104. How to Raise Your Fractional CFO Prices With Existing Clients

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You've been charging five or six hundred dollars a month for CFO services. How do you get out of that pigeonhole that has you boxed in at the lower prices? This is really problematic for two big reasons. Number one, your existing clients have already anchored you in at those low prices. And number two, the referrals you're going to get from those clients are going to have you anchored in at that price point as well. The big question is, is there a way to get out of that so that you can raise your prices to what you know that they're worth? That's what I'm talking about today on this episode of the CFO Report. One of my inner circle members recently decided to raise her prices and she's running into objections from her current clients and from their referrals. I'm walking her through how to tackle those objections and how to reestablish her pricing going forward. And you're gonna wanna stick around until the end of this conversation because I also talk about the thought process that I use to determine how much top line revenue a business should have to be able to afford or to even need fractional cf. Go ahead and dive in. Before you go into your question, what is your ambition that you shared with the group?

I didn't share it with the group, but I will share it here. My ambition is to fully transform into a fractional CFO or personal CFO from my old services and 4x my rate at a minimum.

Awesome. I love that. Okay, now I'll let you ask your question. Thank you for sharing, by the way. Glad you're here.

Yeah. Yeah. Okay, so I'm a certified financial planner and I've been a financial planner for 15 years and I've always worked for myself, which seems to be really like a fractional CFO or personal CFO way, meaning I meet with my clients every month. I get their hopes and dreams, I look at the financial data and I give them little action steps each month to get those goals over the course of the year. And as it's grown, most people seem to have a business. And so I've been doing their personal in the business and. And somehow randomly I found you. And I was like, this looks very, very similar, but this is very different than the prices that I'm charging. And I'm in the burnt out section category. I'm serving like 35 people and their businesses and I'm just like, wow. So then a new client came along and I tried to pitch them this CFO package for 2000amonth. And the referral client called me up almost immediately and said, WTF, you know, are you scalping my friend? I'm paying 500, which was my worst nightmare. Right. And I said, no, I'm shifting to this, and blah, blah, blah. One, the question is, my network that I've built, built up, has a frame of me at a certain price point. How do you shift that? Or do you. Do you just have to go find new people? And how do you hold the new frame at the new value, you know, 500 versus 2000. Last point I'll leave you with is that I've tried to do the data way, like, let me see what kind of value I add in. This last client, she raised her net worth by 270 grand in three months. And I'm charging her $600 a month. And so the data is there, but I still have a hard time, you know, saying it.

Oh, I know, I know. I totally know. Great question. So the first one is, how do I get out of kind of being stuck or pigeonholed into a 5, 600amonth person that was doing CFP work into a fractional CFO that charges thousands of dollars a month? That was the first question. And what was the second question?

That's the essence of the. That's the essence. I really. Because that goes locks with my ambition that I want to flow into that I want to serve less people, make more money, or, you know, redesign.

Yeah, you know, part of the answer. Let me go a little bit higher. One of the reasons I was actually thinking about making a video, a YouTube video on this. A lot of people ask, like, he, hey, do you think that the Alex Hormozi style of like giving it away free and then you charge people for it? Like, do you think that works for fractional CFOs? And it's the same problem that you're kind of seeing right now is there's this thing in the world of buying called psychological anchoring or price anchoring. And when you price anchor with people for whatever reason, one, it's hard to ever get them to a higher price point, which you're living right now. But number two is the referrals you get from them are also anchored at that point. It's. So I'm like, no, like, charge what you're worth. Charge what you're worth. It's. I think it is an extremely dangerous game to give away services or charge lower prices for those two reasons. You're not going to get the people up because of that price increase. And then the referrals suck. The referrals suck. And so I'm like, avoid that at all costs. This is the reality that you're in. So what do we do? Well, there's a couple of things that you can try. The easy one is you got to go get new people. That's, that's the one that's like the easy one. And I think that's got to be part of your approach to getting out of it. But a great exercise that you can do along the way is I think you probably are going to have to get better at communicating your value proposition. You're going to have to get better at that because if you were great at it, then the conversation between the new referral and the person that referred her would have been, I can't believe your girl's only charging you $600 a month. She's charging me two grand and I can't wait to pay her. Like, if you were great, that's how that conversation would have gone. And it's not guaranteed that it would have gone that way. But like if you were really good at it, then there's a much higher likelihood that the conversation would have gone that way. And so I'd say like, do a really like a deep dive and like how am I communicating not just my value and the results that I can have, but specific to the goals, dreams, aspirations, fears and uncertainties that they have. And that to me is a lot of times the missing link in sales and is it's like, oh, you, you do a good job of talking about how great you are, but that's self serving. You've got to be good at saying, hey look, I can do this to make you great. There's a gap there a lot of times. So if you haven't, I've got the seven step sales framework that's free that you can watch. If you haven't watched that yet, we'll put a link in there in the chat. Go watch that and really like ask yourself, like, how am I connecting the outcomes that I know that I can deliver to the things that they're asking me for. And if you can bridge that gap, sales become like that's 90% of it. I think in a lot of ways is like identify what their pain points are and where they're trying to go and then show them how what you do gets them there. And then price point starts to become a lot less relevant. At that point, assuming you're working with people that can afford you and that's that's always the other missing thing is it's like, hey, if you're working with people that are top line, 300 grand a year, 400, 500 grand a year, and you want to charge them thousands of dollars a month, it's probably hard to make a business case for that. So make sure that they're large enough that they can afford it. And I think that's where I would start if I were you.

Thank you, Michael. So for. For a $3,000 monthly package, what do you think the top line revenue of that company would need to be?

That's a bit of a complex question, because it depends a little bit. I was actually just doing a podcast interview right before this, and I said, really? It's less about revenue in a lot of ways, and it's more about the magnitude of problems that you're solving for them. So as an example, if you work with SaaS, startup founders, let's say they've got some IP and they're getting ready to go do a $10 million round, they've already done a series A and, you know, they've got $3 million in the bank. Revenue is not the question there. Right. It's. It's always dangerous to go to the revenue question in the same terms. You could have a company that's an online coaching business doing $5 million a year, and you probably still might not be able because they just don't have big problems to solve. Right. It's a super straightforward business model. We're not dealing with heavy, you know, big decisions. It's just kind of digital products. So it may not even make sense. So I think it's. You have to look at holistically, like, what's the order of magnitude of the problems that you're solving? And then it's, you know, cash in the bank, you know, But I would say so my firm works with, you know, construction trades, movers, professional services. For us, it's like on the low end, 3 million, really, where it starts to. The buying decision isn't a factor, isn't a cost factor, is around 5 to 7 million. You know, like at that point, even our $8,000 a month package, it's not even a blip on the radar for them. It's the confidence that we can help them achieve their goals at that point. Not in can I afford it? I don't want to give you, like the lawyer, it depends answer. But it's a little more complex than just what's the revenue.

It has to have a big problem that you can solve that's. And then two they can't have make nothing.

Yeah, exactly. So great questions. Thanks for being here.

Thank you.

All right, my friends, I hope you found this episode helpful. If you did, it would mean the world to me if you would leave a five star review on Apple Podcasts, Google podcasts, Spotify, wherever you're listening to this episode. In the meantime, I can't wait to see you back right here next week. I'll see you then.