How to Implement Value Pricing
For this month’s Interview Spotlight, we’re excited to highlight our interview with Jason Blumer, Chief Innovation Officer at Blumer and Associates and Founder of Thriveal CPA’s.
As most of you probably know, Jason wants to disrupt our industry. Through his work, he puts into place strategic, creative initiatives for accounting practices and does the things in the industry that others say cannot be done.
But before we dive into how he is transforming accounting, let’s start with his background.
Jason’s accounting career began 11 years ago when he worked with his father at their CPA firm.
As he learned about the world of accounting, he realized that many professionals in the community were embracing creativity and seeking alternatives in what is a traditional accounting firm model.
It was from this mindset where he decided to create his own firm, Blumer and Associates. At Blumer, the company’s aim is to “turn agency owners into mature business owners”. Blumer offers coaching, consulting, virtual controllership, taxation, accounting & payroll, and technology services. But just being a CPA firm owner was not enough for Jason.
Alongside the creation of Blumer and Associates, Jason decided to launch an accounting community focused around creating entrepreneurial, risk-loving and technology-focused CPA firms.
This accounting community is called Thriveal and has grown to approximately 70 members in four countries over the last 4 years. Inside the community, you will find like-minded accountants looking to develop their own firms and provides coaching and consulting services.
On top of everything he has done, Jason decided he also wanted to launch two podcasts focused in the accounting industry. His first podcast is Thrivecast that he co-hosts with Greg Kyte for the Thriveal community.
His second podcast is Businessology that is directed towards creative professionals. Jason’s experiences with the accounting community, through his social media and personal interactions or otherwise, over the years has led him to conclude that people desire to do business with people they know.
People are interested to discover what regular, real people are doing and to learn from their efforts. So he was motivated to launch Thriveal, a virtual firm, to facilitate information sharing and to foster a communal environment for the accounting world.
Disrupting The Accounting Industry
Here are Jason’s top 5 Disruptive Business Considerations that you should implement within your CPA firm:
• Adopting value-based pricing versus hourly billing and other value-added services
• Running internal processes efficiently
• Making the business virtual
• Leveraging technology such as eliminating paper files or moving the phone system by utilizing the cloud
• Eliminating the hierarchical management structure within a firm: Make the CPA firm “flat”
• Reconsidering the business dress code
In expanding on considering alternative management structures for firms such as the flat firm concept, Jason points to the ROWE concept.
The ROWE Concept
ROWE stands for Results Only Working Environment. Rather than have a management hierarchy, with ROWE, the working team is entirely autonomous.
The team members, who are still employees, do what they desire to do in when approaching work. Each employee is paid on a percentage of revenue brought into the firm.
The role of management would then be to empower and support the efforts of these employees to serve their clients well.
The Division Of The Accounting Industry
Jason sees the accounting world divided in two ways:
1) Accountants who are firm owners and
2) Accountants who work at firms.
More often than not, it is the firm owner who is the change agent. If an employee at these firms wants change, Jason believes that eventually, the person will have to take the risk of going out on their own to create the change. That person has the power and leverage to change.
Hourly Billing vs. Value Pricing…Is the Change Worth it?
There is a constant debate going back and forth within the accounting profession. Should we offer the typical hourly billing structure or turn to a more radical approach of the value-based pricing module?
When it comes to hourly based billing, the offer seems to be much simpler.
“With hourly billing, you can work for anybody and have the added benefit of starting the work within 5 minutes of them signing the engagement letter.”
However, when you offer value based pricing, it becomes much harder to determine what the offer will be. Fortunately, there is a well-documented community of practitioners who are leading the efforts, notably the Thriveal community and Ron Baker’s Verasage community.
3 Key Factors To Consider When Implementing Value Pricing
It’s important to keep in mind the following key factors when setting up a successful transition into value pricing:
1. Successful value pricing starts with value conversations (both in the initial consult as well as onboarding)
2. Onboarding will typically take longer in value pricing, so not having a well-defined onboarding and engagement process can prolong this experience, and hurt cash flow
3. Value pricing is about finding alignment and asking the right questions (covered below).
How To Onboard A New Client, Using Value Based Pricing
In order to determine what the right price should be, Jason recommends that you have an in-depth conversation with your prospective client to see if this will be a good fit for both your firm and your client.
Here are a few questions you want to try and nail down during this prospective client conversation:
• Is this a right fit for both of us?
• Do you match our firm service offerings and client type?
• Does our firm have the capabilities and competencies to serve your needs?
Key Considerations When Turning To A Value-Based Model
Though the Value Pricing Model is starting to make waves in the accounting industry, there are a few things to consider before making the jump:
• A well-defined process is needed before transitioning into value pricing
• Cashflow can suffer from value pricing since onboarding can take longer, which is why a good process needs to be in place
• Start small, try implementing value conversations with new clients
Just remember to align mutual business interests for value pricing to be successful. And you will be quickly on your way to implementing value pricing.
Relevant Value Pricing Interviews: