287 Overcoming Client Resistance to Pay You More

There's a whole lot of reasons why your client doesn't want to pay you any. Any more money. And it only takes one for them to be like, nah, sorry, bro, not for me. Today we're going to pick apart a whole bunch of them to think through what those objections are, what risks the clients bear to ensure that we are setting up our packages and managing these communications in a way that will overcome them and give them no more objections they could possibly push back with so that you can move ahead doing the same work or maybe a little bit more work than you did before, but get paid way better for it. So today we are digging into pricing resistance. Come on in, let's talk about it. All right. This week we're going deep on value pricing. I've never been a big value pricing Stan. There's aspects of it that haven't felt super practical for me because it's hard. But I think if we acknowledge it for what it is, a skill that can be developed by yourself, by your team, it is arguably one of the best investments you can probably make if it leads to all of your engagements being priced better. Right. So we're trying to go through some practical examples of how to put some of these tools to use. We're gonna refer a bunch to kind of the two core books by Ron Baker and Paul Dunn that most people point to for value pricing around accounting firms. I'll put links to those in the show notes. Okay, let's jump straight in to something I really liked from the implementing Value Pricing book of Ron's in 2010, the five C's of value. Because I think it shines a light on why we're bad at this. And maybe the things we're not doing that if we did, would lead us to be able to value price better. The five Cs of value, number one, comprehend value to your customers. So do we even have an understanding of. Of why what we're doing for our clients is valuable? I'll give you a really good example of where we. We maybe missed the mark. We talked about this quite a bit. The notion that you've got clients way up here that are paying you top dollar, that adore you and happily pay the bill the moment you send it to them. Right? Like, those are your A clients. You love working with them. They're the ones that are sending you the gift baskets every holiday. Then on the other end of the spectrum, you got the stinkers, the declines where you mark that bill down and they still complain when, when they get the bill and you're like, oh, my gosh, this person is gonna drive me nuts. Are they just a bad person? And the reality is you're not solving painful pains for them. And when we don't understand the difference between the A and the D, it is because we don't comprehend the value that we deliver or don't deliver to our clients. So step one, like, we have to understand what it is we do that is valuable, and that will lead to better selection and screening when we're pulling in new clients. But it's also a step to understanding how to value price. Because if I don't even know what they think is valuable, how am I ever gonna, like, pick a number that's going to be optimized? Right? So the five Cs of value number one is comprehend value to customers. Number two is create value to customers. There is still a foundational is this valuable or not? Sort of thing. And sometimes, sometimes the answer is no. Especially when we're doing really basic stuff that is kind of commoditized work, we're not delivering it in a way that is particularly valuable to the specific pains of that business. So at its core here still is. There's an element of, like, am I giving them good advice? Are we doing a good job that can always be improved? That's the second one. Create value for customers. The third C of value, Communicate the value you create. I guarantee you, we don't do this. Maybe that's like an accountant thing where we're not good at tooting our own horns. I know. I'm sure not. But. But when you do something phenomenal for a client, what usually happens is you do it all behind the scenes and you begrudgingly think, if this client only knew. If they only knew how smart I am and what a headache I just saved them. But we don't, like, we don't tell them that stuff. Like, we keep all that to ourselves, and then the clients don't know about it, and then we get mad that they don't value us. So it's like, if you're not going to advocate for yourself, who will? Right? Like, it's one of those things. The fourth C is convince customers they must pay for value. So there's an element of negotiation here where oftentimes clients will push back simply because they want to pay a better price. And unless you have the skill of, like, being able to stand up to that and understand how to navigate that dance, like, they're just. They're going to steal your lunch. So your sales Folks, whether that's you, whether you have a team of people to agree, they got to be negotiators, like have some skills there to be able to not get taken advantage of, like not end up at a price that is less than what they actually would have paid the client. And then the fifth C capture value with strategic pricing based on value, not costs and efforts. This episode is sponsored in part by Live Flow. I love spreadsheets. Yes, I knew I love spreadsheets, how about you? But you know what spreadsheets don't do? Integrate with anything. Like anything all the other tech that we use, Zephyr, Dax software has to integrate. Stuff like that's just a requirement now for software. But hum, humhow, humhouse, spreadsheets have been left off the hook. And so you end up doing this hokey pokey CSV export over here, CSV import over there, big hot copy paste mess, which isn't good when spreadsheets are a part of recurring workflows like month end closes, stuff like that, where you literally rely on the worksheet to make a work paper every week or every month. And gang, that is where liveflow becomes the Swiss army knife that gives your spreadsheet Jim Belushi superpowers. It's a plugin for your Excel or your Google Sheets that'll pull any data in from your client's QuickBooks files. Don't even have to go to QuickBooks, just bippity boppity boop, couple clicks from inside of your spreadsheet and. And you got Data from that QuickBooks file into the spreadsheet. You can pull it in once it can pull it on an ongoing basis. You could get hit by a bus tomorrow. And that spreadsheet, it's gonna, it's never gonna stop, it's gonna keep on updating and I don't know, there's just something about that that I guess it becomes a conversation of legacy. What do you wanna leave behind? And will your spreadsheets keep updating even after you're gone? Cause you know what, with liveflow they will link in the show notes. This episode is sponsored in part by TeamUp, who helps you find talented people in the Philippines. Common question about hiring offshore people. What do you do about computers and it other side of the world? How do I get them the goods to do the stuff securely? Basically, you got two options. You can let them roll up with a personal computer or you can provide them with a computer. According to team Ops data, they see roughly a 6040 split with most firms in favor of personal computers, but it's totally up to you. If you want to provide them with a computer, then go out and buy one and you can reimburse them. Or you can actually pull in a local IT vendor. Team up can even connect you with a great one. Plan on around 1000 bucks combined for laptop and monitor and secure your team member's computer the exact same way you would if you hired somebody remotely. That's going to work for you across the street. If you have someone that's already managing it for you, they can probably extend that to the folks that you're hiring offshore. Practice Protect Team up also calls out as a good option here. We actually did a video on the main channel about Practice Protect. I use that for single sign on in my firm. My folks in the Philippines. Philippines use that as well. And like most things hiring offshore it ends up looking a lot like hiring onshore right now. Spooky question. People we can get stuck on sometimes. What if the employee does something bad? What if, what if, ah, what if they make off of the lucky charms? We're going to talk about that next week in another Team up ad. How do you manage the risk of a remote employee just being a criminal? We'll cover that next week. Thanks to Teamup for sponsoring this episode. Learn more about Teamup in the link in the show notes so the five Cs of value 1 comprehend value to your customers 2. Create value for your customers 3. Communicate the value you create. 4. Convince customers they must pay for value and 5 capture the value with strategic pricing based on value. How many of these do we not do? Comprehend value to customers. When's the last time you asked somebody what was valuable about your service to them? That one's a little dodgy. I think we can probably guess sometimes why what we do is valuable for some than others. But it's very rare that we ask I create value for customers. We do that. That's the one where it's like the one out of these five that I think almost all of us do. We're like yeah, this is the stuff we pride ourselves in the technical work, right? The third one Communicate the value you create. Not a chance. Not a chance, buddy. We will die at our desks before we have the self righteousness to explain to a client why what we just did was valuable for them. Convince customers they must pay for value. Oftentimes it's like take it or leave it bub. Like this is how it is. I don't know that we put much effort into convincing and then capture value with strategic pricing. I don't think we've put a whole lot of thought into this. It's not something admittedly that we even know very much about. I mean, at no point when you're becoming an accountant are you trained on sales and negotiation and pricing strategies. No. Like we get to where it's time to put the number on the page and it's like, well, here's what this similar guy is paying us. I can see here what they were paying the last person. Any meeny miney this number. Like it's not thinking about different pricing strategies. Like it's, it's something that we just kind of stumble into through trial and error. So optimizing for value rather than maybe what you do today requires like an aspect of these five things. I think probably the one that I was missing most and a lot of people can probably relate to this is just communicating the value you create. You do a tax projection for a client and you're running it in stanky old tax software that runs a humongous report that not even you can understand. You can understand it, but you know what I mean. So what do you send to the client? I tell you, what I usually send was like a three sentence email to say, okay, here's the deal. Send this check here, send that check here. Looks like by doing xyz we'll save about this. And it was as simple as that. And I would always try to very intentionally call out like here's what your savings are. Because I think that contextualizes our fees. But boy, I sure didn't like go into any level of depth of the gymnastics that we were doing to put all these things together. I have long thought, like there's a, there's an optimal level of ignorance that, that clients should have where if they kind of understand some stuff, they seem to respect and value what you do more than if they're just completely ignorant of everything. And sometimes clients come to you with that understanding. Like I have a CPA that does my tax work. I have a different level of appreciation for them than the random small business client that would come in. But the folks who are completely ignorant of everything we do, man, it doesn't hurt to educate them a little bit along the way. And, and some this is an opportunity here for software to help us, like some tax planning tools actually do a better job of making what we do look really impressive. I go to get my oil change and there's like this big old long list of like we just did this 28 point inspection and it's like none of those things individually are particularly impressive. But that whole deliverable and the fact they squirt some of my car juice on there and I can see what color it is, all that is like a much more impressive deliverable than me doing this mountain of work, this huge technical thing. And the output, the deliverable being a 5 minute phone call or a 3 sentence email. Like there's so many examples of that in an accounting firm where what we think we do that is valuable and all that is this mountain of this big volume of work, this big old project. But then the only human aspect of that that like ever touches the client is, is as concise and to the point as possible. And oftentimes we think we're doing them a favor by doing that, but we're kind of hosing ourselves in that process because the client gets no understanding of what we're doing and the value of it. And so when it comes back around to pricing what you're doing, I do think the better understanding they have of the cool things you're doing for them, the greater their perceived value of what you're doing is going to be. Now let's talk about risks to your client. Like risks to, to a potential buyer which is a source of them saying no. Right. Like if they say yes, especially to an astronomical proposal or paying more than they've ever paid before, there is risk to them. And it's worth thinking through what each of these risks are so that we are overcoming them on the fly and not leaving them anything that will be a reasonable sort of no. Right. So number one, performance risk. Got seven types of risks here. The chance that the service provided will not perform or provide the benefit for which it was purchased. Maybe we validate that one with some social proof, like examples of other people who have had a positive experience. Number two, financial risk, the monetary loss incurred by the customer if the service fails. This is one of those cases where increasingly you are seeing like a money back guarantee if something is not worthwhile for you. Still very foreign for professional services, but even in that context, it's starting to happen more. The whole idea is you overcome this financial risk that the customer has and eliminate another reason that they could say no. And the reality is when you get there, it's exceptionally unlikely that anybody ever takes you up on that deal. The number of people who will say yes as a result of it are generally gonna be in excess of the folks that come back around and say no, pay me back. Number three, Time loss risk, amount of time lost by the customer due to the failure of service. So not just the monetary loss they could face, but how it could waste a bunch of time for them. Number four, opportunity risk. The price of them choosing one service over another. Number five, psychological risk. The chemical chance that a purchase will not fit the individual's self concept, which I think is increasingly becoming a big deal. And actually the flip side of this can help overcome risk if they feel like they're coming into a space where they belong, where they fit in, where they identify as similar to the peers in that space. That's another great example of where like brand affinity and greater transparency in the people that you serve responsibly, obviously. Cause there's ways you can get in trouble disclosing who you work with. But if they feel like they're coming into a place that serves other people that they want to identify like, that's really powerful. But the flip side of that is psychological risk coming aboard and that not aligning with their self concept. Number six is social risk. The probability that it will not meet the approval of others who are significant to them. So if they make the decision and their boss doesn't approve or a peer hears that they're working with you, they don't like that. Or your spouse, something like that. And then last is physical risk. But if your clients are feeling that, then you've got, you got bigger problems. That's more like, is this car going to fall apart as I'm driving down the road? This episode is sponsored in part by Ignition. Come, come, come, come, come. Here's the thing. Here's the thing about client billing. You can't bill for the time you spend billing. You can't, you can't. It is pure waste. And we're bad at billing because it's, it's icky. You let things slide, you don't get paid. You waste time. Waste time chasing people for money. That's not what I did. I would just, I didn't want to waste time chasing them and so I would just, I just eat it. Don't do that. This is where Ignition comes in. The leading revenue generation platform for accountants and professional services. When I was running my firm, Ignition wiped out our ar, it's true. And significantly reduced the time spent billing clients. Saving our partners over a thousand hours in the first year because they didn't have to bill all that stuff manually. Man with the condition. We want more business with impressive online proposals. No more hustle and hustle and PDFs and Word docs. We automatically pulled payment up front or at the end of a job when it was done. No more dialing for dollars. We transitioned our firm to more recurring revenue and better managed scope creep. No more leaving money on the table. Ignition is making thousands of firms more money and genuinely made us more profitable. Check out why over 7,000 of the smartest businesses run on ignition@ignitionapp.com put a link in the show Notes this episode is sponsored in part by Client Hub Choosing a practice management system for your firm. It is. It is a big decision, arguably the biggest tech decision you make. Here is a way to think about it. Use the four C's Isn't that a. Isn't that like a diamond thing? Like clarity, cut, carrot and crunch Boy, flashbacks to having to buy a diamond when I proposed to my wife. I think we're moving past that. I think fake diamonds have gotten good enough. I remember one of those C's I totally maxed and just let all the other C's burn because they seemed less important. Where am I right now? Wearing a Client Hub ad read when choosing a PM, think about the 4C's capabilities, client experience, clarity and crunch, and community. Today we're talking capabilities. There are a lot of PM solutions out there that do a whole lot of stuff. Remember that roundup we did of all the different PMs? 14 of them compared hundreds of different features. But Client Hub specifically, it sets itself apart from the others with two sets of capabilities. One, it's built to support your CAS slash bookkeeping work with QBO and Xero integrations built straight into the PM platform. And two they're investing in AI that is Artificial intelligence. You might have heard of it with magic email replies, magic workflow, magic answers. Starla. Is that her name? What's the wizard lady's name? Sharla Starla. Starla Charm Blaster. She's not here right now. It's about picking the right tools for your needs. Now for practice, it's more tax or audit centric. There's probably better options out there than Client Hub. Wow, they just called out who they're not for props, but if your firm is founded on bookkeeping and client accounting services, Client Hub is a great platform for you. Or a small startup that's co founded by a former firm owner. Top 100 pro advisor who knows the challenges for firms like yours? Learn more about Client Hub. Check out the link in the show notes. We've also done some demos of them on my YouTube channel. And thanks to Client Hub for sponsoring this episode One thing these books do well is they are. They get into the theory a lot and tie it back to like a foundational economic concepts which at times can feel too abstract to be useful, but then at other times are actually helpful because when I sit down and have a conversation with a client and the answer is no, you can break that down into a bunch of different components of. They may be doing 30 mental calculations and 29 of those may have ended up being yeses and one of them ended up being a no. And the more you understand about, like the, the inputs that go into that decision, the more we can better build the system and the sales process that will tick off each of these boxes and open, overcome these concerns one by one. And then as you get more repetitions in doing this with people, those things kind of come naturally and you start seeing it in people where you're like, you know, is there a psychology risk here? Like this person? Maybe. Maybe it's not the type of person I would hang out in real life when we feel very different. Like, are they worried that coming into our firm like this is not a place that's necessarily for them? You start seeing those different things, I think, and understanding how to overcome them or whether it is worth overcoming. And then one other thing from implementing value pricing, it is the factors of price sensitivity, man. I mean, you could spend a whole week on this. I love this. It is an explicit list of 9 things that impact what a client's reaction will be to a price. And it's another example of a very practical thing where you could put all these things kind of in a grid in a list and say, with what our sales process looks like right now, what are we doing to acknowledge these things talked about risks? How does our sales process acknowledge and solve for each of those risks? Likewise, how does it factor in these sources of pricing sensitivity to overcome them, make that client less sensitive and more willing to pay a premium price? So seven effects here. Number one is the perceived substitutes effect. What alternatives is the customer aware of when making a purpose? And this is where you, you know, getting specific. Being perceived as more of an expert is a huge advantage because if they don't perceive that there are any substitutes, and there might be, it's just what are they aware of? Then it makes them much less price sensitive than they would otherwise be. Number two, the unique value effect. Does our service and the way we deliver it have any unique attributes that differentiate us from others? Is there something that only we could do? If you are a thought leader like you can Be the, the secret sauce. You gotta be careful with that. Cause it's not necessarily going to be scalable, but you can be an example of a unique value that only your firm has. Number three, switching cost effect. To what extent has the customer already made investments in another relationship? Like, is that going to be a hard thing to transition over to? Interestingly, oftentimes there's times of the year where people can't change accounts. They're in the heat of a project or something like that. No matter how good you are or how impressive you look, if you come to them at the wrong time, oftentimes there's like nothing they can do. And they may circle back eventually, but oftentimes we don't forget that or it's not as high a priority then or later as it was earlier. Number four, difficult comparison effect. How easy is it for them to compare like your apples to someone else's oranges? Number five, price quality effect. Is a prestige image, an important attribute of the service. If it feels exclusive, is that important to them? Number six, expenditure effect. How. How significant are the customers? Is how significant are the customer's expenditures for the service in absolute dollar terms like as a percentage of income? Is this a huge thing for them or not? Number seven, end benefit effect. What are they seeking as a benefit of the service? Is it gonna save them money, like very explicitly? What is that? Number eight, shared cost effect. Is the customer paying the full service of the price or is it being subsidized from somebody else? Are you billing for this work through this person's partnership where they're only really paying for half of it versus billing them directly? And then number nine, the fairness effect. How does the service's current price compare with the price the customer has paid in the past for services in this category? Number nine, that one. Oftentimes that is just where everybody anchors their price as what did they pay last year? Right. I highly encourage you to go through these books. And those two things we went through, the risks and the sort of sources of sensitivity are maybe a good place to start. And as you're thinking about, maybe you already have an SOP for your sales process or you're thinking about developing one for the first time. And it really is important to list out what are all of these factors and sources of no's. And even when you're going through the sales process, when someone says no, if you can get to the bottom of why it was a no, that's incredibly valuable for you. If you can learn from that no, why it Was a no, build something into the sales process to ensure that never happens again. That could mean closing a whole bunch more deals down the road. Right. But for each of these things that we have called out, the value of like building a process for sales, even though that may be hard, cause it's kind of an abstract thing and maybe you've shot from the hip doing it for years. If you can map out each of these sort of points of resistance and all the reasons they could say no, you can build into the sales process. Like ways to overcome every single one of those. If you're like me, when I was going through this, there were like maybe three or four that I was like, oh yeah, we actually faced that one a lot. Like that was the main problem for a lot of the folks that I talked with was even better, even easier. Right now we. We can think about how do we build solutions in the sales process for this particularly sticky point that a lot of my folks are getting stuck on. In fact, that is a great way that maybe we could help each other here. So if you have, you think a specific point of resistance or a customer risk or a source of sensitivity that you heard there that jumped out to you, then maybe you're struggling with how to overcome that, man, drop that down in the comments. We can share some ideas for or how to specifically overcome those most common points of resistance that you're up against with your clients. Everybody is at a different point in the journey on this stuff, honestly. Like, there are people that are obviously full on geeked on this stuff and incredibly skilled at doing this, and then other people that are just spooked by it and have zero relationship with it at all. But that could be a great exercise to exchange some value with each other. So if there is something you're stuck on, drop that in the comments. I can share my thoughts on. We can get other people who are tuning in, who may be more experts than we are, get your thoughts as well, and we can steal some ideas. If you don't have anything to post, give the comments a skim. You may find something useful there. That's it for day two of going through value pricing. Wednesday. We're going through a more explicit how to implement this in a firm, whether you're a solo firm or a team, step by step how to do that. And I'll see you there.