This week we’re excited to release our interview with Tim Shortsleeve, a partner at TYS LLP and the well known AICPA speaker on various workflow process improvements and overall tactics to building a successful accounting practice.

In this interview, we cover:

• The 2 baby steps to take to try to implement change within your firm
• How to understand the culture at your firm
• Benefits you will see from removing the timesheet
• How to implement a successful workflow process at your firm
• And finally, Tim details out his version of the ultimate blueprint used to grow a successful accounting practice

And much, much more

Click Below to Listen to the Interview:

Show Links: 
TYS LLP
Tim Shortsleeve’s Linkedin 

Ready To Start Implementing A Workflow Process That Will Actually Save You Time?

At Jetpack Workflow, we have created a workflow software geared towards maximizing efficiency and effectiveness within CPA and accounting practices.

To learn more, check out our free 14 day trial at JetpackWorkflow.com. 

Key Summary

I think I might be a little biased here when I say I was SUPER excited to have Tim Shortsleeve on our podcast today.

Tim Shortsleeve not only has his own firm, TYS LLP, he has also worked with the AICPA as a speaker on topics such as process improvement, workflow efficiency, paperless best practices and other ways to increase the success within accounting firms throughout the world.

Before I geek out on you with the amazing things Tim has brought to the accounting profession, as well as how to ditch timesheets, innovate quickly, and grow a successful accounting practice, let’s dive into Tim’s background first.

Let’s Start At The Beginning…Tim Shortsleeve’s History

Tim Shortsleeve started his accounting career as a tax professional with PricewaterhouseCoopers, before the Coopers.

After spending around 9+ years working at PricewaterhouseCoopers, Tim moved on to become the Director of Tax at a small pharmaceutical company.

After spending a few years in private, Tim headed back to public accounting where he caught the bug to become an entreprenuer and start his own firm, 17 years ago called TYS LLP.

Now you can find Tim spending most of his time growing his practice, currently at 20+ professionals, and continuing to be an advcoate of workflow process improvement, life without the timesheet, and how CPA firm can build successful firms, without all of the added stresses of bringing in new clients.

2 Baby Steps To Start Implementing Change At Your Firm

In creating TYS, Tim recognized that tax compliance and preparation services were becoming commoditized. He was motivated to develop a system that improved efficiencies but did not impair quality and kept margins intact.

1. Add a second computer monitor

Utilizing an additional computer monitor when reviewing tax return information makes a big difference in saving time. It creates the opportunity to eliminate the step of printing out and reviewing a lot of information and it saves paper.

2. Go paperless/embrace the cloud

This might sound a bit scary, but this can be done in pieces, as you and your firm feels comfortable with accepting and implementing change.

One of the first programs that Tim and his team developed was the “Keeping Tracks” program that tracked workflow efficiencies in the client paperwork process.

The program was created as a simple digital routing sheet and tracking solution that provided information not only of the history of the process but where the process was in real-time.

Tim started to implement this program within his firm, but it took a ton of time as he tested and learned for himself the best ways to optimize workflow, make systematic improvements, and implement great initiatives.

The Struggles Of Changing Accountants’ Minds

Tim goes on in the interview to mention that he found that within the CPA world, in general, most accountants do not like to embrace change. Period.

These professionals are successful, well respected, and trusted advisors, Tim believes.  There is a degree of pushback and resentment to new methods since the typical way of doing things for them has always worked well.

For those resistant to change, “Anchors” as Tim calls them, he engages with them to understand their viewpoints for not wanting to do something.

Their reasons can be very real and important to them.

Tim tries to get them comfortable with what he is trying to do and tries to provide solutions to mitigate what is holding them back.

If he identifies too many challenges to overcome, he would make the decision to step away.

To start the conversation, it is “people first” for Tim.

He identifies the people he believes would be receptive of change and then champions the initiative internally.

According to Tim, CPAs fix problems for people – they provide the “whats” and the “hows” in their services to clients. Tim provides the “whys” to the CPAs.

How To Identify And Understand The Culture Built Within Your Firm

Tim tries to understand the whole environment of the firm when attempting to initiate any fundamental change and new processes.
In doing so, he conducts two surveys that he created:

1. Pulse of the firm/understanding culture – the Five Essential Elements of the Team that evaluates

1. Trust
2. Conflict
3. Commitment
4. Accountability
5. Results

2. Company snapshot that evaluates where the firm is at fundamentally

• How do they operate?
• Are they happy?
• Are they compensated well?

The Difficulties You Will Face When Trying To Implement Change

According to Tim, the difficulties in implementing change arise from:

1. Leadership that may have a viewpoint to change but does not follow through with implementation.

2. One or a few staff members that hold back the process

Once the buy-in for change is established, the time in which change is implemented depends on:

• The size of firm
• The culture of the firm
• Leadership support
• How advanced the firm is from a technology standpoint

For tech-savvier firms, implementation process is much quicker; for some organizations it may only take 90 days to establish new processes.

For less tech-savvy firms, the entire infrastructure may need to be reengineered to be able to move the firm to a more digital environment.

Some of these implementations include a paperless workflow solution and a time sheet free environment.

Time To Get Rid Of The Timesheet

While many CPA firms are still reluctant to discontinue the use of time sheets, Tim says that businesses transform when they stop relying on them.
So many business factors such as billing, collections, receivables, and staff evaluations are improved when embracing a time sheet free environment.

Time sheets show “flawed data” when it comes to staff evaluations and billing.

Tim says the CPA is supposed to be the trusted advisor yet when relying on time sheet information, the data may not be entirely accurate.

Managers inherently know who their top performers are.

“The schedule doesn’t lie” he says.

The number of billable hours logged on the time sheet is not the indicator of this performance.

The CPA firm makes a big workflow shift when embracing a time sheet free environment.

The entire team now takes on ownership of the workflow.

Keys to success without a timesheet are:

1. Two way trust between management and staff that the job is completed and completed well
2. Regular and frequent communication of work responsibilities and work progress provides a clear understanding for each member of the team.

Ready To Implement A Workflow Process? Here Comes Jetpack!

As the conversation further, Tim goes on to highlight our business tool, Jetpack Workflow, that facilitates workflow to help you through this process.

Management sets up schedules, assigns tasks, and reviews output. All of this can be done through Jetpack’s app. Budgeting time becomes streamlined when time sheets are eliminated.

Ready To Start Implementing A Workflow Process That Will Actually Save You Time?

At Jetpack Workflow, we have created a workflow software geared towards maximizing efficiency and effectiveness within CPA and accounting practices. To learn more, check out our free 14 day trial at JetpackWorkflow.com. 

Tim also embraces Velocity-based billing within his firm, a Ron Baker concept. You can learn more about the Ron Baker’s interview on implementing value based pricing here.

“Remember that the amount of time each task takes and turn around times is estimated based on experience. Everything has a due date.”

This approach requires a high level of communication between management and staff for implementation to be successful.

Management is then able to develop a more realistic schedule for the staff to follow.

Tim encourages a results-only work environment. Budgeted times are eliminated.

In a results-only work environment, employees work wherever and whenever as long as work is completed on time. Communication is key for its success. Results-only work environment fosters collaborative team interaction, says Tim.

If employees believe they have too much work responsibilities assigned, Tim stresses the importance of speaking up about the workload.

The results-only work environment removes the complexity of workflow because of mutual trust and understanding.

Without time sheets use, sincere and deeper relationships are fostered with clients because the concept of being on the clock goes away.

The Ultimate Blueprint To Grow A Successful Accounting Practice

Tim believes these new business implementations are positive for every party involved.

1. Employees like the work freedom and appreciate the environment.
2. Clients are happy.
3. Team members take responsibility for the schedule.
4. Management sets realistic and achievable due dates.
5. Any changes to the schedule are communicated up front.
6. And if team members fall short on deliverables, Tim suggests that management provide coaching opportunities and give constructive criticism.

When evaluating performances, Tim cautions managers to not look for ‘gotcha’ moments.

Tim says that the leader’s responsibility is to give every opportunity for team members to perform at their higher and best levels. Micromanaging erodes mutual trust.

Managers should provide coaching opportunities through particular situations and should not frame actions as negative. Lighten the mood.

Tim likes to pose questions such as “Did you try to do it wrong?” and “What can we learn from this?”

He urges managers to treat people as professionals and give the benefit of doubt when offering constructive feedback or giving discipline.

In this new working environment, everyone on staff has revenue goal for the firm and has a responsibility to deliver.

Velocity-based due dates and turn-around times are monitored.

When determining the yearly budget, Tim suggests building it from the bottom up.

Understand the anticipated costs.

Set that goal and measure against known revenue for the year.

The selling strategy needed to fill the profit gap becomes much clearer and provides an avenue for you to start to grow a successful accounting practice.

In following this strategy, hiring needs for the year can be more easily anticipated.

And as firms grow, hitting pivotal milestones and evolving, Tim believes that planning for growth is important. “You wouldn’t build a house without blueprints”, he says.

Here is Tim’s Blueprint to Grow a Successful Accounting Practice:

1. Identify early on what success looks like
2. Be prepared.
3. Create a sense of awareness
4. Respect the business
5. Rework plan as things happen along the way
6. Keep head up
7. Make it happen
8. Lastly, setting good examples for your team is highly important. Management must keep good composure around their team, at all times.

The goal is to create a business environment that is collaborative where people feel safe and welcomed to perform their very best. When this environment has been created, nothing will hold you back from success!

Ready To Start Implementing A Workflow Process That Will Actually Save You Time?

At Jetpack Workflow, we have created a workflow software geared towards maximizing efficiency and effectiveness within CPA and accounting practices.

To learn more, check out our free 14 day trial at JetpackWorkflow.com. 

This week we’re excited to announce our interview with Nate Hagerty, marketing expert and owner of Tax Pro Marketer.

This interview is jam-packed with actionable insights and specific tactics on how you can (finally) build a marketing system that brings in (and nurtures) leads and help you actually get ideal accounting clients.

In this interview, we cover:
+ Why (and how) you should avoid the “Free Consultation” trap
+ Common traps Firms fall into when investing in “online marketing”
+ How “me-too”, image obsessed marketing becomes meaningless to your prospects and clients
+ How to effectively write emails that engage your client list (… emails that they’re excited to open and read!)
+ Why “Direct Response” marketing is the secret weapon for effective ROI driven marketing (and how smaller Firms can use it to “out market” the bigger firms.

And so much more…

Part 1:

Part 2:

Books and links mentioned in the interview: 
Influence
Dan Kennedy Books
Jay Abraham Books
GoingConcern (for email subject lines) 
Key Summary:

We all want to grow our business. Make it more effective and get in touch with the top clients that increase our bottom line and are actually enjoyable to work with.
But one of the problems incurred while trying to dive into growing your firm through marketing tactics is that there is a ton of noise on the internet today that does nothing to actually grow your business.

This is where Nate’s concept, the ROI Driven Marketing plan, comes into play.

According to Nate, “You need to have a name, value, and purpose to bring to your prospective clients.”
ROI Driven Marketing (Or Data Driven Marketing) surrounds the idea that marketing is tangible and you can see a return on your investment. Today, with the use of Facebook ads, landing pages, custom links, inbound & outbound programs, SEO, and social media nearly everything has the ability to be measured and tracked.

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Want to dive deeper into learning How To Get Ideal Accounting Clients?
We are offering a book giveaway of Jetpack Workflow’s Ebook titled: 47 Lead Generation & Marketing Strategies. To be entered into this book giveaway, leave a comment answering the following question:

What is 1 marketing tactic you have used that has helped grow your business?

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So how did Nate learn how to market in a world with so much noise and confusion?

How Nate Hagerty Built TaxPro Marketer

Prior to developing TaxProMarketer, Nate was a Marketing Director of a regional tax firm in Virginia. Nate helped to grow the firm’s tax prep fees to $4.5 million in less than ten years, and the firm surpassed its well-known national competitors in yearly sales in 15 market areas.

Through his efforts, the firm expanded its employee base to over 440 people in 23 locations throughout Virginia, West Virginia and Tennessee. Additionally, Nate has coached and acted as a consultant to the tax and accounting industry, helping thousands of other tax business owners in the US, Canada, Australia, and the UK make more money and grow their companies.

In May 2007 Nate established TaxProMarketer to provide services for tax and accounting professionals who did not have the time, experience, or wherewithal to implement business strategies for themselves all through ROI-driven marketing.

Nate’s company is involved in creating and handling his clientsprint newsletters, email marketing and social media in a new, fresh way, and provides a full online marketing suite with websites and blogging capabilities.

Through working as an expert marketer in the accounting space, Nate has picked up on the trends CPA firms are offering and the common mistakes they are making.

Let’s dive into the mistakes.

Common Mistakes of First Time Accountants

For the professionals ambitious enough to grow their firms in their ideal way, some common mistakes can be made early in the process, derailing efforts and costing valuable time and money. According to Nate, some of these mistakes are:

• Not cutting away enough of the marketing information clutter found on the internet
• Heeding bad advice given by “gurus” on social media
• Not giving enough thought on their Unique Selling Proposition (“USP”)

The key is to not skip over the basics. Most firms just want to jump right into trying to sell anything they can get. Instead of focusing on what truly matters, which is defining your unique selling proposition (USP).

[feature_box style=”12″ only_advanced=”There%20are%20no%20title%20options%20for%20the%20choosen%20style” alignment=”center”]

Want to dive deeper into learning How To Get Ideal Accounting Clients?

We are offering a book giveaway of Jetpack Workflow’s Ebook titled: 47 Lead Generation & Marketing Strategies. To be entered into this book giveaway, leave a comment answering the following question:

What is 1 marketing tactic you have used that has helped grow your business?

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The Framework for Implementing a USP (Unique Selling Proposition):

According to Nate, the basic take-away for CPA firm owners is to understand, establish, and execute their USP.
Here are the 4 steps in implementing a USP in your firm:

1. Start by understanding different business demographics and markets
2. Next, zero in on a selected niche: Do not be a jack-of-all-trades, master of none.
3. Of the niche group, focus on the clients that are great to work with and are profitable
4. Finally, speak the language of these targeted clients when providing them what they need

“When you implement a USP, as a firm, you are finally able to differentiate yourself among the rest of your competition clearly and concisely and become attractive to your clients. Who doesn’t want that?”

Nate goes on to state that many of these professionals can lose their focus when sifting through the overwhelming amount of information on best practices for marketing strategies. This is why a USP is essentialy to every CPA firm. 

How To Communicate with Your Exisiting Client Base

When communicating with an existing client base, Nate believes that email is the most powerful medium when it comes to ROI driven marketing.

“Email is a scalable and an effective marketing tactic that is unfortuantely underutilized.”

Nate offers tested suggestions when communicating to clients or prospective clients.

Here are the steps to successfully communicate with your existing client base:

1. Speak in a personal tone vs. a corporate tone
2. When writing subject lines, use curiosity content and keep it short and informal
3. Avoid using headers, images, or banners in the body of the email
4. Identify the voice of the firm, either the owner or the face of the firm, and then send all communication from that person
5. Communicate in a warm, fresh way and in a first person messaging
6. Send email periodically – a weekly basis is suggested
7. Make the client feel appreciated and build a deeper relationship
8. Harvest the client relationship over time in a nurturing way and through personalization
9. Sequence/engage: Ask questions, post content, put out offers, and evoke responses

Further to the point of engaging the target audience, whether it is the client or a prospective client, Nate says to “invoke a bit of fear in the messaging. Address regulatory changes and current events in an unbiased fashion.”

To invoke fear within your communication, Nate advises his clients to direct the conversation towards a great article that may be helpful in addressing the situation. This way the client feels like their problem will be solved *after sweating a few minutes with worry”.

Then, provide a follow up email or call with solutions and business capabilities.

The aim is to differentiate the email messaging in an already busy email inbox. “Create messaging that encourages subscription and builds the mindset of the clients.”

By identifying and showcasing a USP, tax and accounting firms will stand out from an industry that is typically known for being bland. Nate recommends looking at other industries such as law firms, financial services firms, and real estate firms, which are growing in creative ways and are providing value to their clients, as models for success.

When discussing successful marketing tactics, Nate believes it is best to embrace Direct Response Marketing over Image Oriented Marketing.

Let’s jump into Image Oriented Marketing vs Direct Response Marketing.

Image Oriented Marketing

Image Oriented marketing (or brand building marketing) focuses on the image of the company using photography, slogans, tag lines, and logos. It emphasizes the company and its services.

According to Nate, about 80% of advertisements across all industries utilize image-oriented marketing strategies yet they are ineffective. Image Oriented marketing is the most common form of marketing and probably, the least effective in today’s day and age.

Direct Response Marketing

Direct Response marketing focuses on a call to action and provides an offer to the recipients. The message speaks directly to the recipients and encourages them to respond.

Examples include direct mail, newsletters, email, podcasts, and social media interactions.

Direct Response marketing is an old-school version of marketing yet it can provide a more quantifiable return on investment (“ROI”) as opposed to Image Oriented marketing, Nate says.

It creates a reason for the recipient to act upon the message and that data can be easily identified, tracked, and analyzed.

As an example, Nate suggests, is to find a way to market a business offer with a compelling value. A “free consultation” has become overused. Instead, position the service by attaching a time value such as rewarding the first number of recipients who act now or by ascribing an exact monetary value to the product or service.

The Key To ROI Driven Marketing

Remember that you need to stick to the basics when it comes to seeing a return on your marketing efforts. Make sure that with each proposition that you offer a prospective client, there is a name, value, and purpose attached to that proposal.

This is the key to providing clarity to your customers and making them feel understood by you. Your prospective client will know exactly what you are offering and can ultimately make the decision to become your next top client.

[feature_box style=”12″ only_advanced=”There%20are%20no%20title%20options%20for%20the%20choosen%20style” alignment=”center”]

Want to dive deeper into learning How To Get Ideal Accounting Clients?

We are offering a book giveaway of Jetpack Workflow’s Ebook titled: 47 Lead Generation & Marketing Strategies. To be entered into this book giveaway, leave a comment answering the following question:

What is 1 marketing tactic you have used that has helped grow your business?

This week we’re excited to release our interview with Ron Baker. He’s been our *most requested* guest for quite some time, and now we have the full, one hour interview live!
In this interview, we cover:

• The foundation of time based billing, it’s origin, and where it falls short
• The new formula for creating a value based billing process
• How to build certainty into your clients experience
• How to structure prices and payment schedules around specific industries
• How to remove client decision paralysis and package a monthly service plan
• Why focusing on billable time could limit client profitability

And much, much more
 Click Below to Listen to the Interview:

Show Links: 
VeraSage Institute 
Ron Baker’s Linkedin 
Ron’s Books on KPI’s, Value Based Pricing, and More (Amazon Link)
The Soul of Enterprise Radio Show

Want To Dive Further Into Value Pricing?

We are offering a new Book Giveaway for Ron Baker’s published book titled: Implementing Value Pricing. To be entered into this book giveaway, leave a comment answering the following question:

Which business model have you implemented at your firm: Value Pricing Model or the Billable Hour Model?

Key Summary

In today’s podcast, I was originally super excited to speak to Ron Baker about his background and how he was able to build his successful Think Tank: Verasage. After a few minutes on the call, I quickly realized the enormous amount of value Ron was bringing with regards to learning how to implement value pricing within accounting firms and why this is valuable for your 21st century clients.

A few questions later, I was given the breakdown of how to decipher if your firm is an old business model or a new age business model, the purpose of value pricing and the 8 steps to implement value pricing within your firm.

Let’s get started.

CPA Firms: Old Business Model Vs New Business Model

Let’s start with what a business model is from Ron’s perspective: Implementing Value Pricing (aka. The Radical Business Model).

Of course, the first question I had to ask was: Why do you use the term radical?

According to Ron Baker, “When I talk about radical for CPA firm owners, I want the owners to realize that they need to get back to the root of ‘value’. Ever since the billable hour business model came in, we lost sight of the value. We tend to think in terms of time, and hours and that’s not how the customer thinks as they want to see the value (or the results).”

When defining a business model at accounting firms, you want to first create value for your customers and outline exactly how you capture a share of that value.

For example, ‘capturing a share’ of that mean means identifying and proposing the right price for the service you are providing.

The ‘creating value’ section of the business model is meant towards how your customer experiences or feels when they receive your service. This goes beyond technical expertise and more into how your customer feels with regards to your listening skills, communication skills, ability to empathize with you, and ultimately, talk in the same language as you.

Old Business Model Formula:

Revenue = People Power x Efficiency Of Your People x Hourly Rate
• ‘People Power’ means your capacity in terms of hours
• ‘The Efficiency Of Your People’ is measured in realization, utilization and billable hours
• The Hourly Rate is what you are charging your clients for the service being done

When discussing this old business model with Ron Baker, he continued to harp in on it’s main problem: This old business model is completely consumed by time.

“There is not a customer alive that buys the professionals time. Nobody goes to the doctor to buy an hour. We can’t buy time from one another yet we are essentially selling time with a ‘billable hour’ model.”

Instead, understand that what customers are buying from professionals is an outcome.

As we continued on, Ron focused on the idea that this entire old business model, is all denominated in time focusing on something that the customer does not care about.

“This old business model does not conform to the knowledge economy that we currently operate in. It was instead designed for a factory model, for example the Ford Auto plant.”

Ron’s issue with the old business model is the major focus on what’s not important: The Billable Hour & The Timesheet. Most accounting firms focus on hitting their hours, marking them down into 6-minute increments and then never focusing on the outcome. Which should be the most important part of your work.

By focusing less on the outcome, and more on the billable hour, you move farther and farther away from what your customer really cares about.

“Any time you can reduce the risk of taking away time from the customer, and put in on yourself, the entire risk lies with the customer. If I don’t know what I’m doing, then the customer feels it. That’s what customers don’t like about the billable hour. It’s a breeding ground of uncertainty.”

According to Ron Baker, one of the biggest arguments for a fixed fee/value pricing model is by taking on the risk of the uncertainty of how long the job will take, the customer will be willing to pay a premium fixed fee. This is why the new business model is focused solely on how you create value for your customer, instead of focuses on your billable hours.

What’s an example of creating more value for your customers?

Here are three examples of how accounting firms can create more value for their customers, per Ron Baker:

1. Structure payment terms around the customer’s cyclical cash flow, rather than your firm’s workflow.
The purpose of structuring the terms around your customer’s needs is because value is determined by your specific customer and therefore it’s external to your firm.
For example, if you have a retail store that has cyclical sales towards the end of the year, structure your payment plans around the times when the cash flow has been increased as long as they pay you within the 1 year requirement.

The best part is to not only give your customers the peace of mind of having a fixed fee, but also be able to help them budget for it by providing payment terms around their business, instead of your own. Since you’re the accountant, you know their cash flow probably better than they do.

2. Offer various ‘Value Guarantee Options’

This can be down alongside your fixed price agreement. If you are not satisfied or delighted with our service, then only pay what you think what the value was.

An example of a value guarantee option is to give your customers the ability to have a 100% money back guarantee, with no questions or ridicule from your accountant.

“Just remember that a service that is guaranteed is worth more than a service that does not have the guarantee.”

3. Bundle in unlimited access

A tagline you can provide on your contract is to mention that the customer can call you or meet with you at any time, on any topic. The purpose is to showcase that you are here to help your customers, not the other way around.

“Why don’t we drop that and reduce the barriers for the customer to call whenever. I’m not saying give it away. Instead built it into your pricing. It’s going to lead to more work and more high value offered to the customer. It’s going to be higher value to be involved in the strategy of the transaction, instead of fixing the damage after it has already been done.”

You’re ultimately going to end up selling more services to the customer when they have unlimited access to you.

New Business Model Formula

Profitability = Intellectual Capital x Effectiveness x Value Price

Let’s break this formula down, piece by piece:

Profitability:

The purpose of structuring this formula is to get CPA firm owners in the mindset that not only do you want to be profitable, but you also want the customer to make a profit off of using you and essentially getting value from your service.

For example, when you went to Starbucks this morning and purchased the $4 latte, it was clear that as the buyer, the latte was more valuable to you than the $4.

According to Ron, “We need to focus on the buyer’s profit. This is where the added value service comes into play (as discussed above – Unlimited access, service guarantee, etc).

That’s enhancing your customer’s value perception. So I’m looking at the customer’s profitability over the lifetime, not just within 1 year.”

Intellectual Capital (3 Component):

1. Human Capital

Human capital, defined by Ron Baker, is what is instead the mind of all of us. Most of the wealth resides in human capital and that is why the world is fueled by the Knowledge Economy.

2) Social Capital

Essentially means who your customers are. Remember that nobody owns a customer and essentially how your customer feels and views you makes up part of your business model.

3) Structural Capital

This is all the stuff that stays in your firm after your employees go home at night. For example, it’s your workflows, software, computers, and your strategy. Structural capital is completely owned by your firm.

Effectiveness

When describing effectiveness, Ron makes it clear that it does not mean being efficient. Per Ron Baker, “We can be efficient at doing the wrong things. I want knowledged workers to be effective which is defining doing the right thing.”

Value Price

Within this model, businesses do not have hourly rates. Instead, replace the billable hour with fixed fees.

How Do You Shift From Offering Value Pricing Instead Of Hourly Rate Model?

One of the things you can do to start building your intellectual capital is to offer your customers options (choices).

Essentially, people prefer choice.

For example, you have a choice in which American Express card you would like to have. Whether it be a green, gold or platinum card, there is a choice depending on your needs and desires.

This is the first step: Offer Options.

Craft an acceptable range of pricing for the exact same product. You will need to do research within your firm and your customers to determine what that range is.

Give your customer a range of 3 different prices (just like Starbucks does with Tall, Grande and Venti sizes).

Here is an example of value pricing with options:

Green Card Level (cheapest price): Offer just the basics of doing the tax return (no bells and whistles)

Gold Card Level (medium price): Add in additional items of value that you can do for your customer (for example, cash flow budgeting, KPI analysis)

Platinum Card Level (highest price): This is where you can offer the most value (i.e. 24/7 365 day access to you)

By offering these options, the customer will decide what they want and what they are willing to pay for. Some customers just want the green card and go with the basics. Some customers want the 24/7 access and are willing to pay a higher price.

This is the best way to switch from the old model to the new business model: Offer your customers choices.

How does the initial onboarding process happen with the new business model?

As Ron Baker goes on the mention, “The onboarding process is essential in selling within this new type of business model. We have a saying at Verasage that you cannot value price the wrong customer. You don’t price the service. We are pricing the customer (because value is subjective).”

Value is determined based on what the outcome is (what you are producing for that customer).

Want To Dive Further Into Value Pricing?

We are offering a new Book Giveaway for Ron Baker’s published book titled: Implementing Value Pricing. To be entered into this book giveaway, leave a comment answering the following question:

Which business model have you implemented at your firm: Value Pricing Model or the Billable Hour Model?

8 Step Process To Implement Value Pricing

Here are the eight steps Ron Baker walks you through to determine how to implement value pricing within your firm:

Step 1: Engage In A Value Conversation With Your Customers

This is the first step, and most important step. You need to know how your customer sees and identifies value. In order to get this answer, you need to set up calls with your customers and ask them the following questions:
• What stage of life are they currently at?
• Where do they want to be in 5 to 10 years?
• How do they define a successful relationship with their accountant?
• Why did they switch from their prior accountant?
• Why are they sitting in your office now?
• Why do they need this today, not 6 months from now?

The purpose of these questions is to determine: What are the value drivers that are steering your customer?

Step 2: Craft Your 3 Tier Value Offer

Once you have determined how your customers see and price value, you can create an acceptable 3-tier value range to offer to your prospective and current customers.

Using the same idea as the American Express structure, offer your customers a Green, Gold and Platinum level of service and let them make the choice of the value they want you to offer.

This step also helps firms answer the daunting question of whether or not you priced the service incorrectly (i.e. did you leave money on the table?). This service offering of 3 options will place the customer in the driver’s seat and make the decision on how much they are willing to spend for your value offer.

Step 3: Decide Pricing For Each Tier, Through Customer Inquiry

To take a step back, you have first contacted your customer and learned what they see as value driven activities. Then, you have crafted 3-tier level of the value you are willing to offer.

What’s next? Deciding on how to price each tier.

Before you actually establish the price, you want to go back to your customers and perform a series of questions to learn what is the price range they are willing to pay for this value.

Here are a few questions to help move this conversation along:
• How profitable is the client’s company? How long have they been in business?
• How sophisticated is the client?
• Do we like this client?
• What is the client’s cost of not solving this problem in dollars?
• What is the economic benefit to the client if they solve the problem?
• At what price would this be so expensive the client would not consider buying it?
• At what price would this be expensive, but the client would most likely still buy it?
• At what price does this become inexpensive?
• At what price does this become so inexpensive the client would question its value?
• What price would be the most acceptable price to pay?

After you have gone through the questions with the customer, it’s now time to identify where the value buckets lie, in terms of pricing. There are three different types of pricing responses that you should expect from your customer, during this interview process:

Reservation price:

The price that is way below what you are willing to actually work for. This would be generating a normal profit, and something the firm might just turn down.

Hope For Price:

This is the price that falls in the middle of the 3 tier pricing strategy. Most times, the customer will not be shocked with how expensive or how low the price is. It’s generally a solid price that your firm is willing to accept.

Pump Fist Price:
The last tier in the pricing model, and the most expensive, is called the pump fist price because it’s the price your firm would kill to have. Within this top tier price, your firm is willing to add extraordinary value and will generate a crazy good profit. You will be fist pumping if your client accepts this price.
According to Ron:

“Many people ask how to ascertain value since it’s subjective and there’s no formula. The answer is with a deep understanding of your client’s value drivers, which requires a deep conversation with the client.”

Step 4: Once The Options Have Been Crafted, It’s Time To Present Them To Your Clients

Now it’s time to consolidate all of your hard work, and bring your new 3 tier pricing and value offer to your current clients.

This will provide an opportunity for the conversation and feedback to come directly from your customer, without wondering what they are thinking.

Remember that this conversation needs to be done with someone comfortable to discuss pricing.

Your client might start off with saying it’s too expensive.

You will need to ask additional questions and might need to head back to step 3, to make sure you have identified how to price your value properly.

Step 5: Create A Fixed Price Agreement (FPA)

This step can only be completed, once you have successfully identified your value service offering and the prices you are willing to offer for those services.

Essentially, an FPA is an engagement letter detailing out the value you are willing to offer and the price you have come to an agreement on with your potential new client.

Step 6: Begin Planning On The Engagement

Now that you have your FPA and are ready to start working, it’s now time to plan the engagement. The planning steps can include the following:
• Scoping the work
• Organizing who will staff the job
• Set up client expectations and timelines (due dates)
• Plus other planning items (risk assessment, etc)

Step 7: New Additional Work Arises (Scope Creep)

We have all been there, contracted the engagement to do one job and find out there is a lot of other work that needs to be done.

This is where “out of scope” billing comes into play.

When scope creep occurs, you can give your client the option on how they want to proceed.

Whether it be through signing an additional FPA or adding on additional fees to your current arrangement.

Just make sure you have a clear communication line with your client when this occurs.

Step 8: Review The Work, After It Has Been Completed

Within most jobs, we review the work to make sure everything is in place before sending it to the client to finalize.

An additional step you can take, to confirm the value you have provided, is to perform what Ron Baker calls an: After Action Review (AAR).

Per Ron Baker, “You will need to find out how you did as a service provider. Whether it be through a phone call, in person meeting or a simple email, set up communication with your customer to confirm that they have received the value that was offered in the FPA.”

This is a core competency that all firms should be implementing, regardless of staying with the old or new business model.

Want To Dive Further Into Value Pricing?

We are offering a new Book Giveaway for Ron Baker’s published book titled: Implementing Value Pricing. To be entered into this book giveaway, leave a comment answering the following question:

Which business model have you implemented at your firm: Value Pricing Model or the Billable Hour Model?

Want To Dive Further Into Value Pricing?

We are offering a new Book Giveaway for Ron Baker’s published book titled: Implementing Value Pricing. To be entered into this book giveaway, leave a comment answering the following question:

Which business model have you implemented at your firm: Value Pricing Model or the Billable Hour Model?