Your Obsession with Pricing is Holding Your Firm Back

Hey 👋 - Brandon here.

Happy Saturday to 1,628 growth-minded accountants.

Here’s one growth tip for you and your firm.

Today’s issue takes less than 3 minutes to read.

I was on a podcast with J Staats recently (to be released soon) and the topic of pricing came up.

While we discussed, it occurred to me that the accounting industry is overly obsessed with the topic of pricing.

There’s hourly billing, fixed pricing, productized pricing, value pricing 1.0, value pricing 2.0, subscription pricing, etc.

But I think firms are hyper-focused on the wrong lever.

Think about it…

How much leverage does better pricing really give you?

If you are charging below market rates, a better pricing model is an easy lever to pull and can result in immediate increases in profit.

And a strong pricing model can compound at scale.

I’m not saying you shouldn’t look hard at your pricing model - all firms should.

But at some point in your pricing journey, you find equilibrium - the price the market is willing to pay for the scope you are willing to deliver at that price.

As a result, the leverage pricing gives you is effectively capped.

Once you find equilibrium, the marginal effort to improve pricing is no longer worth the cost (your time, energy, and resources).

Here’s an unpopular opinion but stick with me…

What if you didn’t change your pricing model at all and instead just doubled the prices you currently offered?

It would be easy from an admin/process perspective to roll out.

You wouldn’t have to spend months developing a new system, forecasting revenue and cash flow, crafting communication to teach your clients the “new way” of pricing.

Instead, you just roll out a price increase and see what it does to your retention numbers.

Simple.

And all that time and energy you saved?

Roll it into winning new clients and coaching your team - these are the highest impact hours you can spend as a leader of your firm.

How does this perspective change in regards to hourly billing?

It’s no secret I’m not a fan of hourly billing and time tracking. I think you can end up making decisions on data that is inherently false.

But…

At the end of the day, big firms have been billing hourly for decades and it works “fine” for them.

So if you are able to bill $500 per hour with a close-to-100 realization rate…

Why change models?

That's all for this Saturday. See you next week.

Cheers,

Brandon