How to Value Price Quarterly Clients Without Underselling Yourself

How do you value price quarterly work? That's a question that I was asked by a member of the Value Pricing Academy community. And so I thought I'd share some tips on exactly how to do that. The specific question was this. Nicoma said, I have a problem pricing quarterly services versus monthly services. I have some clients that only see me quarterly because their volume isn't much for them to be on a monthly package. So I charge them hourly each quarter. But I don't know if I'm selling myself short by doing this. So let's have a look at addressing that and we'll perhaps just make it a little bit broader. The challenge here is if we're not doing clients for work, for clients every single month, how do we justify and how do we move to some form of monthly pricing? So this could be because we're doing the work quarterly. It could be, we're doing it six monthly. It could be even less frequent than that. So let's, first of all, let's just reframe the real issue. I think that the real issue here, which is a common one in the profession, is the mindset. It's the hourly billing mindset. And this is a real challenge for a number of reasons. The problem with hourly billing is, first of all, first of all, it caps your income. It caps income. What do I mean by that? Well, if we're billing based on the hour, then we all have a finite number of hours in a day, 24 hours a day. And if we want to sleep and have dinner and stuff like that, then probably seven hours a day. And so if we're pricing based on the hour, that's putting a cap on how much we can earn. Now, we can overcome that to some extent because we can scale through people. We can just hire more bodies, more people, and that gives us more resource for hourly billing. But. But then again, there's a whole bunch of other problems comes with trying to manage a team of people, which I know many accountants and bookkeepers don't like doing. So hourly billing caps our income and it also, it rewards inefficiency. What I mean by that is if we're pricing based on the hour and we want to make more money, well, it's really simple. Hourly billing, if we want to make more money.

Just work a bit slower, take your time, chill out, take your time, put more time on that timesheet and the bills will go up. But to me, that isn't ethical. That's not in the best interest of the clients. So let's, how do we deal with this, we have to overcome this hourly billing mindset. And that means we should at least be using.

A fixed price upfront, if not moving to full value pricing. So what we should be doing is presenting clients who are on, let's say quarterly packages. We should still be presenting them with some options. We should be giving them different options. Think of it as the bronze, silver, gold. Because all of us as customers, we want choice. We want to feel like we're in control. We can choose what is exactly right for us. So even though they're on quarterly cycle of work, we still offer them a choice of different options. Think of it as the bronze, silver, gold. And then what we can do is.

Once we've got those quarterly packages and I choose them, we can still have them pay monthly. And I strongly recommend that. I think it's better for our cash flow to have money coming in every single month. It also helps with predictability of cash flow. We should also be collecting the money three months in advance. So when we do the quarterly work, we've been paid for those three months. So it benefits us because it helps our cash flow, it helps the predictability of our revenue streams, but also it helps the client as well. Because the client, when they pay monthly, they also have a more stable stream of, in this case outgoings that becomes predictable and easy therefore to manage cash flow.

So we should be charging every month. But here's another thought. When we're creating our packages and giving people different options, remember people like choice. One of the things we should always remember is that pricing and payment terms are two different things, but they're very much interlinked. And so when we're figuring out how to present our packages to our clients and give them choice, we, we should be thinking in terms of not just different packages. We may have a more expensive option with more value in here. We might have a cut down version for those clients that don't need so much. But also we should always think about the payment terms as well. And one of the things that you could do if you've got clients, let's say on a quarterly cycle of work, we could give them another set of choices. And the choice could be would you like to pay monthly, which will help your cash flow, or would you like to pay quarterly? And what we could do is we can give them two options whereby if they pay monthly, it's a slightly lower price. And you see this a lot now with software. If you subscribe to software, SaaS, businesses, very often you will see that you have the option to pay monthly. But there's usually a little button. We can move the slider and move that to an annual payment upfront. And very often what we see is that if you go for the annual option, then we're effectively paying for 10 months. We're paying for 10 months for 12 months access, we get a bit of a discount if we pay for annual, which is a win win situation. The owner of the software company gets 10 months worth of income up front and the customer gets to have a lower price. So we should be thinking exactly the same way that we could have a monthly arrangement or quarterly payment and we could have a slightly lower price if they choose the monthly, which gives them a small discount. And for us it gives us then the predictability of the monthly cash flow. Now when I say discount, what you should be doing is actually increasing the price of, of your quarterly package if they choose quarterly.

And then what you do is you reduce it to the price that you really want if they choose monthly, so you still position it as a discount. But if they choose the monthly payment, you're getting the price that you really want. If they choose quarterly, well, it means effectively you're getting paid a little bit more in return for them not paying you every single month. So there's some thoughts. Let me just recap very quickly. So the issue here, the question was how do we deal with clients that have quarterly cycles or less frequent cycles? The issue here was let's still get away from this hourly billing mindset. We need to still use all the techniques that we might use for value pricing with monthly recurring work. It's just the same and we should certainly be giving people different choices, creating different packages. But also think about how you can use payment terms in creative ways to help people pay you on.

The best system for you, which is monthly, because it creates that predictability. Thank you for watching that video. If you found that valuable, if there's something you found useful there, could you do me a favor? Could you first of all please just hit the thumbs up button to say you like it? But could you also put in the comments below what was the most valuable thing that you got out of that video and what's been your experience with that? If you could share that, it'll be great feedback for me. And if the more people who like the video, then I will go away and create more videos like this. Also this video that you just watched is an example of the sorts of videos that we put in the value pricing academy on our school platform. And if you want to be part of that Value Pricing Academy. You can join for free and we'll put the link below. You can join for free and be part of a community of accounting professionals looking to improve their pricing on this Value Pricing journey and a place where you can ask me and my team questions. So once again, thank you so much for watching and I hope to see you inside the Value Pricing Academy. Bye for now.