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Forget value billing. Think value building.

Dr. Chandra Bhansali, CEO of AccountantsWorldI recently attended a seminar on value pricing. The presenter started with a seven-minute video on “the backward bike.” This bike turns left when the rider turns the handle bar to the right, and vice versa.  Of the dozens of people who tried it in the video, no one could ride that bike. The presenter was trying to demonstrate how hard it is to break a habit.

Then the presenter explained what value-based pricing is. And then he tried to demonstrate how to apply the value pricing concept to get higher fees for services rendered.

At the end of the presentation he asked if there were any questions. More than half the attendees raised their hands. It seemed attendees were more confused after the presentation than before.

And then it struck me that value-based pricing truly was as complex as riding a backward bike.  

So I asked myself: if value pricing is so complex, does it have much value in the accounting profession?

My assessment is that while a small percentage of firms with specialized practices could benefit from value pricing, most accounting firms (based on tax, accounting, audit and payroll services) will at best derive marginal benefit from value pricing on the consulting services they offer.

So why are we trying to solve a complex problem that has limited practical value?

In this post, you'll learn:

-        The real facts of the current environment for accounting and other core client services.

-        Why core services, including accounting and payroll, have become low-margin commodity services.

-        Tangible steps you can take today to break away from traditional commoditization and make these services highly profitable.


Let’s start with some basic facts.

Fact 1: A vast majority of CPA and accounting firms generate more than 80% of their revenue from the following services:

  • Audit & review
  • Tax
  • Accounting, including write-up, bookkeeping, trial balance, and preparing compiled or SAARS 21 compliant financial statements
  • Payroll

Fact 2: These services are either compliance services or commodity services.

The primary function of tax, audit and review is to meet regulatory requirements which most clients perceive as a nuisance. Most clients consider money spent on these services as an expense. How do you create value in an expense? There is only one way - by reducing the expense. That means reducing your fee, which I’m pretty sure you don’t want to do.

Meanwhile, accounting and payroll are important business functions. Offering these services usually doesn’t require highly specialized knowledge. Virtually every accountant has the knowledge required to offer these services, so they have become commodity services.

Fact 3: You have already created a perception of your value in your clients’ minds.

The accounting profession has historically charged clients for services by hourly fees. This created a perception in clients’ minds about how they view your compensation for services. In their view, you are paid for the perceived effort (i.e. hours) and skills required to perform a service, NOT for the value you bring.

Another problem is that the perceived value of your skill set is weakly correlated to your skill set. It is all based on perception. If you’re a sole practitioner and charge $150 per hour, then that is the value of your skill set in your clients’ mind. If your friend, who is no smarter than you, is a partner in a Big 4 firm, then her clients have a higher perceived value based on historical norms, and might gladly pay her $450 per hour.

You established the value of your and your staff’s time in the minds of your clients. You also establish how much time of different staff members is needed to perform a service. Based on this perception clients expect a certain fee to be a reasonable compensation for different services you offer. It is etched in their minds, and it’s very hard to change that perception of your compensation.

It is very likely that, assuming you have great client relationships and offer excellent service, if you were to increase your fee by 10-15%, most clients would still stay with you. That’s thanks to your personal relationship and quality of service. But if you try to do it using the concepts of value pricing, you’re actually likely to have less success.

It isn’t necessarily impossible to raise your bottom line in core services using value pricing. But in this case, I must commend the honesty of Greg Chambers, a proponent of value pricing. He wrote an article for Accounting Today entitled:

“The Impossible Journey: Transitioning to Value-Based Pricing.”

Thanks Greg, for proving my point!

So you must be wondering, is there any way to make more money from core accounting services?

YES. Even though accounting services have become a commodity, you can add 20%, 30% or even 50% more to your bottom line from accounting services. 

To learn how that's possible, we need to first understand some suprising realities of the digital age in which we live.

The common notion is that the price anyone pays for a product or service is the value of that product or service in buyers mind. That’s why sellers of a product or service work hard to create a perception of high value for their product and services, so they can charge higher prices. That’s the basic premise of value billing.

But today, that's simply not true. Here's why...


 Ready to learn more about how to break the commoditization of your core services and boost your profitability?

Download our free whitepaper, "Forget Value Billing. Think Value Building."


Jay Abraham interviews Subir Chowdhury (VIDEO)

Here's a video with marketing guru Jay Abraham interviewing award-winning quality leadership consultant Subir Chowdury.

Attending the IPPA Conference? Stop by our booth!



Are you attending the 2017 IPPA Sales and Marketing Conference in Las Vegas on Feb 20-22? If so, make sure to stop by our booth #33 to learn more about our award-winning Payroll Relief solution. Our payroll specialist Roger Batista will be happy to give you a personal demo to show how Payroll Relief can boost your payroll profits by 20% or more.

Roger will show you how Payroll Relief can:

♦ Automate your payroll processing, including direct deposit, tax payments and the filing of tax forms. You'll see how Payroll Relief handles all of that automatically, on time, and with 100% accuracy - guaranteed.

♦ Eliminate data entry and check printing in your office.

♦ Consistently earn $3 - $5 per paycheck.

♦ Use payroll to increase client satisfaction and retention.

♦ Lower your costs. Payroll Relief has processing fees as low as 45¢ per paycheck, all inclusive.

Hope to see you at the IPPA conference!

Learn more about Payroll Relief.



Three Benefits of Maximizing Your Relationship with Your Accountant

This byline was originally featured in Home Business Magazine.


Small business owners: tax season has kicked off, which means you’ll be speaking to your accountant again. But did you know that accountants can do so much more for your business than filing taxes? In fact, for independent business owners and freelancers, it’s highly valuable to work with accountants throughout the entire year.

Here are three ways you and your business can prosper by working with accountants beyond March and April.

Finding New Revenue Opportunities

As a business owner, you’re in charge of so many different aspects of a company, from marketing to operations and HR. While basic bookkeeping may seem like a necessary to-do on your list, working with an accountant allows you to outsource this task. Not only can you benefit from their ability to expertly manage your books, you’ll also reap rewards from having their experienced eyes tracking your numbers. These days, many forward-thinking accountants can use cloud-based solutions to maintain a great handle on your company’s financial standing. This enables them to provide strategic advice on areas to expand your business.

Future-Proofing the Business

Risks are an inherent part of any business. It’s hard to anticipate them, but working with an accountant can improve your chances of surviving through uncertain times. When accountants have both your historical and real-time financial data at their fingertips, they can help you develop a better business plan. You may have an idea of when your peak and off seasons are, but accountants can enhance your business plan to help you maintain a steady cash flow during the off months.

Gaining an Extra Lookout

As a business owner, you see that money is constantly churning, from an influx of revenue to an excess in spending to manage inventory. As such, it’s hard to discern what’s draining your resources. Working with an accountant year-round enables them keep an eye on your cash flow and share timely advice about your business. For example, you may be using various contractors to fix different parts of your business, from lights to computers. Accountants, who see these invoices uploaded, may recommend consolidating vendor services to ensure you’re getting the best deals for services you need.

Running a successful business isn’t easy. In fact, nearly 50 percent of all small businesses fail within five years. By working with your accountant beyond the tax season, you can discover new growth opportunities, prepare for future threats to your business, and minimize inefficiencies.


How to Develop an Accounting Firm Marketing Message That (Really) Works

By Hitendra Patil

How do you develop a marketing message for your accounting firm that really works? Here's a hint: Ask Gillette!

According to CampaignLive, Gillette’s 2016 Father’s Day ad achieved an extremely rare 709 Ace Score. Less than 1% of ads receive an Ace Score over 700.

It further explains that the ad’s biggest strengths are:

  1. being liked, and
  2. being relevant.

Nearly 65% of the viewers thought the single best aspect of this ad was the “message”. Not the visuals, music, characters, etc.

Why? Because the message is completely relevant to what is going on in the world today.

Don’t believe me? Come back to the rest of this post after watching the ad.

(Welcome back!)

Inspired by this awesomely clever yet simple video ad, we have some ideas that you can use in your firm’s marketing plan.


1. Be relevant to your target clients.

The “message” you deliver to to attract your ideal clients needs to be relevant to their lives.

Question for you: 

What is really relevant to your target clients? (Hopefully, you have defined your target clients very precisely).


2. Compare to show wisdom and expertise.

Yes, accounting is a bit more (okay, a lot more) complex than shaving. But that's the point.

The key marketing principle here is contrast. When you show what is difficult, the easier option is understood better, in a comparative sense.

Question for you:

Which stressful results can you show your clients if, for instance, they did their own accounting and taxes? 

Now show them the results you can produce, without that stress.


3. Connect via context.

Some viewers felt that the story was great but the content was not that well related to the product.

When you deliver the context, your target audience should connect your story (message) with your services.

Question for you

Here's an example: Can you figure out the most common entries that go into “Ask My Accountant” and WHY? 

Answers to these WHYs can be your context that clients will quickly relate to.


So what's next?

Giant corporations can spend millions to do market research and demographic studies. They pay a lot to creative ad agencies and media producers to create such awesome ads. 

It is not easy for accounting firms to do the same. And it is rare to see mass video ads in the accounting profession.

But your message can still deliver the same type of impact - on your website, in your personal interactions with prospects, in your emails, perhaps via videos on your website. 

I look forward to your thoughts!

Hitendra Patil is director of practice development at AccountantsWorld. In this role, Hitendra helps accountants leverage AccountantsWorld's solutions more powerfully, advancing the company's leadership in cloud solutions for accountants. He can be reached at