Value pricing has been widely adopted in other industries by providers who are servicing the same clients as you. Why then, have so many accounting firms been slow to transition to this model? Bruce and Justin from QuickFee explore.

Listen to the radio or the TV. Many vehicle retailers are offering fixed price servicing. Which makes sense, their customers are tired of being quoted an hourly rate without knowing how many hours will be needed, or worse—how many hours were consumed. For these consumers, certainty has value.

If complex litigation is involved, companies will hire the best lawyer they can even though the rate is higher. For these companies, reputation has value.

Try booking a hotel at a ski resort in the middle of the best snow season on record. Here, scarcity has value.

Value pricing for professional service firms really started to gain momentum in the last decade, where the virtues of assigning true value to your education, expertise, and work have been touted. This war cry is typically received with nodding heads and hope-filled eyes, yet despite this prevalence in other service industries, most accounting firms today are still billing their clients based on hourly rates.

Why have accounting firms been slow to go all-in with value pricing, when so many other providers to our clients adopted it long ago?

Value pricing is not as straightforward as traditional pricing methods, so making the switch can be daunting. At the outset, you need to assess both the scope of the work to be done and the value it will provide to your clients, and incorporate this into a value-based pricing model. You to decide what your clients really value rather than your firm's inputs to a piece of work. Inputs do not determine value, and this is why a charge rate sold by the hour and based on a staff member’s salary does not reflect value.

The key to determining value and the price you charge (set below the perceived value) lies in asking questions that will uncover your client’s true need. As an accountant, you have typically been trained to answer questions, but now you must be asking the questions in order to uncover the value for your client and be paid accordingly. There is much more upside when addressing a client’s aspiration than solving an affliction.