305 How To Price The Tiers of your Accounting Proposals

Today on Jason Daily, how to price those little tears on your proposal. Gold, silver, bronze, you know those ones. How do you put together prices that convert? What's the best way to do that? Some, some practical strategies. How do we re scope our engagements when there's something that comes up that was absolutely unknowable? You know that old chestnut, not really scope creep, but those punch you in the face surprises. And what I think is probably the most exciting new app I've encountered in the last nine months. I'm going to run you through what it is. It is an AI thing, but I think it's an example of like the future of how software will probably get a bunch of work done for us. I geeked on this thing until like late last night. I think it's really interesting and has a bunch of applications to accounting and how we get our work done. Pull up a chair. So scooch it on in. It's Q and A Friday with me, Jason Daly. Okay, proposal pricing and where you set it up how you like, stage those different options, Are they pretty close to each other? Are there big old gaps? What is there like a strategy that we can employ as a firm to kind of standardize how, how we do these different things? Two ideas here that came from Geraldine Carter's book that we didn't have time to get to this week that I think are both very good options. If you're looking for a single concept to always price these around like a single approach in your firm, it's in a section called Pricing curves. By spreading your prices by specific amounts, you can nudge the buyer's choice. If you create a large spread between your prices, you, you can nudge your buyer to the middle option. So if bronze is way cheaper, if gold is way more expensive, they're more likely to go silver. Right. By narrowing the spread between your prices, you can nudge your buyer to the gold option. If they're not all that much different, then it's like, eh, may as well just go to the premium one. So here are two pricing curves from pricing expert Jonathan Stark. We've talked about Jonathan Stark quite a bit on the POD lately. The first is called Might as well. The second Goldilocks. So the might as well pricing curve. In this curve, your base level bronze package is X cost, silver is 1.5 and gold is 1.75. Each service level offers a bit more value. But because this is me now, because each tier is going up in price a little bit less, that part of your brain that actually makes pricing Decisions based on the relative like price, not the absolute price, tells you, oh, okay, decent sized jump from bronze to silver. But because the jump from silver to gold is smaller and it is less taxing on me to think about going for that gold option. So back to Geraldine here. The might as well curve drives your buyer to the gold option because they think to themselves, well, if I'm going to spend $10,000, I may as well spend 15,000 and get everything that's included. But if I'm going to spend 15,000, that's the silver option, then I might as well spend 17,500 to get all the options. So if you want to push them to the gold, working backwards, two silver and two bronze, make that delta from the silver and the gold smaller than the delta is from the bronze to the silver. Because it's like, I'm just gonna pay a little bit more and I'll get all this extra stuff. So I may as well. The other approach, the Goldilocks pricing curve. It's gonna drive buyers to the middle option. So from the book here, use it to create a gold option that allows you to anchor high, and there is value to anchoring high. We'll circle back to that. The gold option feels so far beyond what's reasonable or necessary. It tends to feel like it's being built for a long shot and the accountant won if they even want to sell it. It doesn't feel like the same natural progression as the might as well curve. However, Goldilocks is a way to test the market to see if people will actually buy an offering at a much higher price point than you initially thought possible without risking losing the client. So if you're trying to learn about what will people actually pay, or is this feature as valuable as maybe I'm thinking it might be, or maybe you just don't super need the client right now. It's a great way to test the market to say, would anybody actually pay this back to the book? You might be surprised to learn you have buyers out there who are willing to pay far more than you knew for a much more valuable option. You still have bronze, silver, and gold packages with the Goldilocks curve. Your base level bronze package is x, silver is 2.2 times x and gold is 5 times x. So to put that in real numbers here, for example, if your bronze is 10 grand, your silver's 22 grand, your gold is 50 grand. Now, when we did that value pricing week, I believe it was Ron Baker that referred to this as fist pump pricing. You have this tier that is like heck yeah, I can't believe that I just got that. And these moments in running a firm are incredibly important. If you've done it for very long, you can probably go back and put your finger on a number of like fist pump mind opening situations where somebody happily agreed to something that was outside of what you could have even imagined. Hey. This episode is sponsored in part by Lifflow and do I have big news for you buddy. Live Flow now supports Xero Xero Accounting ledger Xero for the first time it's big news. I ran a primarily Xero practice and I can tell you what a headache it was to have like some tools that worked with my QuickBooks clients, some tools that worked with my Xero clients drove me nuts. Live Flow let's just zoom out and recap everything that Life Flow is doing for you because it's bringing everything together. Google Sheets Support Check Excel support Checkaroo QuickBooks online? You betcha. Zero support now. Exciting stuff and sneaky sneaky feature like valuable feature consolidations. Consolidations being able to roll up a whole bunch of different like chart of accounts that like no matchy matchy required various charts of accounts rolling them all up in a super simple really nice ui. And then because it's Live Flow, you can pull just about any report from the accounting system into your favorite spreadsheet either one time or on an ongoing basis. Like it continues syncing out and it works across your whole stack now. Okay. Honestly don't know what more they could do for you. Learn more about Lifelo. Check out the link down in the show notes. This episode is sponsored in part by Team Up. Common question when you are hiring people around the globe, how do you even time zone? When do people work? Do you work at the same time? Do they work at night while you work during the day? Gang, it's your team. You get to make the rules. But common things that people do when they're hiring folks in the Philippines, sometimes they'll just have them stick to your business hours so they will literally work at night during your firm's hours. When I was running a firm this is what we did. Everybody worked during our hours and it was all pretty straightforward. But increasingly what folks are doing and this is a little easier on on lifestyle because like would I like to work graveyard myself? Probably not. So is it unfair for me to ask my team to do that? Maybe. But increasingly common now is folks are looking for getting like two to three overlapping hours a day with your team. Now increasingly this is less of a big deal because we're all sort of moving to a more asynchronous version of work where we're not always hopping on live calls and needing to take meetings and all that. Trending towards working from anywhere, anytime you want. But I can tell you, in my firm, what I ended up with was we actually had like a three hour block a day where it's like, everybody needs to be on during this time each day to take care of any of those synchronous things that may need to happen. Otherwise, go wild, work whenever you want. And that framework works really well with, with this offshore hiring approach is you pick that two to three hour window during the day when everybody's gonna be available, everybody has to be on then. Otherwise up to them. As long as they're getting their work done, I don't care. At the end of the day, you're making the rules. So if you want them working during your regular business hours, you could certainly do that. They're gonna be available all the time. You may be asking a little more of them. So maybe it's harder to find the right folks because they may not wanna work at night or bookend it at one end of the day or the other. So when they're getting on, your team's getting off. Or the other way around. Now if you want some help to find some talented accountants in the Philippines to come work with you, check out Team up link down in the show notes. We will inherit clients from time to time where we go back and maybe they're coming from a bigger firm or you just see someone throw out a rate like, yeah, we are. Our tax planning starts at 20 grand. And you're like, I don't believe you. Or you just see a bill from a bigger client and you're like, who on God's green earth happily pays this stuff? Like, do they understand the work that's happening behind the scenes? Or the oftentimes the shoddy quality of the work that's being done. Like, why are people paying these prices? I can remember very distinctly I had a. There's a regional firm in our area that was having a real rough go of it. And an engineering firm came to us who was like two blocks from us. And I wasn't in a huge market. It was a one and a half million top line a year engineering firm. Not a huge business by any means. But they came to us from this regional firm and had stuck with them for the last six years. But it was virtually impossible to get anybody on the phone. And the person that was serving them, like, kept turning over every single year. And after three years of this, they're like, you know, we didn't have any major problems with the firm. We thought they were doing work fine. It was just really hard to actually build a relationship with somebody. And I came in with my expectation of what a one and a half million dollar a year company is probably paying professional help. They had been paying like, 20 to 30 grand a year. And I figured this out, like, at the last minute as that proposal was about to go out the door. And I had priced it the way that we would normally price this sort of thing. And I saw those fees and I'm like, is this, you know, those. That moment where you're like, is there something I'm not understanding here? Am I missing something? Because I've also done that too. Or I saw a rate from another provider and I provide a rate that's. And they're like, oh, yeah, no, that provider was also doing, you know, and they list this. These hundreds of other things or something that was built into that fee that you're not doing. And you're like, oh, yeah, no, we're not doing that. And then you just lost that deal. But I learned this as the proposal was about to go out the door. And I basically did. Did the Goldilocks pricing here, where I had a premium option that was over twice as much as the silver option. And I'm like, if I'm understanding what I'm seeing and what they paid last year, I think they're gonna go for the gold option. And wouldn't you know it, they did. And a couple years into that engagement, what I learned, like, they were blown away by the fact that we would hop on a live call every single quarter, and I would proactively follow up with them and be like, hey, let's get in touch. I'm curious to hear how everything's going, see if there's anything we can do to be helpful. And just the fact that I had that email, which I had scheduled out months ahead of time, that went out like, they were so flattered by that. And what I learned a couple of years down the road was their perceived value of what it was going to cost to get that work done was anchored by what that premium firm was charging them. But you know what? I was delivering something way better than that, something far beyond what that larger firm was charging. Granted, they weren't happy with it, but when they came to us, they ended up paying largely the same thing for a Vastly superior level of service. Does that mean I could have charged more? It's hard to say. When that client first came in, they may have thought that they should have been getting that for the price that they were paying, because in the beginning of their relationship with that provider, they were getting that. So maybe they wouldn't have been willing to pay more than that. But I can tell you, over the next few years, their fees definitely went up because they were like, they were jacked. And that wasn't me taking advantage of the fact that they were jacked. It was me realizing, oh, like what we're actually providing is more valuable than I even realized it was. And that's one of those situations where you sit back and you're like, okay, team, I think we've stumbled into something here and we need to get a better understanding of exactly what it is that we just discovered so that we can replicate it. And so what I learned from that was one, the clients within this specific department of this regional firm, we're having a real rough go of it. And we actually ended up getting another few folks from that firm from that same department. And we came into those engagements armed with better information. We were value pricing them. But also, had I not done a little bit of extra due diligence and not done that like Goldilocks pricing of putting that gold option out there and them saying yes, I would have never known that that universe existed. Right. That's actually why, I mean, Goldilocks pricing, I think might be my favorite because. And maybe we don't do it on every single engagement, but it's worth doing more frequently than maybe we think is reasonable. And the value pricing, I think it was, the implementing value pricing book actually framed it this way really well. They said if you never ask for that price, you're never going to get it right. So like, if, if you never put that out there into the world, it's never going to find you. So think about, like, is there a proposal that's going to go out in the next month where you could even just test this once to say maybe it's a new service that you've been considering? Like, is this going to be really valuable for people? Or maybe it's something different about a prospect where you're like, I think, I think they may actually go for this. Don't be afraid to put that stuff out there. There are very small, little itty bitty, like inflation bumps and a kind of rate of inflation growth to your firm. And then there's big steps, big unlocks And I think that's how you find the big unlocks. And those were some really pivotal points for me in running my practice. Okay, this was a question on one of the daily pods. Good question. That was a big struggle of mine. What do you do when in the middle of an engagement, you realize clients have exceptional circumstances you cannot foresee beyond their selected package? This is from a Nesmi Domerkant. I have no doubt that I nailed that. So something big comes up. An exceptional circumstance that you could not have foreseen. As I got better at scoping things and the further into my journey I got, my perception of what was unforeseeable shifted. It changed. I think if you look at two different people with different experience levels, it's not even experience, I guess somebody who's good at this stuff and somebody who's not good at this stuff. Because two different people will scope the same thing wildly different ways where they may pick up on, oh, this is going to be a problem. Whereas maybe a few years ago, when you hadn't seen that issue before, you wouldn't have been looking for it. Because two different people do that such radically different ways. It leads me to be pretty convicted that scoping is something that you will absolutely get better at over time, but also can be systematized more than we often think it can be within a firm. So what is that thing that was unforeseeable, that exceptional circumstance, and how do we make sure that it never surprises us again? We all have examples of engagements in the past where that thing came up that like blew you away, that you're like, wow, I was not ready for that. That just turned this whole thing on its head in a way that really hurts. Think about how you build that into a process. Maybe you got a. Maybe it's as simple as a checklist of things to look out for when you're initially scoping work. That stuff will happen and it can lead to uncomfortable conversations. But. But don't rule those things out as outliers, as one offs. There really is no such thing. I mean, I don't care how nuanced it is. If you zoom out just a bit and you're like, oh, yeah, other people could probably have this situation too, where it's like, oh, they were actually going through a divorce or like all these different things that can complicate matters, right? That process of scoping is something that you can develop a system for. One of the things in that value pricing week that came up was revisiting how you priced an Engagement, you know, nine months down the road, circle back and be like, did anything come up here that we didn't adequately measure? That's definitely worth doing. Like, regardless of what you think about value pricing, it is worth doing a review after the fact of how you onboarded of how you scoped that project. Because at that point you're going to have front of mind things that you overlooked. And we perpetually underestimate how much time and how much work things will be. Right? So doing that as a way of reinvesting back in your process, that is worthwhile to ensure that the next time you're scoping an engagement, you get it right. This episode is sponsored in part by Stanford Tax eight tax firms. You got an eye on that calendar, buddy. Next tax season it is. It's going to be here before you know it. I know we're thinking about extended deadlines and I don't want to be that guy, but the time to start testing your next tax season workflow, it's now. It's not January when you can't afford for it to go sideways, it's now. Let me tell you about Stanford Tax K. Big problem with 1040 workflows is asking intelligent questions, putting personalized questionnaires in front of your clients rather than the dumb boilerplate ones that ask a whole bunch of questions that don't apply to them. Right? Stanford Tax, great way to do it. In fact, they've beefed up the platforms they support. Cch, Access Pro System, fx, Gross Ultra Tax, Lacert Pro Series, Drake, generate personalized questionnaires that only ask the questions they need to using actual pro forma data from their prior year return. Oh my gosh, somebody did it. Only ask the questions you need to ask in a modern web interface, get them to upload the required docs, and buddy, you're off to the races. You just asked for all the goodies that you need and none of the goodies that you don't. Leaning into what, like, web forms can enable for you without losing that, like, personal touch. The worst version of completing the thing online is the thing where it's like, none of these things apply to me. And my tax professional knows that. Okay? So if you're looking for a smarter way to do intake, check out Stanford Tax link down in the show notes. Today's episode is sponsored in part by makershub. If you want to lean into the very best of what AI is enabling, like right now, like, we're not talking, we're not talking hypothetical what it can due soon, we're talking right now. You want to lean into that today. It is upending accounts payable. It just is make yourself. We've done several demos of them on the channel now. I had clients who had very complicated accounts payable needs, multiple heinies in seats, processing bills, processing the detail, doing receiving, all of the stuff that goes into fiddly inventory management and, and complex purchasing. We could have streamlined so much of that with Maker's Hub. It's because Maker's Hub's using AI vision models to take extraction, like automated extraction further than has ever been possible before with old OCR tech. We had a whole generation of tools that were built supporting the accounting profession on OCR tech. And man, that stuff is gonna get wiped out so fast. Cause AI vision models, they can not only see and understand things like, they can not only visually see it, like it can, it can pull like handwritten text notes scribbled on top of a computer bill, but it can like comprehend and make connections. When you pair that with a language model, that can be like, normally it's like this, but here's what I'm saying. What do you think that means that can get you so much farther? And it creates an interesting place as we are standing up our own services to be like, is this, is this an arbitrage opportunity for firms to step in? Is this a shrinking opportunity? If it's something that all clients are gonna adopt over the next five years, either way, you know what it is, is a phenomenal advisory opportunity where we can step in and be like, gang. There's a fundamentally better way to do this. Talked with people who literally sent my Maker's Hub demo videos to their clients to be like, we need to do this now. And in an age of AI hype where you're kind of getting fed up with all the marketing, right, to see something that is actually crushing, that's really exciting. Makers Hub is doing this really well for ap and we got a few providers starting to do this really well for 1040 tax prep. The exact same technology, AI vision models, pulling stuff off of documents in much more compelling ways, doing a bit of reasoning and then like getting it way closer to the end zone than OCR ever got it before. If you're thinking about this for bill pay, check out Makers Hub link down in the show notes. Okay, last thing that I teased new tech that I'm very excited about, when I was talking with Andrew Wall, you may have heard that interview yesterday. Andrew Wall shared with me before recording that they're doing all sorts of RPA automation, I.e. robotic process automation, which is basically software that lives on your computer and you instruct it how to click things and how to type things in. Basically, it uses a computer the same way a human does, which for us as accountants is really exciting because it means it can use all the same apps that we can, even if it's a stank legacy desktop app. You basically outline the steps to say, first click this and then click that, and then this logic situation. If it's this, click this thing. If it's that, click this other thing. Type text into this text box. That's rpa. And the most accessible version of this is probably Microsoft Power Automate. It only costs 20 bucks a month for a license. And genuinely anybody can go out and build these RPA bots. And they're doing some really cool things. Basically, they've paired an engineer with an accountant on their team and now have all these RPA bots running that have saved them genuinely, like, hundreds of hours of work. And RPA five years ago was the technology that was supposed to replace the accounting profession. There's always something. We are always on the verge of cataclysm, and it was RPA before that was supposed to put us all out of jobs. But increasingly, people are asking, will AI replace rpa? And I actually think the two will kind of become the same thing. Because the future promise of AI is its ability to work our computers for us, like, just like we do. For it to be able to type on things and click on things, like, that's really exciting, right? So I think those two technologies actually kind of combine. And the best example I've seen of this yet is a tool that I've been playing with that is super, super exciting. I will put a link to it in the show notes, and I would encourage you to check it out more. It's called Wordware, and it grew to almost 2 million users in under three days last week. Basically, how it works is it's an interface kind of like, notion, where it's just like a text interface. You type everything out, and it's an interface for doing, quote, chain prompting. And so if I think about how I talk with ChatGPT right now, a single prompt is asking it to do a thing and get me some information. What this app allows you to do is to do a whole bunch of those things in sequence. So not just ask it one thing, but take the response and automatically do the next thing with it and then the next thing, maybe even run some code in the middle. There or run a web search and then run a prompt on the results of the web search. The notion that you can build custom workflows that chain a whole bunch of those different things together, it's really, really cool. I'm already using it for some of our workflows. When it comes to like on my weekly newsletter there's a Q and A section where we take the questions from the Friday podcast and put like a concise one paragraph answer. So chaining together a multiple step thing like pull the transcript from this YouTube video, extract the five questions from it, write the question and each of the questions in a concise way, that's like a ten word sentence or less. Answer each of these questions in four sentences or less. Now revise your answers to sound more like the tone of voice example that I provide here. The sort of thing that would require a whole bunch of back and forth with an AI assistant, but all built in one one sequential workflow. And if you think about what RPA does, where it works our computer, I think this sort of technology is probably what it looks like to have AI automate the things happening on our machines. Go and use, open this app, go and do this thing step by step until you have these big long workflows that are doing things in software that are going through an entire like quality assurance process. Super cool, really exciting app has taken off big time. The biggest AI release probably in the last six months. Like I said, I'll put a link to it down in the show. Notes. Really interesting stuff. Anything on the AI side that you're seeing that you're really excited about technology that seems cool, but maybe you're unsure how it impacts the work that we do. Drop that stuff in the comments always leads to an interesting discussion. Thanks for coming and hanging today and I'll see you in the next one.