It is quite common for bookkeepers to encounter prospective clients who for some unknown reason believe that the job of bookkeeping isn’t worth the penny. Over the years, it has become quite common place to hear phrases such as “It’s just bookkeeping, the guys across the street would it for just $20”
Unfortunately, such views held by a large percentage of prospective clients are widespread and are based on the ignorance of just what bookkeeping has become over the past few decades.
From data analysis, the need for specialisation in industry-specific software and the new challenges Artificial Intelligence and the likes bring to the table, it is safe to say that bookkeeping is a lot broader and more challenging than it used to be.
After factoring in these challenges, the average bookkeeper tends to reduce his prices in a bid to gain more clients at an individual cost less than the value of the service. This inadvertently keeps the prices for the job at the lowest possible as customers begin to play the system by threatening to make use of competitors in a bid to score a deal.
How to Escape the Pricing Trap
One of the toughest decisions to make as a business owner is rejecting business because the price failed to meet set standards. Rejecting money is indeed a difficulty worth learning.
What makes this worse is the fact that even the best of clients are price sensitive, hence, it is quite the struggle to maintain such standards.
This doesn’t justify mindlessly adding additional perks into the actual package in a bid to attract customers. The value, must be the value regardless of what is being said.
The way to mitigate the effects of the pricing trap is by understanding the kind of practice you intend to indulge in and the building up.
Start with the End in Mind with Income Targeting
It is suggested to conduct Income targeting for bookkeepers, as well as accountants as a first step towards determining prices.
This works efficiently because, when you make your projections based on how the income works as your salary, you would be able to easily convince a prospective client against a bargain from your set price.
What this means is that if you require a budget of $20,000 per annum to meet your personal needs, you’ll need to make at least $40,000 per annum to efficiently account for all other business related expenses such as taxes, operating costs, etc.
How Much Do You Want to Work?
Having numerous clients walking into your office might make it seem like you are making progress, but after a while, you’ll begin to get burned out, and slowly but surely, the need to raise prices will begin to creep into your thoughts.
Raising prices isn’t as difficult when you already have the client base, but even then, what explanations are you going to tender to your loyal customers with regards to the changes in prices.
Project the Benefits to Your Client
When your clients agree to work with you, they have agreed to hire a professional with these abilities:
Specific needs for their businesses (sales tax, payroll tax, etc.)
And so many others.
Proceed to suggest an annual fee which when considered against hiring a staff for bookkeeping is cheaper, but extremely sufficient for you to execute your job and meet your needs.
Be warned though, they’ll threaten to use someone else down the street. Do not engage in defaming the bookkeeper from down the street. Simply try your utmost best to explain just why you are better than whatever choices they may have.
And in the rare event that they go with the other bookkeeper, be calm, better clients will value your work better.
The Seamless Balance
A grossly underestimated part of the modern-day workplace remains the work-health balance. Try your utmost best to ensure that you keep your prices at a considerably comfortable position, that way, you can be sure to work lightly, maintain a good health and still make ends meet.