and breathing our product we fail to take an outside view of the product .That is a pretty tricky situation to be in . Any thoughts on how to get this outside view ?
How do I inform clients of increases? Do I just send the invoice with itemized information then wait for them to ask for details? In the beginning of 2018 I sent an email out communicating that there would be a rate increase. However, since then I have in fact helped a few clients obtain more financing to grow their business. In growing their business has placed more demand on what are requesting of me. Initially, I though rate increases should only occur at the beginning of the year. But what happens if things change throughout the year?
Ahhh yes, isn't that funny? We work hard to provide value, and because it comes so easily to us, we start thinking it isn't valuable enough! Oh the places our mind takes us!
OK, so let's create some perspective for you!
1) Read testimonials that customers have sent you about how your services have positively impacted their business. (If you don't have a testimonials file, start one today!).
2) Read it often - especially when the "not-valuable-enough" whispers start talking to you!!
3) Focus on what else your customers might need at a higher price point to make a bigger impact on THEIR success, and you can simultaneously impact YOUR success by offering it at a much higher price point than any of your other levels, so you won't need as many customers to grow your top and bottom line.
4) Read your testimonials even more! Just the fact that you are asking the question tells me that you are doing great things in the world, so trust your instincts and keep going and growing!
Do you have that testimonial file out yet?
First of all, high-five for increasing your rates this year @QcFinancial! So many entrepreneurs resist increasing their prices out of fear of losing a client, so great job!
For clarification, do you bill by the hour or by package/service levels?
I offer value pricing for services. I originally billed hourly but after reading so many articles and books on hourly rate, I thought it beneficial for my organization to implement value pricing.
Whew! SO glad you said that @QcFinancial!!! Trading time for money is never a win because you always run out of time!
I have all my clients that are accounts create 3 levels of pricing:
1) Basic services and a simple monthly report
2) Basic services plus payroll or a few other more complex transactions, and a monthly report with analytics
3) Outsourced CFO services
Package one is very basic and can be delegated to a junior person. Package 2 can be your bread and butter, so be very thoughtful about what is included and also clear that if they require additional service, that is when a pre-determined hourly rate will kick in.
In addition, if you can engage one or two "Outsourced CFO" clients, you have the makings of a million dollar business! This client should be billed on retainer based on the level of services required.
The key is to make sure that each package is billed at a price that leaves room for extra work, because it always comes up. Extra work means less margin, less profit, and less income for you, so be thoughtful about each level.
Regarding your clients that now have expanded work, are they in the right package category? Is the category billing high enough to provide incredible service at a fee you deserve? There is nothing worse than feeling resentful because you underbilled your client!
Lastly, since you just increased your rates, I would bill hourly for the extras for now, and then start billing all new clients at higher monthly package prices now.
There is a lot here for you! What is resonating?
@JulieatTheWELL thank you! I was actually forced to revamp. One day while working I realized I had the clients just not the income. I started feeling like I wanted to close the business down and go another route. I felt so overworked. Then I realized it was how I was billing my clients. I wasn't billing them. I started tracking all the work I did. Then November of 2017, I said to myself that 2018 is going to be my best year yet. I knew that the most uncomfortable conversation, increasing rates, would have to become a priority.
OUTSTANDING @QcFinancial!! I love the way you didn't let your realization derail you, but rather re-fuel you! Are you ready to become an outsourced CFO and start making the big money now?
Hi Julie! When increasing my pricing, what is the best way to cross the income threshold without alienating my current customers or audience?
@JulieatTheWELL The category and thoughtfulness of the packaging is truly resonating. I think that I 1. developed too many packages 2. did not package properly and 3. did not package for a "bread and butter" scenario
I currently have five packages available, too many options.
@JulieatTheWELL I am! My niche is nonprofit organizations. How do I attract an outsource CFO opportunity.
Great question @ElaineTay-TGW and that's the number one fear when increasing your pricing. Here is a link the long post with my overall thoughts on how to structure your pricing.
In regards to increasing your prices for existing clients now, sending them a letter giving them a 2 to 3 month advance notice is professional and elegant. You are in business just the way they are, so overall, they will understand. Also know that you do not have to give a long and overly detailed reason why (that's a very slippery slope for staying professional!). Just a simple statement that shares that to continue to serve them in the best way possible, service fees will be increasing in XXX amount of months.
I know doing this will make you nervous, but try to focus on how great it will feel when they say, "Sure! No problem!". And then you'll wonder why you didn't do it sooner!
And lastly, in the event that one or two get a little cranky, that's OK too. They probably weren't your ideal client anyway, and if they do leave, then you'll have more space for much better opportunities to come along!
Ready to hit send?
Excellent! Are you networking with Executive Directors of NPs or CPAs that do taxes-only for NPs? They are the top influencers that can lead you to those opportunities. Can you think of any @QcFinancial? When you do, make a list and start reaching out!
Know that the conversation begins with them being dissatisfied with their current bookkeeping/accounting team, and when you hear that, that's your cue to ask a lot of questions to uncover what isn't working to determine if YOU are the answer they are looking for!
@JulieatTheWELL I have not even thought of those that I already work with, will create that list and begin to reach out! Thank you so much for direction!!!
Hello, I have a quick question on your pricing packages. Can you expand on what Outsourced CFO services might include? Thanks in advance.
Hi @J_QDS and welcome to OFFICE HOURS! I love that you are interested in the idea of offering services as an outsourced CFO. That tells me that you are ready to THINK BIG!
The short answer is that an outsourced CFO takes over responsibility for the entire accounting function of a business. The size of the business will determine what is required, including whether or not managing a team is involved. In most cases, you (and/or the team) will handle all of the normal financial functions and reporting, and in addition, will provide financial analysis and advice regarding decisions that financially impact the businesses' cash flow and profitability.
Helpful? Does that sound exciting? Let me know! J.
Thanks Julie. BTW, I'm a Julie also. ;-)
I asked because of one NP client I have. I do almost all of their financial needs, except for the annual tax return and some of the analysis of the financial reports I send that the President of the Board does himself. I think some of the extra things that have been added to my tasks over the last five years may fall into the CFO Services range.
When I took the position as a contracted bookkeeper, I was still in school earning my Bachelor of Accountancy and the $400/month offered seemed reasonable. I was responsible for data entry, running payroll twice a month, filing payroll taxes, and providing basic financial reports monthly. Now, 5 years and a completed degree later, I still only get $400/month and my duties have expanded to include calling/emailing to collect on delinquent accounts, setting up employees for insurance compliance, and a few other things.
I know I need to ask for more, but this client is struggling a little already, so how do I do that? I also have a great friendship with the President and his spouse, who was one of my professors, and I don't want to mess that up.
Now that I know that we are bonded by name @J_QDS, get ready for a little #realtalk!
Believe it or not, I had this EXACT conversation with a client YESTERDAY. She started with her NP about 4 years ago when she first started her business and was excited to just get a client, let alone be on a retainer. Then, of course, they grew, their needs grew, and her resposibilites grew significantly too. The only thing that didn't grow was her retainer!! Oy!
So here's where we landed. She has two options:
1) Explain how she has underbilled over the last 12 months by calculating AND SHOWING THEM what she SHOULD have been billing versus what she charged them, and that over the next 3 months, she was going to incrementally increase the retainer to where it should be. Trust me, when you do this, not only will the number be concrete for them, life will get VERY REAL for you when you realize how much additional income you could have had to manage your world (think paying down debt, adding to savings, investing in your business, or a well-deserved luxury vacation)!
2) Accept that they are not capable of getting to where you need and deserve to be compensated, so you will help them with a 3 to 6 month transition to a different firm. They will probably realize that it will be impossible to replace you at your current rate and be forced to find a way to keep you.
While the above are both difficult conversations, sometimes that is what is required of business owners to take your company to the next level. By being brave enough to stand up for yourself, hopefully, they will realize that they too have to find a way to generate more revenue so they can make a greater impact as well, and nickel and diming is never the way.
Whew! That was a lot! How is it sitting with you dear Julie?
I knew that was pretty much what you were going to say. ;-)
I forgot to mention that this NP is run by a volunteer board. I attend the meetings as a non-voting board member, to explain financials and offer advice. They employ 4-5 coaches, mostly hourly. It is a swim club.
I believe that I will start with the first suggestion. I know the President will be working on the budget soon for the next fiscal year starting September first, so it will be the perfect time to broach the subject.
If he is unwilling to work with me, then we will be forced to go with the second suggestion. I know he will be turning over the reins to someone else within a year or two as his daughter will be aging out of the team so, if I'm going to stay with them, I need to make the increase happen soon, I feel.
I appreciate the #realtalk.
Way to show up for yourself (and the organization) Julie. I was on a volunteer board for my oldest son's soccer team for many years so I understand the culture (mostly frustrating from my perspective!). Now you have a solid plan of action, so the work is to stick to it! If you give them enough time to plan for an increase or your departure, your friendship will stay intact and everyone can move forward happily.
@J_QDS, let's stay connected on this so we can keep your motivation and courage on point. And regarding the #realtak, you are welcome. It's actually the fastest path to profit. Talk soon! J.