Doubling Prices and Halving Hours: Cathryn's Journey to Work-Life Balance

This is extraordinary. I was talking to an accountant this week and she was working last year 80 hours a week. She was so stressed. Now she's working just 30 hours a week and doubling her prices. I caught up with this amazing lady called Catherine this week. We did an interview together and she shares so many amazing things of how she managed to get from 80 hours to 30 hours. Let's go and watch that interview. You're going to be amazed at the things that she was doing and the results that she's got.

Catherine, wonderful to have you here. I know you do some amazing things with pricing within your firm. I've got a few questions for you. And my first question though is just to give some context, to give some background. Could you just say a little bit about you, your firm, how long you've been in business, perhaps where you're based, how large it is, those sorts of things?

Sure. I'm based out of Mississauga, Ontario, which is just outside of Toronto, Canada. I've been in business since 2018. I started my firm because I was tired of working for everybody else and just wanted a solo practitioner for, for a while to just get out of the grind. I have 15 clients at the moment and I was at about 285,000 a year. And now I'm significantly increased that in the last couple of weeks, actually.

Wow. Okay. Looking, looking forward to finding out a bit more about that.

And 2018 was. So you started just before all the challenges of 2020 with lockdown and Covid and stuff, which must have had an impact. Tell me about some of the big challenges that you were facing, the problems in the early, early years of starting up your business.

Well, the first challenge was how do I price myself? So I went down the route of hourly because it was the only thing I knew. And then the other challenge as I grew was just figuring out my margin that I was making at the time was all mine. So adding people became a challenge. So then I had to start increasing my prices and increasing my prices and it got to the point where I was doing everything. I had a bookkeeper and a payroll specialist working for me part time and I was working 80 hour weeks and.

Just.

Trying to keep afloat, really.

That was. That sounded like me back in 1998 in my accounting firm. I guess it was. Was it fairly stressful at times?

It was unbelievably stressful. I just, I think I had luggage for bags under my eyes. I didn't have bags.

And I wasn't sleeping. My family, I was the only Income for my family as well. So that added extra, extra stress to that whole situation. Yeah.

And what was the kind. What was the big thing, the catalyst then make you realize something had to change?

Well, I had a couple of things happen personally in my life that really affected my business from the perspective of my being able to focus on it and work as hard as I had been. So I knew I had to change. And when I took a serious look at how I was doing my business and what my margins were per client, I started really focusing on my pricing this year because I knew I had to change. I just couldn't keep doing what I was doing. And I've been a member of the bpa, the Valid Pricing Academy, for a long time. I just haven't personally been able to take advantage of the knowledge I've been gaining. But this year I decided I have to do it. So In March of 2023, I hired a bookkeeper and he has replaced me in the business. So I am no longer in the business now. That started about nine months after I hired him. And then that's when I started taking a serious look at my processes, what I was doing and my pricing and figuring out where I needed to be to function as a viable CPA firm going forward. So I took a page from your book and you have this spreadsheet that is available through the Value Pricing Academy Client Scale Worksheet. And I took that and I worked through it, and I compared what I was currently pricing with what I thought I should be pricing. And I also built out the effective pricing model through all the live training and recorded training that you have in the academy. I did my work that way to figure out which clients I wanted to keep and which clients I could afford to get rid of, and then what my pricing really should be for those clients. To maintain the margins I needed to give myself a salary and to be able to pay my employees the salary they needed.

Okay, wow. Some great stuff there. So if I can just summarize.

You hired a bookkeeper and then after a few months, you start to refocus on the processes in your business. You also took that kind of step back holistic look at your client base to figure out, well, what are the right clients and what are the not so good clients. You've also worked on your pricing systems. You mentioned setting up the effective pricing software, which we'll perhaps get into some of the pricing stuff in a little while. What other processes did you start with? What was the first steps to putting those in place?

I got Practice management software, which helped huge. I highly recommend anybody starting in this industry. That's one of the very first things they do.

Which one, by the way, did you.

Financial sense.

Okay. Financial sense.

Yep.

It's great.

Yeah, I really like it. They're very open about their roadmap and where they're going with the product and what their development plans are. It gives me a lot of good feedback on the product and it was easy to implement. The biggest thing I think was for me to get the processes documented. And I also hired my son, who was a co op student at the time in computer science and, and I had him document all my processes and do my training documentation as well so that we had the tools to be able to bring new people on board. So that was one of the first things we did. And then I also used a lot of loom videos to sort of express what I want them to do for the client, not just the steps they have to do. But I'm kind of boutique. Yeah. So we really, really look out for, you know, our clients from the point of view of trying to help them find efficiencies, etc. Now that's a double edged sword because as soon as you're finding efficiencies and you're charging by the hour, your value, as far as your revenue goes down. And that, I think was my biggest epiphany, Mark, is when I started seeing that happen, because the bookkeeper I hired, his name is Cyrus, he was so good at eliminating inefficiencies that our value as a firm was going down.

So at that point I went, okay, now I need to do something about my pricing. And that I think was my biggest aha moment.

Yeah, that's important. If you're pricing based on the hour, the more efficient you get, the less hours it takes, the less money you make.

Crazy, crazy model. Yeah. And interesting as well that you hired your son.

Yeah, exactly.

So that was fascinating. With the pricing system specifically, what systems did you put in place there? What sort of pricing systems?

So I went right for effective pricing. I really have been wanting to use that model for a long time. To me, it helps me to explain to the client the complexities involved in their file. Rather than I do this, I do that, I get to explore more through the effective pricing process about the client and where I can specifically help them. And I think that really helps me to price better and to give my client the sense that they're getting value for that price tag as well. So I think that was my biggest thing I just went right for effective pricing. And that grading spreadsheet sort of helped me to mentally make the shift from what I was charging to where I should be charging and see what that impact was.

Yeah, great. And when you started using the effective pricing software, what was the timeline? How long did it take you to make this decision that that was the process you were going to use for pricing and then actually using it for the first time in front of a client? Did you spend a lot of time testing? Did you just go with it? I'd be interested to know what was the process you went through?

I took about two weeks to sort of really go through it because I had already built sort of that spreadsheet. It gave me all my clients, and I didn't do it. I did that spreadsheet based on, so accounting service, payroll, service accounts payable management, bill pay. Like I broke it down that way, as opposed to how many hours am I spending on each client. And then I could then take that and go category by category through that and figure out what questions I needed to ask to get back to. So what is my accounting based off of for my clients? I'm focused on the service industries, so I don't worry about manufacturing or any of those. But because they all are service industries, they all have very similar things that they need from the perspective of they need compliance accounting, they need accounts receivable management, they need accounts payable management, they may need help with bill pay. So those are all things that I did. And then I just went through every single one of my clients and ran them through the effective pricing model to see if I had all the questions I needed to ask in order to get the pricing that I wanted for that client. And so basically, I've been building up questions in my database and playing with the associated value of those. Those price questions to come up with my pricing model. And I'm never going to stop playing with that model.

Okay.

It's just going to be part of my daily existence.

Okay, well, let's talk about all those things that you. The amazing things that you've done in a really short space of time, which is extraordinary.

And two weeks to get up and running with effective pricing. For example, let's talk about the results that you've been having. What are some of the things that have worked for you? What results have you got?

Okay. So the beginning of June, I started attending the live training sessions that you're offering for effective pricing, which have made a huge difference in my understanding of the difference and the challenge for me has always been the difference between services, packages, features and just what do I do every day. And those are very different things.

So that really helped me to consolidate that thought in my mind. And then I just went ahead and talked to my very first client. They've just changed executive directors. So they're a not for profit here in Mississauga. They're a sports organization.

I talked to them about the fact that I wanted to set them a fixed price. And so we went through for my services and we went through and the executive director actually said to me, I want you to also price taking over all the accounting for the organization. We currently have an in stock in house person, but we're not convinced that that's the best model for us right now. So I did both of those with my effective pricing model and I actually have a meeting today at 10 to go through exactly what they want as part of that pricing. But I managed to price them at 78 per year for the first year for the whole package.

If I just get that right, 78, that's 78,600. Wow.

That is.

Without that system and the process, if you would have had that same opportunity, let's say six months ago, what do you feel you might have charged with the old way of doing things?

Yeah, it would have been hourly and it would have eroded over time. And my time, I know for the last number of years what my rate has been earning me. But currently, because I have developed so many efficiencies in my processes to generate what I have to generate for them, my time, if I was billing it hourly, would be less than half.

So effectively I've more than doubled my revenue going to this fixed price with this client. Yeah.

And what do you think might have been the key factor or factors that helped you to get that price?

Really? I think it was helping the client to understand everything we do for them and how that impacts them. Them walking through. So just saying I'm going to reconcile all your banks doesn't mean anything. But saying there are 2,000 transactions that we go through and we make sure that everything is properly backed up. There's compliance, we're properly coding it. They also have 10 programs that we charge the expenses across. So it's quite can get quite involved on that level. So for this new executive director who's been involved as an operations person but never involved with the numbers, it was very eye opening for them to understand all the different things we do. And those questions in the effective pricing really make you understand all, all the different Steps you have to go through to get that file for that client on whatever frequency it is that client would like. Yeah. And they have a board meeting every week, every month. So it has to be updated weekly basically. So. So, yeah, it really worked.

Amazing result. But I also know Catherine, it's not a one off, is he?

No.

Yeah. So they haven't signed yet, although they have said they are going to. They just want this meeting. I actually have a full day meeting today and tomorrow because the executive director as part of this shift wants to make sure that I can change the reporting in the way that he wants it changed for his vision going forward. And then we're going to talk about adding budgets and etc. Yeah, yeah.

What are some of the other results that you've had?

So I have also had one of my clients refer me to a new client like two weeks ago and we just signed them up for 54,000 a year.

54,000?

Well, to support them for accounts payable, payroll, customs documentation and anything else that comes up to their book, their accounting. They have their AR automated now. So that was one thing they've already done and taken care of. So I'm 100% sure we're going to find all kinds of efficiencies at this place as well. Yeah, yeah. And then the client that referred me to this new client for the 54,000 is also, I have him scheduled for a review on pricing this week.

For 64. 5.

64,500. Wow. You get some great results there in a very short space of time. And I'm conscious of your time because you have an important meeting today. So a couple more questions that I'd love to ask.

Yeah.

Thinking about. You were saying earlier that you were at the stage where you work in 80 hour days and life was challenging and now you're getting these sorts of results. If you could compare back then and now. How does this all make you feel? What's the feeling of this?

Can you see the smile on my face? I can breathe. I can spend way more time with my family. I think I'm working about 30 hours a week now.

Wow.

And the 30 hours is very productive hours. Like I'm not churning through bookkeeping and spinning on getting backup from clients. I'm actually building my firm. So one of the things I'm working on right now is building my advisory services. So I wouldn't have been able to do that.

Even six months ago without this shift because now I can afford to pay my staff without working hours myself to make up the difference, and that's been the biggest advantage for me of all of this.

Wow.

Amazing. As I've been talking to you, there are so many things coming out as things that you're doing that are extraordinary. If we could kind of sum up with. If you were to pick three, if you were to share three key tips for people watching this, what would those three things be?

Yes. So very first thing, make sure you have practice management software. It'll save your life in the long run. I know it's another subscription cost, but it is really, really, really important. Do not bill by the hour. I don't care what you do. Do not bill by the hour. It will set you up for failure. Especially now with the change in, in the accounting world with regards to the increase in AI, the increase in apps, the efficiencies that you're capable of providing for your clients now are huge. And for your firm, charging by the hour simply erodes what you can make as a firm and as an owner. I mean, if I was still charging by the hour, I wouldn't be able to pay myself. Definitely make sure you stay in touch with your clients. Clients. Keeping in contact with your clients through the every whatever regular basis it is and make sure it's at least quarterly, will make this transaction transition. Sorry. To value pricing that much easier because they will be that much more connected to you as a person. When you're presenting that pricing, you're not just going to be another vendor looking for more money.

I find that really makes the difference with my clients. I actually go and see them as part of our process. I'm lucky that my clients are local enough that I can do that. But I think it has made a big difference. Even if it's face to face through zoom, staying in touch with your client will make this process that much more.

Easy to implement because you've got that relationship. So I think that was my biggest one.

Great tips there, Catherine. So, just to summarize, practice management software, stop pricing by the hour. Keep regular contact with clients, which I agree with. It's so important because in this world of AI and so on, those connections are so important. That's what we're in, this relationship business. And the more we build those relationships, the more the clients become loyal. They'll stay, they, they value you, they'll pay you higher prices. I would love to carry on talking because I'm really enjoying this, Katherine, but I know you've got a big meeting today and I promise you that we'd keep this to 2025 minutes. So I just want to say a big thank you for sharing so many amazing tips.

Thank you.

Wasn't that just an amazing story? I just loved the smile on her face when Catherine talked about the impact this has all had on her life. If you want to find out more about how you can get those sorts of results, I'm going to put some links underneath the video. Go and grab some resources. And also if you found some value from this, please give it a thumbs up. Please. Also, if you've not already subscribed to the channel, if you click the bell notification then you'll get notification when we upload new YouTube videos. Thank you so much for watching. I will see you on another video soon. Bye for now.