Price is what you pay, and value is what you get. That is what pricing is all about. You have to make sure that you are giving the best value for your price. Your pricing is directly proportional to what you’ve invested in your education, time, and mistakes. If you believe you are an expert in your field, don’t be afraid to raise your prices. It’s all about getting through your beliefs that your customers will leave you if you raise prices. Get over that so you can learn how to price for what you’re truly worth.
Michelle Weinstein takes the hot seat opposite the CEO of TaxProMarketer and AdvisorProMarketer, Nate Hagerty, to talk all about pricing. Learn how you can raise prices without making your customers feel ripped off. Discover what a lot of people do wrong in pricing, like watching their competition. Find out more about perceived value and how that plays into your pricing strategy. Be the expert and start understanding how your pricing works today!
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A Conversation On Pricing: How To Charge For Your Worth With Nate Hagerty
We have a very exciting episode where I did a training with Nate Hagerty on pricing, charging your worth and value, what it all looks like, and how to do it. That is what we’re going to dive right into. For those of you that are having a challenge with taking control of your pricing and doubling your firm revenue with ease so you can finally feel confident to start charging those premium fees to your current clients, have them appreciate you for the value that you offer and get paid what you’re worth, and be able to do this with confidence, without any fear, and without any guilt or anxiety of where that next call or client will come from, then here’s what I have in store for you as well.
After you’re done reading this episode that I did with Nate and some other firm owners, my team and I have set aside some time to speak to some of you and how you can apply the ideas that you read in our conversation and how you can make a change and a transformational change versus just hearing information. Head on over to TheAbundantCall.com to book your call, and let’s dive right into the conversation with myself and Nate Hagerty.
Everybody, thank you for joining. I am so thankful to have Michelle Weinstein here with us. Michelle and I have gotten to know each other over the last few years or so. She presented at Dominique Molina’s American Institute of Certified Tax Planners event. My team was there, Christian and Troy. We formed a friendship and started talking on the phone a bunch. I’ve been on her show a couple of times, which, by the way, let me plug your podcast. The Abundant Accountant Podcast is the name because you have a couple of brands. It’s the podcast that everybody should listen to.
It’s all about how you can increase your firm revenue, what to do with the leads you get from Nate, and how to monetize and maximize everything in all your conversations. We don’t talk about anything technical accounting or tax. It’s all growth.
That’s what I want to talk about in this episode. I want to send a little more sunshine your way before we get into the meat, if that’s okay. What I’ve enjoyed about our conversations and your content is your relentless focus on these ancillary topics that aren’t necessarily the things we cover here at TaxProMarketer and AdvisorProMarketer. They are some of the blocking and tackling of business related to sales conversations, pricing, positioning with your clients and prospect pool, whatever that looks like. That’s your specialty. To not mess it up, why don’t you give people a short bio and your story on how you came into the industry? I know you’ve been around the industry for a long time, but tell your story, so I don’t mess it up.
I, out of college, ended up working in an accounting firm as an analyst at Moss Adams. I started a company. For about 8 or 9 years, I had a company in the prepared meal space. I had to close it in March of 2017 and was like, “What am I going to do?” I started helping Dominique Molina grow her business.
After having probably over 1,000 conversations with many accounting and tax professionals, I realized that the biggest challenge was how you charge higher fees with confidence without losing any clients, especially the ones that have been with you for 20 to 30 years. That is the thing we see typically that you’re terrified about, why giving discounts is probably the worst strategy you could ever do in doing some free work in hopes that someone will pay you a premium later, and how to stop having your business control your life so you can go on vacations like I saw Nate go to Hawaii. We’re there at the same time.
Have we talked since then?
We talked when you got back.
Are were on a different island?
It’s the same island, Maui.
I forgot that.
That’s where I started the Abundant Accountant in 2018. In 2018, I took a beta of ten accounting and tax firm owners through my program. I said, “Let me make sure I can sell all your services. I’ve sold tax plans of 60,000. I’ve sold 1 of 100,000 monthly services, so I can sell all your services.” I said, “If I can do it, I want to make sure I can also teach you.” From there, we grew the show and the whole business.
Our mission is to help firm owners, whether you have a side hustle firm or own your own firm, on how to double your firm revenue, charge premium fees without apologizing for it, never give a discount, and be able to acquire and also retain your clients at much higher fees without feeling guilty about doing that and resenting any of the work that you do for them so you can have a life and enjoy the work you do instead of being grumpy and irritated. We also like to make sure that you see a very high ROI on investing, like with Nate, and make sure that you have the best mouse trap in place from the time you get a lead.
That’s one of the reasons why we want to have this conversation. To be perfectly frank, this is not all of our clients, but there are a certain number of folks that we have a meeting with them during or after tax season. We look at the data because we’re tracking the phone calls, the form fills, and all the things. Christian was able to hop on, so he could probably tell you even more of these stories.
We sometimes talk with our clients. We’ve given them fifteen appointments in the past. They aren’t doing much with them. This is an area we need to continue to talk to our clients about and also the entire industry. It’s so important that people optimize the right leads and their engagements so that all the hard work that it’s done and the investment that people put into the marketing of time, effort, and energy bears fruit. That’s exactly in front of me, Michelle.
That’s exactly why we’re here. That’s the exact reason for the show. Denise and I do not do anything about lead generation. That’s the marketing piece, and then you have the sales piece. Sales is about conversion. How are you converting the clients into premium clients and premium fees where you have the price to value figured out? That’s the piece we do because the price is what you pay, and the value is what you get, like Warren Buffett says.Sales are about how you convert clients into premium clients. Click To Tweet
This is a small group of our clients, so I want to give them some access. I’m going to start asking Michelle some questions and have her tell some stories. I want you all to use this opportunity that you have to pick her brain and have a conversation. Even about some thorny issues that you might be facing, feel free to bring those. If there are things you want to ask in a more confidential space, Michelle has kindly agreed to make herself available in that setting as well.
For the sake of the conversation, I want to have some bare bones of the content we can go through, Michelle, some basic pricing package things, and some positioning things. I’m going to let you guide the way, and I’ll interrupt with snarky comments as I do. For ice break questions, what’s the biggest mistake you see with people you work directly with, like accounting and tax practitioners? That’s a big question, I know.
Do you want to make it more specific, like about pricing?
Let’s talk pricing. That’s where I was going. What is the biggest mistake about pricing that you see?
I’ll list a few. Some of the biggest mistakes we see around pricing are, “I look at what the other firm owners are doing in my area. I need to be competitive on price with them.” I call that doing market research, which is probably the worst idea you could ever do. Seeing what everyone else is charging or offering is a horrible idea for you to stand out from the rest and charge premium fees.
That’s another one. I’ve heard from some of our students that they don’t do any of this anymore. They would say, “Michelle, I called ten accounting and tax firms. I took an average of everything I asked them about their pricing.” Another horrible thing is that firm owners are telling prices like we’re a menu at Starbucks. That shouldn’t happen.
I want to admit it for the sake of transparency. That’s how I used to advise people decades ago. We’ll charge by the form. Keep pushing those fees up. The value pricing model was not something I leaned into until I started doing a lot more work with Dominique and heard her concept on that.
It’s still the default pattern that we see. I’ve been back and forth with a prospect just for fun at this point. He’s like, “Michelle, I make $208 an hour. I’ve done an analysis.” That took him two weeks to do this analysis. I’m like, “If you think that’s great, I can’t help you. There’s nothing else I can do if you’ve got confidence and you’re this and that.”
If that’s the way you think about pricing and are going to stay stuck in those ways, Denise and I can’t support. Another thing that I’ve seen a lot of firm owners do to figure out the prices they shouldn’t do is go below the competitive amount. I was on the phone with a woman the other day, “Michelle, there are eight other firms in my area, so I know all their prices. I went about 25% below that.” That’s the competitive advantage she took. It’s no wonder she’s having problems.
That hurts my heart.
I know. It is sad.
Michelle, what you brought up prompted something that I hear consistently from a certain group of clients or people we talked to, which is the startup. They’re credentialed and professional but in a different space and are trying to start their own thing. It’s so common to feel from them to feel like, “I don’t see the value because I’ve been salaried. I know I’m good at what I do. This is super common, but I’ve got to come in and do penetration pricing. I’ve got to break into the market. I’ve got to find this level that gets me leads.” Have you worked with any startups that, from the jump, didn’t do that? Can you talk about what happened?
One gentleman comes to mind. His name is Devin Whyte. He was in corporate and had a firm on the side, just starting out. He’s the one that did a lot of the things I don’t recommend and that most firm owners end up doing, where their value proposition is, “I’m going to do more for less.” They can barely stay above water. He couldn’t quit his corporate job. Now, it’s tax season. He missed this last class with us because he took a week off. Most of the clients we work with end up taking a week off for vacation. This is the normal thing of what we see because most people we meet who are on salary are working 60 to 80 hours a week on salary.
That same mindset goes into doing the firm, “If I work 80 hours a week and charge us, that’s the norm.” Basically, you are working for free for X amount of hours per week and donating your time. Do you want to be in the nonprofit space? Are you looking to grow the firm with profitability and a lot of revenue so you can have a work-life balance? Most people are trying to leave corporate or get out of their corporate job because they’re sick and tired of grinding out fourteen-hour days. They then start a firm, meet us, and feel like they have shackles attached to their ankles. They created this same job they were in before in corporate for themselves in their firm. It’s a vicious cycle.
We have some newer students who are in this vicious cycle now. We had another woman. She never raised her fees. She bought 2 or 3 firms when she first started. She was terrified to go through our process. She thought I was bonkers. She went through the process and now has 40% less volume with increased revenue this season. She still feels a little overwhelmed. I’m like, “We could have even been a little bit more aggressive.” Sometimes, newer startups are also looking to acquire some firm with business already or just work with you guys, Nate, and get new leads and start from scratch, which is the smart way to do it.
There are lots of ways to skin the cat. I appreciate that, and I receive it. I completely agree. When you’re talking about clients, I don’t want to downplay. Sometimes another path is gorilla marketing and networking to get the momentum from revenue. Especially, you have to have the pricing right in the beginning.
The gentleman I talked about was a startup because the question was about a startup. February of 2021, his revenue was $2,182. His revenue for the month of February 2022 was $24,280. He had a $22,000 increase in just one month. March 6 to 11 or 12, which is 1 week of revenue, was $11,000 this 2022, whereas last 2021, it was $1,000. He just quit his corporate job and thought he was going to quit this summer.
Beth brought up a good question that I’d like to talk about.
The question is, “How do you recommend bringing legacy low-bill clients up to the new client pricing without damaging?” Beth, that’s a great question. That’s probably the number one question we get in our course, and that’s what I was sharing. Tanya is her name. They all have it. We have to get through some of our previous beliefs.
Beth, what are some of your beliefs about your long-term legacy clients that if you increase the fees, they’re going to leave you? She said, “They’re 2nd and 3rd generations of families I’ve been working with for many years. I can’t do that for them.” What are your beliefs around it? That is the first thing that you have to get through because until you can break and see the change in that belief, you can’t do anything moving forward that Denise and I could teach you. You wouldn’t believe it.If you believe that your long-term legacy clients are going to leave you if you increase the fees, start changing that belief. Click To Tweet
It wouldn’t sink in. It would be like two magnets with the wrong ends repelling each other where we need the two ends to stick so you can say, “I’m going to trust Denise and Michelle on this one. I know that I’m not going to lose everyone, and all my legacy clients aren’t going to hate and underappreciate me.”
We had one of our gentlemen, Kevin. I don’t know, Denise, if you have the comments from him from his clients, but he emailed it to us like, “Thank you so much. You’re like my God. I would never leave you. You deserve it.” Those are the things that we see, Beth. For us to help, it’s good for you to share with us what are some of the beliefs you currently have around damaging long-term loyal relationships. I’m sure everyone here has the same.
It’s something we did here at TaxProMarketer for the first time a few years ago. I’ve been preaching this stuff forever. In transparency, I was a little bit concerned about what it would be like to, for the first time ever, raise our fee. We got similar amazing replies from many of our clients like, “Thank you. I can’t believe you’ve been doing it at this rate for so long anyways. We’re happy to support you guys.” It’s that kind of thing.
Let me read out what Beth’s reply was, “I’m not fearful of losing those clients. I feel some loyalty to them because they’ve been loyal to me. A lot of them are quite a bit older. I worry that an increase in fees might impact them on a personal level.” That’s interesting. I’d be interested to know what you say to that, Michelle. I have my own thoughts.
Beth, the ones that are older are typically the ones that everyone’s most worried about. You’re not alone in that at all. I can appreciate that would be your concern. I know that you’re in the right spot with that, but here’s the honest thing we found in every single client we’ve ever worked with, and a client being a firm owner like you.
The older ones are the ones that are willing to pay the most because they have a lot of money. When they pass, that’s going to go on to the other generations. They rather support and pay you because you’ll make sure that their finances are in line until their last day here on earth. It’s just that we’re terrified that you might give them a heart attack or something like that.
It depends on also what your increase is going to be, how you do it, and what you say. There’s a whole process that we take our clients through this process. Everything that we do is succinct, and how you can raise fees, not only on your compliance work but on your monthly services and consulting type engagements, all of that. I’m going to guess your older clients are your basic 1040 clients. I don’t know what you’re charging now, but we typically recommend a 300% to 400% increase. That’s what we see across the board on all of those points.
A 300% to 400% increase. If you’re charging them $500 for 1040 for the sake of argument, you’ll be at $1,500 to $2,000.
Correct. We have a bunch of people, even Kevin, when Denise posted on this exact topic of the increased letters he sent. He didn’t go that high, but we have most people that are a minimum 1040 is $995.
John Walter is my old friend. He has been on here for a while. You might know John, Michelle. He’s been connected with Dominique in the past. I liked what he said. He said, “What about that loyal gas station you’ve used for years? Did they keep the price the same for you? Do they raise prices to keep up?”
Here’s an analogy that I love. It’s about planes. When you go to buy a plane ticket, what you paid this 2022 is never what you paid last 2021. Everybody, what about the clients that don’t get you any of their materials until March 25th? They’re like, “Can you do my return for me? Can you file an extension?” You still have to go through the full cycle, which I’ve learned is pretty much doing the whole return anyway. You do it for the same price.
Beth, can you try to say something? Hop in.
Beth, what is your belief about the old folks and impacting them on a personal level? I’d love to know what that means.
The ones I’m referring to, for the most part, are retired pastors. I do a lot of those. They are not simple 1040. We’ve got housing exclusion and all that fun stuff. I took them on as an entire book several years ago. The last thing I want to do is jack them up to the same rate I charge everyone else, which would easily be twice what they pay now.
Why is that for you?
I’m a softy. I don’t think they’re going to leave. I’m not afraid of that. If they do, I would only be afraid of what somebody else might do to their returns.
You said the magic thing. Share with me what someone else would do to their returns if they left you.
The number of people I know who have no idea what to do with the housing exclusion and retirement income is astounding.
I’m going to call you a housing expert so I don’t screw up the terminology. A housing expert, is that what you would consider yourself for these older folks?
She talks about the allowance, the housing exclusion thing for pastors.
My point is that that’s a specialty. If you were to get LASIK and you were 80 or 90 years old, do you think they’re going to go to the person that’s going to charge $50 an eye or $2,000 to $3,000 an eye?
I understand what you’re saying. I’m not saying I’m not worth the increase in fee or wouldn’t charge the new people that same fee. I’m just saying how you would approach that.
What you would need to believe, Beth, is the question. What would you need to believe in order for you to charge the double that you know you’re worth and also understand that if they get the work done somewhere else, most homeowners aren’t experts in this area like you? What’s a new belief you need to have for yourself?
It’s that I’m not screwing them over. As I said, these guys are on a fixed income. I don’t want to hurt them. I didn’t mean to start a whole big thing.
It’s good. Let me say this for you, Beth. A workman is worth his wages. You are worth the market rate, not just the benevolence rate. If you want to do it as a benevolence thing, go the whole hog and do it for free.
You have to separate the two. You either need to choose, Beth, “I am going to charge the premium because I’m the expert in this.” What will their alternative cost be if they have someone else do this work for them if they leave you? What is that going to cost them in mistakes, penalties, interest, and letters from the IRS because of the mistakes that they go somewhere else, like overpayment of taxes? What is the total cost that could happen?
I get that. What I was asking is what your approach is. How to start that with these folks?
Can I plug myself in real quick? I’d love to help you because we’re getting through some of the beliefs now. Until we get through this part, I can’t help you with the how to do it part, the logical stuff. We have to get through the emotional department first before we can get into the logical how to do it because once we’re in the how to do it, there’s no problem. I got you on that. First, you have to, from an emotional standpoint, be like, “I have a new belief that I’m going to try on.”
Here’s the next question for you. When was there a time when you thought you were ripping someone else off before? There’s something that happened before where you thought you weren’t doing the right thing. This is coming up again with these guys. We have to get through that first. You should book a call at TheAbundantCall.com to talk to me and Denise, one of us. This is a normal thing we get to work through on a weekly, daily basis at The Abundant Accountant.
There is a way how to do it. I have a gentleman. It was even Kevin. Denise posted it. He even said there are ten clients he’s chosen to do free work for. There’s this segment where he is going to do pro bono work. I do pro bono work once a week. I volunteer on the suicide hotline. That’s my Tuesday. Beth, if you’re going to choose Friday to do these old folks or pastor returns or whatever, or on an annual basis, you have to decipher where you’re going to draw the line.
Beth, this is awesome. Don’t worry about it.
You’re not hijacking it. This is helping everyone else. I’m sure.
You are speaking out about some of the same things that a lot of people also think. I want to address some of these other questions that came in already that are getting into some practicals. I want to go back to the 300% to 400% thing because that got my attention. That’s not the approach that we used when we did this to our longstanding legacy clients. Sell me on that. I’m not anticipating that we’re going to do that. Sell these folks about that because that’s quite a pop from $500 for the return to $2,000 for the return.
We talked about the things that you shouldn’t do on how to price. I have a question for you. A lot of this is a longer conversation, but just a rough level. This was Edwin, “Do you want to go virtual?” You should. The pandemic was a great excuse on that one. That should be an easy fix. “Some clients might feel they’re paying more for less. How do you deal with the questions concerned?” First of all, you want to think that on a scale of 1 to 10, how many clients are compliant with you in giving you their paperwork? They get you all their paperwork for tax time on time and beautifully organized. It is top-notch.
This is what we did in our firm this 2021. We had tax season in 2020. We pushed it hard in 2021. A strong percentage of our clients did adhere to it. I did have some people that were resistant, but I’m going to be honest. I sent an email to Christian. We started meeting with people in person. I dreaded it. It was a severe waste of time.
I would never meet anyone in person from now moving forward.
We’re not. I have to honor people that I made appointments with through tax season. After that, that’s not happening anymore. We’re getting rid of that. I asked the TPM to help me rebrand that we were going to be all virtual going forward. I’ll make exceptions for my top 1% clients, people that are very high net worth clients. I’m going to be honest. Those people don’t even need to in person because they’re so busy themselves. They prefer virtual anyway.
Local people, a lot of them, are going to meet virtually.
There are a few things on price, but you have to first analyze what you’re doing and how the clients are behaving. One of the areas you want to think about when you’re thinking about price and value is there’s the investment in not the money part but getting you the documents that you need. The higher the price, the better the client you’re going to get. The lower the price, the more pain in the ass they’re going to be. They’re not going to get you their documents in time. They’re going to call you on April 17th, Edwin, “I have this one last thing I forgot to give to you.” You’re going to have to open their file and redo stuff. The higher the price, that will never happen.When investing in clients, the higher the price, the better they'll be. The lower the price, the more problematic they'll be. Click To Tweet
Can I be a little case study for myself real quick on this? I meet virtually. I have two different accountants, one on the tax planning side and one on the regular accounting advisory side. Together, I’m spending $3,000 a month on these folks. I meet with them in different rhythms, but it’s all virtual mostly, except my CFO-type person does come into the office here and there. I’m happy to spend that money. It’s not at all about the meetings per se.
I’m purchasing from them the value they’re bringing to the table, whether it’s direct ROI savings or the advice they give me on a regular monthly basis on different entity formations and different things. I’ve got five different business entities that I’m managing. I’m the interplay between them. It’s a real value for me to have somebody else I can trust and handle that for me. I’m happy to pay those fees. It’s not about the meeting rhythm. It’s not about the access per se that I get to my people. It’s about what they’re taking off my plate and the expertise that they bring to the table.
For us, Denise and I, we’re not cheap. The results we deliver are so high when it comes to revenue and your numbers. Most of the time, I say, “We should have charged a fee plus commissions,” but we don’t do that. One of the areas, Ed, you need to think about when you’re thinking about, “How do I go up 300%?” is the results you deliver for your clients. Are they accurate? Are you doing things rushed? Are you doing things slowly and thoroughly? How many letters from the IRS are they getting? Notices, do you take care of those? There are all these different elements. One of the ways to think about your price is based on the results you deliver.
Beth, for the results you deliver, you already told us that you’re terrified if they leave you and get the work done somewhere else because it might be wrong. I know that if you learn how to do sales and conversions from someone else, they don’t know the industry. They haven’t sold tax plans or bookkeeping. They haven’t done any of the stuff that we’ve done. Have fun, and we usually cut you guys come back to us because we know this niche so well. We’ve become an expert in a certain area. Edwin, if you’re an expert in a certain area, you can charge 300% to 400% more than someone else.
Let me also push you on that, Michelle. It’s not even being an expert in the area. It’s not just specialist positioning. I know you agree with this. It’s also the ancillary, emotional needs that your clients have to have somebody in their corner that they can trust and rely upon, and that part of their life is handled. I have been in the tax industry for many years. I know the code. I know the world. I know how to do things. I also have twenty employees. I also have multiple entities. I have seven children. I don’t have time to do all the things that I know need to be done.
It’s the same value prop that a lot of you come to us from a marketing standpoint. We do so much on your behalf because there are twenty people working for you on your Google My Business, website, social media, and all the different things that need to be done to establish a modern online marketing presence. It’s the same with you. Even if you don’t have twenty people working for your clients, even if it’s just you, the fact that you know your stuff and your client can let you handle it, for the right kind of client, that is everything. That’s all you need. That’s the only value prop you need. It’s not about the meeting rhythm.
I’m giving you all these different elements that go into how you go to 300%. The other one is perceived value. Perceived value is positioning. There was a study done where they had people taste five different wines. One of the wines was expensive. Everyone said they loved the taste of the expensive wine. At the end of the day, they were all the same wine. Perception and perceived value are so high. It’s also the perception of quality at the same point.Perceived value is positioning. Click To Tweet
What I was going to share earlier is one of our students, David, shared this story about Picasso. Picasso was at a coffee shop. He drew on a napkin for someone. He said, “It’s going to be $50,000.” They’re like, “You just scribbled.” He is like, “I’ve spent 50 years getting the scribble down to this. It’s still $50,000.” There’s the time. If you’ve all been in business for not the startup firms, you could have all your corporate career, designations, CPE classes, and everything, but you have experience behind you.
There’s that old apocryphal story of the engineer guy who worked in the factory for 30 years and knew exactly where to fix it. The factory shut down. They brought him in as a consultant. He fixes it. They were losing millions a day because there was something wrong. He comes in, strikes the one machine with one hammer, and gives them a bill for $1 million. They’re like, “$1 million? What in tarnation? You need to itemize your work here.” He said, “One hammer blow is $5, and knowing where to strike is $999,995.”
We used this story about the plumber. I shared this personal story in a webinar. This is a timely story. Last summer, the air conditioning went out. I live in San Diego, and it got to 90 to 100 degrees. I called the AC guy. I called the plumber because it was some water leaking. I said, “I’ll pay you a rush fee. I’ll pay you a night fee.” I know there’s no parts store open, so I’m banking on that they have some parts in their car. I kept offering all these premium upsells that they didn’t even know. They’re like, “Michelle, we’ll be there in 30 minutes.”
The AC guy stopped by. He’s like, “I need a part. I can’t get it until the morning.” The plumber came by, got something, and fixed it that night. I said, “In the future, I’ll always pay you a rush fee. I’ll always do this.” Anytime something’s broken, they always answer my call. We will pay a premium because I know they can fix it in five minutes versus calling some number on Yelp and hoping they’ll figure it out. I will pay for someone that knows exactly what to look for when the water’s shooting out and there’s no air coming out of the air conditioning.
I want to keep it tight because I know there are a lot of great questions that are coming up with this. He has a great follow-up. I’ll summarize. “The 300% to 400%, is that something that you advise people to do every year? Is that the first start, and then they get into a different rhythm moving forward?”
It’s the first start. We then do a different rhythm based on what you want. We have one woman, Jamie. She did everything we’ve done. She’s now like, “I love doing consulting work, Michelle.” She’s now selling her 1040 practice. She’s taking a percent of her clients and getting rid of them 100% at a very good price because now we’ve raised them. They’re now compliant with getting things on time. They know all the deadlines.
She’s now selling that portion of the business. For each person who’s a firm owner, Edwin, I don’t know where you went, but you should also go to TheAbundantCall.com and book a phone call with us because we would love to help you get out of this rut. I see you raise your fees from 50% to 75%, which is great. You only lost about two needy clients. When I saw that, you didn’t stretch your rubber band far enough. This, Beth, proves to the point that none of your old people are going to leave you.
Are you killing yourself, Edwin?
As Christian told me, I’m still snowed. I raised my prices that much. Some of them should have been more. They are going to be more going forward.
If you had done 300%, you would have been just fine. It’s in how you communicate it, Edwin. There’s a whole process. We work with clients almost for an eight-week period. It’s not like this is something you can fix. Someone said, “I don’t find it realistic that 300% can be done annually.” That’s a belief that Edwin has. Until we dissect that and get through that part, we can’t get into the how do you do it part.
There is the pricing curve. There is a reality. You can’t push it.
There is. The cool thing is if you want to still be a commodity, you can continue to price the way you’ve been doing. If you want to have a different perception and be seen as the expert and the value proposition that you’re a service provider, and it’s based on the result that you deliver, that’s the change.
There’s a lot of flack that people have gotten over the last decade. There are people like you, Dominique, and others who advocate for value pricing. There’s a debate. Let’s move it outside of psychology. Let’s talk about the industry argumentation that happens. Maybe it is in the realm of psychology, but what do you say to the old green shades accounting people who are allergic to the value pricing model?
To an accounting firm owner?
We have to go through the beliefs that you have. That’s a big part of it in the first couple weeks of when we worked together because we believed the lifetime value of the problems that they have, like Edwin and Beth, because Beth came out the gate and said, “I’m scared if they go somewhere else.” That’s beautiful. That’s where we know we can turn up the dial on the value. Her being terrified and fearful of what they’re going to get from someone who’s not so good at this and the extra tax and the overtax they’re going to pay, that’s the part that will shift and show Beth, “If this problem is not fixed, then they’re going to be in deep waters.” That’s where the pendulum swings.
I believe that your prices need to not only inspire you as the firm owner where Edwin only lost two clients, and he probably wanted to get rid of a few more. I always know the answer. The problem is we’re terrified that we’re going to lose all our clients if we raise our prices by 300% or 400%, and they’re going to send us nasty emails. You name it. I’ve heard it all. Are you going to get some of those? Yes, but if you’re prepared for how to handle them, it’s not so bad. Edwin, you get to see who values and appreciates you versus who was just hiring you based on your price. They thought you were a latte from Starbucks. That’s how they were comparing you.
Most of them felt appreciative and said, “I understand.” This is how I communicate it. I don’t know how you do it. Maybe you have a different method. I wrote a well-written email and communicated it by email to all my clients. I explained to them, “This is what’s going on. This is your new rate that we have determined based on your workload and our cost increase, which they have. The IRS, everybody on here is in taxes. They know that the IRS is having massive problems, and that’s falling back to us. We are under extreme pressure. This is what the new rate is.”
As I said, I only lost two clients. I want to lose ten. When I mean clients, I mean business clients, my monthly retainer people. I value price. I’ve been doing that since I started my practice. It’s for business clients. For individuals that have 1040, that’s a different story. Honestly, those always went up anyway that there’s a minimum, and that’s what I do for that. I’m going to be honest. Maybe some people here are 1040-only firms, but I’m a mixed firm.
For me, my business clients pay my bills. That’s my bread and butter. That’s what makes me money the whole year. I get a rush of 1040 clients, as most people on here do, but those are what pay the bills. I was hoping to lose 10, and I only lost 2. I didn’t go high enough. I know Christian told me I didn’t go high enough. That’s why I’m snowed. That’s why I’m on here because I want to keep going with that.
We’re here to support you. We’re here to pull back the curtain and see what was the thing that stopped you. We’ll find out what blocked you. We’ll unclog that like the plumber’s going to unclog three toilets here and put new ones in. You got to unclog it before you can put something new on top. Ultimately, your pricing is a direct proportion to what you’ve invested in your education, the time, your mistakes, not charging enough, and all of that. The skill that’s required to fix a problem, that is your pricing. It’s not about how much the cup is, the espresso or the milk. We are a different business. It is a different way to price.Your pricing is directly proportional to what you've invested in your education, time, mistakes, and skills to fix a problem. Click To Tweet
I don’t want clients to see me like that. When they see, “This guy did it for $150.” I don’t care. You can go to that guy. That’s not me.
The good news is this is the right time, Edwin, not just because of the inflationary pressure that is part of the news cycle now. It’s also because of our industry. I’m sure you’re seeing this. There are a lot of people in your position who are stepping into a place of power even more because the demographics of our industry are such that there are less and less people willing to treat their clients well by necessity which will raise pricing. Everybody should be raising prices this 2022.
Edwin, you’re a great case study on the inverse of what we talked about, which is the corporate guy that wants to launch out and is afraid to raise prices. You’re way past that point. You know you’re awesome. You know you’re stacked with clients. I’ll share this on your behalf because it’s both a problem and something to celebrate. If you don’t do this stuff over time, you get to the point where it’s hard to take a one-week vacation. You can’t take a week off and not be glued to your computer because you’re so stressed with the amount of clients.
That’s the thing too. It’s got to be worth it to you. Getting good people in place and hiring well now is also hard. That’s the squeeze where if you can’t keep scaling that model and getting more people in place to keep that pricing model and do the Amazon due to the H&R Block or whatever, and that’s not you, Edwin, but I know that’s how some people think, then you have to do something like this. You’ve got people that love you. That’s the thing that is discounted, not necessarily by you specifically, but by the person who’s established, who’s been doing it for a decade or twenty years. You got so much trust in the bank with your folks and 1042.
You’ve got people in the bank that are raving about what you do and provide. We could tell stories about that because you’ve told me. This is now where you get the payoff of that trust bank. You get to draw on that and get yourself in a place where you can do this for a while. The other side of this, too, is if you don’t change something, Edwin, I don’t know how long you’re going to do this. You might sell your book and be like, “I’m freaking done with this because I’m so sick of dealing with the stress.” It has to be worth it, or you’re going to burn out.
Edwin, you’re like Devin, the guy I shared earlier. That’s a prime example, Nate, of selling you on the idea of going up 300% to 400%. This is someone who was starting out. He completely thought I was nuts at first. Now, he’s like, “I get it.” He doesn’t need a whole lot of clients. I don’t know, Edwin, if you do Nate’s process where you work for 6 weeks and take the 7th week off, but implement that now.
We haven’t talked about that yet enough because I’m going to start talking about it. We have organized our business into two teams and take a week off every eight weeks as a company. It’s a paid week off for our part-timers as well. We have two teams that make it work, so we’re always available, even during those sabbaticals. We made that decision a few years ago. We’ve been operating like that for a few years now.
It’s been a massive help in terms of our team member satisfaction, their ability to stay engaged, and our ability to stay engaged. We have a rhythm of not burning ourselves out on client work and all the stuff that we do. There are some difference differences. Our pricing enables us to be able to do that, but we’re not the most expensive. We’re a marketing agency, so we’re not a cheap marketing services provider. We’re not just selling software you can get for $50 a month. We have a different level of service.
At that point, this is circling back. I’m curious, and it’s a little bit of a risk. Edwin, if I hit you with a 300% increase from art stuff, would you pay it?
Here’s my thing. My problem is I don’t have enough help. Now, it’s just my wife and me. The answer to that would be yes. I’m turning down work.
Your pricing is the problem.
If you’re turning down work, you’re missing a boat on another part, which I know we don’t have time to talk about it. This is the prime opportunity to start creating a waitlist.
I like that. That’s a good idea.
You need to book a call with us, Edwin. We can help you make a lot of money so you can pay a premium to some staff person to help you and your wife. The other part we teach is how you can put golden handcuffs on your team.
The idea is you don’t want to be the cheapest option. You know that conceptually, Edwin. Paying people well isn’t necessarily the only way to get good people. There’s a way to get good people.
I paid well, and I got crap.
That’s a topic for another call.
Nate and I did an episode on this, so make sure to subscribe to the show. Nate talks about the different ways, not about money, on how to attract the best talent.
Edwin, you’ve interacted with my team. Would you say I’ve got pretty good team members?
Yes. I genuinely mean this. Everybody I have dealt with your staff is A1. Everybody’s been amazing.
I also want you to know that we don’t pay top-of-market salaries, but we pay our people well. There’s a whole lot more to attracting and retaining great team members than what you pay them.
There’s a culture piece.
It is important to pay them the right rate, but there’s so much more to it. I’m not saying you didn’t nail those things. Some of it, I’ve been very fortunate with the kind of people that I’ve found. Some of that’s also, by design, with what we’ve created here. I have a list of people that want to come work here that if I picked up the phone, we have people. We are not dealing with the Great Resignation pressure that a lot of people are.
I need training on that. If you have training on that, help me.
We talked about this in one episode, so it’s going to come out soon. Make sure to subscribe. You’ll get the notifications on that too.
I’ll plug for Nate a little bit. Training on culture and values are something that we might be doing this 2022. You’re not the only one that needs it. I know the stories of the guys you and the gals you hired and how it flopped. You got to have something else in place on this next round. We’ll be putting on some content like the podcast we already did, but there will probably be more on that front as we move throughout the year.
There’s a whole onboarding process to bringing in a team member that has to be thought through. It’s not easy. We’ve been doing this for many years. We’ve messed it up a lot. We’ve been in the place where there were only 3 or 4 of us and are all wearing many hats. It does take time. It’s not something that you can fix overnight. I don’t want to offer false hope like, “Do my simple system, and you’re set.”
“Everyone will be in Maui.”
It does take some time, but there are some very clear things that you can put into place that will help. This is an important thing in the industry. Staffing is a huge burning need for a lot of people. Michelle, we’ve already hit up the end of the conversation.
Thank you all so much for joining Nate and me on this conversation about pricing, charging what you’re worth, charging premium fees, increasing your fees, and charging higher fees to your current clients. Also, to new clients who might be coming in so you can finally get paid your worth and have that confidence to start firing clients who suck the life and energy out of you or maybe who no longer serve you.
You will know how you can do this without any fear, guilt, or anxiety about will your client stick around or leave you or where that next client will come from. If you want our support on how to implement these ideas, my team and I have set aside the time to speak to you personally about how you can apply and implement this in your firm. Head on over to TheAbundantCall.com to book your call. Pick the first time you see. Spots are limited. Myself and my teammate look forward to speaking with some of you soon. Once again, it’s TheAbundantCall.com.
- American Institute of Certified Tax Planners
- How To Solve Your Staffing Issues And Increase Growth And Revenue With Nate Hagerty – Previous Episode
About Nate Hagerty
Nate Hagerty is the CEO of TaxProMarketer and AdvisorProMarketer, the nation’s leading marketing agency group serving accounting and tax practices since 2007. A member of Mensa, Nate is a multi-year honoree of CPA Practice Advisor’s “Top 40 Under 40”, has been published widely in industry publications, and is the author & editor of two Amazon bestsellers. He is a father of 7 children, four of whom he and his wife adopted from overseas. Yes, he has a lot on his plate, and has few hobbies.