Kimme Lafayette's Effective Pricing Success Story - Core Concepts and Incredible Results

And I'm very, very, very excited to be training on this topic. It's one of my favorites and it's very near and dear to the heart of my business and the success that I've had, which I'll talk about with you in just a few moments. A real quick introduction for anyone that may not have been to one of my sessions before. I'm a certified professional bookkeeper. I'm located in Southern Ontario. My firm is fairly small, both in the number of clients that I have as well as the number of team members that I have. But I tend to service larger clients that require a lot of work, large volumes for them. So it does keep us quite busy still. And my company has just been awarded a platinum award, the top level award for the third consecutive year in the area where I live. And personally, I've also won top 21 bookkeeping influencers in Canada. I've been a member of Mark's Value Pricing Academy for several years, and it's changed my life. Not only because of the knowledge that Mark and all of the trainers share with us in all the regular sessions, but I honestly believe that it was effective pricing and that gave me the final push and was the cutting edge that made the biggest impact to my business. So Mark's teachings gave me the knowledge that I needed to use the software, and then the software gave me the outlet to deliver those pricing bonuses to my clients. So I kind of like to think about it like effective pricing is like the wrapping paper on the outside of the gift of all the knowledge the that that we get from Mark. Okay, so I want to start by sharing. This is the part I get really excited about. I want to start by sharing with you some of the success that my own bookkeeping business has had since I got serious about Mark's program and using effective pricing.

So the first time that I value priced a client, I did it with the software at the same time. So I took all of my value pricing knowledge that I had learned as well as the effective pricing software, and I just jumped in and did it all at once. So previously I was hourly billing. I had made a couple of attempts at fixed pricing or menu pricing, but I always kind of fell back to hourly. And for the amount of work that this client needed and my calculation of approximately how much time it would have taken me to do that work, my hourly price to him would have been about $4,200 a year.

Using effective pricing and value pricing, the quote for the package that they chose came out to 18,000 for the year. So just quickly doing that math, it was a difference of an extra $13,800. That was more than three times what I pay for Mark's Academy and the knowledge on an annual rate, not the monthly rate, of course. So I made it all back in one quote along with lots extra. So, you know, you'll hear some of the trainers and, and people talk about how it requires confidence to do value pricing. And, and it's not really going to come until you jump in and start doing it. So don't let that hold you back because I'll tell you, when I got this number the first time, my confidence shot through the roof. I was all of a sudden really pumped up and I could not wait for that next knock on my door of somebody wanting my services so that I could use effective pricing again and give them another quote. So let's talk about my second quote then. The next time that I used the software, it gave me an over 200% increase of what I would have charged that client using my hourly structure. There's a little pricing metric in the software that gives you these numbers when you do quotes. The third time was $22,000 a year more than what my hourly billing method would have been.

However.

It was also $30,000 a year more than what they had been paying their previous bookkeeper. So it's not just all about the software and service. It's about this Cloud client paid $30,000 a year more than what they had been paying because I was giving them benefits of things that they valued, they purchased based on value of what I was offering, not the actual service, because I'm sure their previous bookkeeper was giving them the service, but they were leaving money on the table because I came in and scooped up that extra $30,000.

To date. This is a screenshot from my software. My average pricing success metric is an increase. I'm going to round that up to 197%. I'd like to round it up even a little bit more to 200%, but I know being accountants and bookkeepers, we're kind of OCD about the numbers, so I'm just going to round it to 197% so that. That is my average increase compared to the old pricing method. Okay, let's move on. So before you can effectively use the software, and I say effectively because. Yes. Can you jump in and start using the software? Yes, you can, but you're not going to see the types of results that you can until you understand some of the core concepts about pricing and the foundations that you apply behind the scenes in the software, the part that the customers don't see in order to calculate the price that you desire and the results that you desire.

So research shows that customers want two things. They want certainty. They want to know the price up front. Rent before they commit to something. How often do you sign a blank check for somebody and just hand it over? We don't. Right. It's just our nature that we want to know how much something is going to cost before we buy it. When we look at a menu, the prices are all right there. The next thing customers want is choice. They like to be able to choose the package that suits their needs. It makes them feel special and that they're not just part of the pack and lumped in with everybody else.

The next core concept is that time billing is not efficient or, or as profitable for our business. It doesn't give the customer certainty because we're billing based on time. So number one, it doesn't meet that first core concept. And it's almost always going to sound more explicit, expensive. Because let's say I quoted a customer that my rate is a hundred dollars an hour. That's going to sound like a lot to them because at this point, I haven't used some other pricing strategies, such as anchoring, to give them something that they can reference to. So when they don't have that referencing point with value pricing, they're going to subconsciously just automatically start comparing it to. To other numbers rambling around in their head. And one of those numbers may be that they could hire an employee bookkeeper for $50 an hour. So automatically they're going to assume that my $100 an hour price is high. The other thing is people are not buying your time. They're not saying, kim, I want to hire you for one and a half hours.

To do this for me. They are buying the results that I'm going to give them. And through value pricing, they're also buying the benefits that those results are going to give them. So they are buying me to prepare their financial statements for them and help them understand it so that it gives them peace of mind that their cash flow is okay and they can sleep at night and go away on the weekend with their family without having to stay home and do their bookkeeping.

Another core concept. So fixed pricing is always going to be the wrong price. I guarantee you, whatever price you're using, it's the wrong price and you're going to be leaving money on the table as you can See, from those results that I just posted about my company, there was money left on the table in every case. One of the things I get asked a lot about in the industry since I started doing training is the difference of fixed pricing compared to value pricing. I like to say that, and there's all different kinds of ways to explain it. That's a whole different session. I'm not going to go into details, but I like to say that in value pricing, we start to tap into the things that a customer wants rather than what they need. So if I take two customers, Charlie and Heather, and they want, they both have identical businesses. I know it's rare, but let's just say we're comparing apples with apples. Their business both does a million in revenue. They both have five staff, they both have the same number of bank accounts. Like they're looking for the same type of service. If I was using menu pricing or fixed pricing, they both might get a price delivered to them of, I don't know, a thousand dollars a month or whatever it would be. That would be my fixed price for the services that they want. However, in that value pricing model, when we're tapping into the things that they want, we're starting to get them to pay for things that they want rather than just need. If they're paying for services, they're paying for just their needs. If they're paying for their wants, they're paying for value. So imagine you're booking a vacation at a resort. Same resort, but maybe one of them wants a waterfront room so they have to pay extra for that. Maybe one of them wants to pay extra for a package that includes a la carte dinners five nights of their vacation rather than the buffet dinners. Or maybe one of them wants concierge turn down service if in their room at night. But maybe the other one doesn't want those things, so the one who dies is going to pay more. So instead of paying $1,000 for that vacation, or accounting services or whatever it is that we're comparing, they might pay 2000 as opposed to giving just a fixed price. So this is where the knowledge comes in about being able to tap into the things they want and what they value. So in the accounting world, that could mean things like having faster response times, having a support call system available, maybe having their work completed earlier in the month. There's hundreds of things that you can tap into that a customer will pay more for. So remember, value pricing is focused on the end benefit that a customer receives more than what the actual service is.

Remember to Price each customer individually and not have that fixed price for the service. They like the feeling of being special and getting their needs met, and they will pay more for that.

Value. Pricing is not easy, people. I don't want to scare you away from it because it is totally worth it, but it does take time. When I used effective pricing for the first time, it took me about eight hours to set up my model that I wanted to use. And that's not even setting it up from scratch. That's using one of the examples that Mark gave me. I just kept tweaking it and practicing it, tweaking it and practicing it, tweaking it and practicing it over and over and over until at the end, I was seeing the prices that I knew I wanted, and it really, really, really was worth it. I shared some of those results. I promise you, it works. And it's always a work in progress. It's never finished. I tweak my models.

Almost all the time. Every time before I use it with a new customer, I go through based on what I've learned in the diagnosis and the discovery call with them and stuff. I might want to add a question. I might want to take a question out. So I go through and I tweak it all the time. But I also continue getting better results all the time. It's always growing.

And the last core concept is the concept of optimal pricing, which, in a nutshell, means finding out how to determine what is the maximum price that a client is willing to pay. We obviously can't just ask them because they're not going to tell you, or if they do, the amount they're telling you is not going to be the truth. So we have to learn how to figure out what is that maximum price. And Mark's program really taught me how to do that.