How to Raise Rates on Current Clients
- Meet Loren Fogelman
- Unsung Heroes
- Scarcity Mindset
- Taking the Leap
- Comparing Ourselves to Others
- The Process of Changing Your Rates: Example
- What Your Client Thinks
- Good Better Best Pricing
- 3 Ways to Get More Profit – Jetpack Workflow
- The Hidden, Simple Growth Lever in Your Firm – Jetpack Workflow
- Scope Creep in Accounting: Increase Your Revenue – Jetpack Workflow
- How To Present Value To Accounting Clients – Jetpack Workflow
Connect with Loren Fogelman
- Loren’s email: email@example.com
- Loren’s website: Business Success Solution | Loren Fogelman
Meet Loren Fogelman
Her main goal is to focus on helping accounting professionals double their income while working half the time. She encourages accountants to raise their prices. With tactics like creating safe formulas and boosting your confidence during conversations with clients, Loren is eager to change how you view your current income.
Loren believes that accountants are unsung heroes. Accountants deeply care about the services they provide for their clients.
Accountants showed their dedication to their clients during the height of the COVID-19 pandemic. As businesses had to shut down due to COVID-19 protocols, accountants were there to help their clients navigate through the pandemic’s confusion. The unforeseen future frustrated the clients, but accountants supported them through and through.
However, accountants’ fees do not reflect their value.
New clients might see reflective rates, but your older clients don’t. For many, it’s easier to present changes to new clients because they don’t know about your previous rates. Yet, your rates for your older clients remain unchanged because that conversation can be a little more difficult. Loren wants to change this process.
All clients need to see your change in rates.
Changing your rates isn’t as scary as it sometimes seems. Raising your rates will benefit not just you but your clients as well.
Fear is one of the main factors that cause accountants to overthink changing their fees.
Some fears include:
- Losing clients
- The conversation
- Doubting your value
However, if you let fear win and stick with your starting formula, your clients will see growth but your business won’t.
Loren says that by raising your rates, 82% of your clients will comply with your new pricing. The clients who leave are usually the ones you hoped would secretly leave anyway.
This course correction levels up your firm and allows you to work with your ideal clients at a higher quality.
Taking the Leap
Increasing your rates takes courage, and once you’ve started to see positive results, confidence will follow.
However, don’t waste this courage on small price increases. A 5% or 10% increase won’t help you and you’ll still be undercharging for your services.
Loren encourages accountants to shoot for a 2x or even 3x increase. Clients make these kinds of changes on their end. However, if you are nervous about taking the leap, you can comfortably and safely go for a 20% or 30% increase and not get pushback.
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Accountants might try to compare themselves to others or analyze other data to determine how to price their rates. If you use this method, you will continue to underprice your services.
You need to understand the value from the clients’ point of view and price your services accordingly. This ensures you are basing your prices on what they value, not what you or others in the industry value.
The Process of Changing your Rates: A Real-Life Example
Loren had a client who didn’t like talking about rates with her own clients. This client had not raised her rates for one specific client since they began working together in 2014. Her client went from a 6 to a multi-7-figure business. Even though the scope of work had expanded, he was still paying old rates of $200 a month.
With Loren’s guidance, her client was able to overcome her fears and increase her prices. Here is a closer look at the process used:
Packages are a great way to introduce versatility to your clients.
Loren and her client created packages ranging from low to high: Silver, Gold, and Diamond. These packaging options allowed her clients to have three different choices of how to work with her.
To properly change her rates, this client had to understand the value of her services from her clients’ perspectives. She had to know why they chose to keep her accounting services as opposed to someone else. This knowledge would allow Loren’s client to ask more helpful questions during future conversations with her clients.
For practice, Loren roleplayed as a client. Loren’s client was able to ask questions and receive answers that she would hear during her actual conversations with her clients. At the end of their mock conversation, Loren gave her advice.
A mock conversation is a valuable way to:
- Understand how the conversation will go
- Correct your mistakes
- Feel more prepared
After her preparation, Loren’s client had a conversation with her client and presented him with the three packaging options. She thought the client would be price-sensitive. However, her client chose Diamond (the higher package).
Loren’s client went from $200 to $1,200 a month with this specific client. She attained this new increase because she showed her client the value from his perspective instead of her own.
What Your Client Thinks
Your clients are expecting more out of you but you won’t know unless you have the conversation. Sometimes what you think they value and what they actually value are two different things.
You might want to ask your client:
- What do you like about the services that we provide you?
- Why do you like working with us?
- What are the changes you see happening as a result of our services?
Asking questions gives you insight into your clients’ perspectives about you.
Good Better Best Pricing
The biggest roadblock is often not knowing where to start. Loren has a great formula that will help you get rolling: Good, Better, Best Pricing.
The Good Rate
New clients are coming to you because of your services. But what should you charge?
Try looking at your current clients’ fixed rates. Multiply that by 1.5. Now you have your “good rate.”
Charge three clients the “good rate”. You’ll quickly see your clients aren’t as price-sensitive as you had thought.
The Better Rate
After you involve three people in your good rate, you will gradually move into your “better rate.”
The “better rate” is the original fixed fee multiplied by 2. Charge that rate for your next three new clients.
By implementing the better rate, you will have an easier time with value-based conversations and begin to understand what your clients care about and better answer their questions. You’ll also gain more confidence to work through objections.
The Best Rate
Now, we go into the “best rate” as clients continue to approach you based on your services.
The “best rate” is the original fixed fee multiplied by 3.
With this rate, you don’t need as many clients to meet your revenue needs, and you’re working with clients who respect and value your services.
Since you don’t need as many clients, you can work more closely with the ones you have to provide higher-level services.
The Cycle Continues
Further down the road, you will recalibrate your rates. Your best rate then becomes your good rate and you will go through the Good Better Best Pricing process again.
Changing your rates might be a scary thought, but the rewards will benefit you in the end.
Loren has the complete Good Better Best Pricing outline and more at Package and Price Handout – Business Success Solution.
Be sure to listen to the full episode above and share it with a fellow firm owner that needs to hear Loren’s advice!