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Value Starts With Asking Your Prospects the Right Questions

Most financial professionals are familiar with the “price sensitive” prospective client. You know the one: They call or email you out of the blue, and the first question they ask is, “How much do you charge?”

Some prospects truly are price sensitive, but many more are “value sensitive.” A value sensitive prospect is willing to pay for top-quality financial services, but first you have to show them the value of working with you. It can be hard to differentiate between a price sensitive and a value sensitive prospect unless you ask the right questions.

The wrong questions

Many accountants and bookkeepers focus on the wrong questions during their initial call with a prospective client. This mistake is often made even before the call, in the call intake questionnaire.

Are you asking traditional, transactional intake questions, like?

  • What accounting software do you use?
  • How many transactions do you have per month?
  • Do you have employees? How many?
  • How many bank and credit card accounts do you have?
  • What is your total revenue?

If you’re asking these questions, you’re setting yourself up to be treated like a commodity. Price sensitive prospects will use these questions – and your quoted price – to determine your hourly or per-transaction rate, even if that’s not how you quote for your services. They will then compare your pricing to your competitors’ pricing and choose the lowest-priced provider.

Are you thinking, “Big deal. I don’t want the price sensitive customers, anyway!”? Then consider this: By asking these transactional questions, you’re also making it difficult for your value sensitive prospects to differentiate between you and your less-expensive competitors. And this means you are turning off – and turning away – good prospects.

The right questions

If you want your prospects to value your expertise and stop comparing you to your competitors, you must improve the questions you’re asking during your sales calls.

The right questions focus on the prospect’s history and what they want to accomplish in the future. The answers to these questions give you a better understanding of the prospect and whether you will enjoy working with them. They also let the prospect know you aren’t a typical accountant or bookkeeper. The prospect then starts to view you differently, seeing the value of what you offer…value they are willing to pay top-dollar for.

The right questions focus on the following four areas:

  1. Understanding their past. Once you understand where the prospect is coming from, you can start formulating a plan to help them recover from any accounting or other financial mishaps in their business.
  2. Learning where they are now. Knowing where the prospect is currently in their business will help you address their most immediate needs first. And when you relieve this pain quickly, your client will trust you more.
  3. Looking to the future. When your prospect shares their aspirations for their business with you, you can see how your relationship with them might develop over time. This can help you determine whether you want to take a risk on a prospect who might not be a good fit now but could become an ideal client with a little bit of nurturing.
  4. What they want from you. Every prospect has expectations of their accountant or bookkeeper. It’s important to know what these expectations are up front so you can determine whether or not you’ll be a good fit for the prospect’s needs. There’s a reason we list this area of questions last, though: Chances are, your prospect’s expectations will change as they start to realize they can’t compare you to your competition.

If you want a comprehensive look at specific questions for each of these areas of focus, check out our “Value Starts With Hello” e-book.

Why You Should Use a Tiered Value Pricing Model

Pricing is the most important thing for you to get right in your business. Improper pricing ultimately leads to lack of profitability and overwork for both your and your team.

There are many pricing models to choose from. The most common are:

  • Hourly
  • Fixed-fee
  • Value

Of these three models, a tiered value pricing model will yield the best results for your firm.

Why you should use a tiered value pricing model

A tiered value pricing model accomplishes three things:

  1. A predictable workflow. One of the pitfalls of “menu” or “fixed-fee” pricing is that you customize services for each client you serve. This not only results in confusion for your team, but it can also lead to you having as many “bosses” as you have clients. You started your firm to have freedom and flexibility…not to have multiple bosses dictating how you work.
  2. A way to “steer” clients in the right direction. When structured properly, a tiered pricing model will influence your clients to choose the best option for their business. And it’s no coincidence that this option contains the most profitable offerings for your firm.
  3. Financial security for you…and your team. When you create your tiered pricing model using the methodology we teach at Profit First Professionals, you ensure that your personal financial needs are met. However, it’s not all about you: This model also ensures you can properly compensate your team for their contributions.

How to create a tiered value pricing model

There are five steps to creating a tiered value pricing model:

  1. Reverse engineer your firm’s income. We call this Income Targeting. Start by determining what you want to earn for the work you do in your firm. Then, use the Profit First model to reverse engineer the revenue you must generate to support your salary while maintaining business profitability.
  2. Analyze your current pricing. Create a list of your current clients and how much they pay you annually. Use this list to determine the average annual value of the clients in your firm.
  3. Analyze your workflow. List all of the services your firm provides. What services do you provide for each client? What services do you provide to the majority of your clients?
  4. Build your tiers. This is how you create the company you want. Using your workflow analysis, create three packages of services for your prospective clients to choose from. The middle package will be ideal for around 90% of your clients…and again, this package will contain the most profitable services for your firm.
  5. Price your packages. This is where the rubber meets the road. Use your Income Targeting and average annual value exercises to determine how many clients your firm needs to reach your revenue goals. Adjust this price until you reach a number of clients your firm can handle. This is the annual price of your middle service package. Your basic package will be priced at half of this amount, and your top package will be priced at 2.5 times the price of your middle package.

Next Steps

Using a tiered value pricing model is conceptually simple, but as with most things, the devil is in the details. A complete, 10-module course to help you create the perfect tiered value pricing model for your firm is included in Profit First Professionals membership. Non-members can purchase this course for $497.

Dispelling the Top Five Myths About Profit First – A Bookkeeper’s Perspective

Profit First is a game changer for business owners. This cash management system helps entrepreneurs feel like they are in control of their finances, even if they don’t understand how to read their financial statements or have never gotten the hang of budgeting.

But many accountants and bookkeepers are resistant to the Profit First methodology. This resistance is largely due to some myths about the impact of Profit First on business owners and the financial professionals who serve them. Understanding the truth behind these myths and misconceptions might just change your mind about Profit First.

Myth #1: All those bank accounts create more work
The most common objection I hear about Profit First is that the multiple bank accounts create additional work for the bookkeeper. When Profit First is improperly implemented, this is absolutely true. However, when the Profit First bank accounts are used as intended, there is a minimal number of transactions – typically fewer than six per month – in three of the five foundational bank accounts. It takes less than a minute per month to reconcile the additional accounts.

Myth #2: It would be better for my clients to learn to read their financial statements
I agree, business owners should learn to read their financial statements. However, after more than 20 years of trying to teach business owners to rely on their financial statements rather than their bank accounts to make business decisions, I’ve discovered the small business owner who will actually do this with any regularity is rare.

Profit First lets your client run their business without emailing you every time they want to make a large purchase – or worse, calling you in a panic because they overdrew their bank account. Now, instead of explaining their budget to them again, you can use your financial statement review discussions with the client to guide them in long-term strategic decisions for their business. This, in turn, increases your value in the client’s eyes.

Myth #3: Profit First wasn’t written by a financial professional, so it’s not “true” accounting/bookkeeping
This one is true. Profit First wasn’t written by an accountant or a bookkeeper, and it’s not accounting – it’s a cash management system. Profit First resonates so well with business owners because it was written by a business owner who experienced the struggle of not understanding accounting and found a way for cash management to make sense to non-accountants.

And this works to the advantage of accountants and bookkeepers, too. The Profit First methodology helps us bridge the gap between our knowledge and our clients’ understanding. It serves as a translation guide between what we say and what our clients hear. With a common language in place, we can make a bigger impact for our clients.

Myth #4: Profit First undervalues bookkeeping and accounting
The Profit First methodology doesn’t rely solely on accounting, but good bookkeeping is the foundation of a successful Profit First implementation. Without solid bookkeeping in place, a business owner cannot accurately determine how much money they should be allocating for taxes, what they should be paying themselves, and how much profit they should have in order for their business to be deemed truly healthy. Profit First doesn’t undervalue bookkeeping…if anything, it underlines the value of working with a quality bookkeeper.

Profit First also increases the need for business owners to work with a forward-thinking tax advisor. As a business’s profits increase, so does its tax liability. Business owners implementing Profit First are encouraged to work with a tax advisor who will help them keep more of their hard-earned money, while ensuring they are setting aside adequate cash to pay their tax bills.

Myth #5: Business owners don’t need a professional to help them with Profit First
This is similar to saying anyone can read a book about bookkeeping and be a good bookkeeper. Or that anyone can read the tax code and prepare a complex tax return. There are nuances to the Profit First methodology that accountants and bookkeepers who attain Profit First Professionals certification leverage to help their clients’ attain ever-higher levels of profitability. This, in turn, positions the financial professional as the go-to advisor for the client…which helps the accountant or bookkeeper attain ever-higher levels of profitability, too.

As a long-time bookkeeper, I understand the resistance many of my fellow financial professionals have to the Profit First methodology. Profit First can seem to fly in the face of what we were taught about the “right” way to run our businesses and serve our clients. However, after implementing this system in dozens of businesses – and seeing how that implementation helped those businesses not only survive but actually thrive during 2020 and 2021 – it is essential to dispel the myths and misconceptions surrounding Profit First.

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