Today's Technology for Tomorrow's Firm.
Issue link: https://cpapracticeadvisor.epubxp.com/i/44903
THE CHANGE AGENT L How Creative Service Begets Proper Pricing Last month, we dove into Daniel Pink's book, "A Whole New Mind: Why Right-Brainers Will Rule the Future." We learned how six new senses he identifi ed in his book are changing how the Western world does its work. As a refresher, these six new senses are Design, Story, Symphony, Empathy, Play and Meaning. Employing our new knowledge of these senses can truly transform our firms and blow our customers' freakin' minds! You can be happier, your team can be happier and your customers can be happier, too. T is month's article is focused on creative services, pricing and timesheets. Being able to off er creative services requires you to change your thinking on pricing, which will require you to be creative with your timesheets. T is is how I see it: Creative Services Steve Jobs said it best when he noted that customers iterate, but companies innovate. He meant that customers are not walking around our marketplace seeking the next greatest innovation that they can use to make their lives bet er. Customers don't know they need whitening toothpaste until someone creates it and sells it to them. And if the brand and its marketing are good enough, customers will iterate or move up one level from their current tooth- paste. T e burden is on companies to create the next thing that is "needed" by our marketplace. Companies must innovate. And so it applies to tax and accounting fi rms, too. We must innovate and off er new services that our customers are ready to buy, but are unable to because we haven't created it yet. When questions about the future of their business), a R.eporting Package (a compilation for their bank), and an E.mployment Review (ask them what each employee does and if everyone is performing the right job function). If it sucks, scrap it and try it all over again. You'll fi nd the right formula. So how do you off er all of this new stuff at the rates you currently charge? Well, that leads me to my next point. Pricing At a recent conference, I talked about T e Strategic Firm — a talk that is all about increasing tax and accounting professionals' awareness about working intention into everything we do. Being strategic means being intentional — doing things on purpose instead of doing things because you've grown too CREATIVE SERVICES ➜ BEGETS PROPER PRICING ➜ BEGETS TRASHING TIMESHEETS creatively innovating, remember the three Blumer truths about profes- sional services: 1. Customers will pay more than they say they will pay. 2. Customers do not know what they want or need. 3. Customers now consider your technical abilities as simply a table stake. Now, take the three Blumer truths Jason Blumer, CPA.CITP Jason M. Blumer, CPA.CITP, CFE, is manag- ing shareholder of Blumer & Associates, CPAs, PC. He wears fl ip fl ops and jeans, says "dude" a lot, and often works in coffee shops with headphones blaring the latest Bloomberg podcasts (though he doesn't understand most of it). Jason loves new game-changing cloud technology and plays rock and roll too loud. His daily duties include consulting, process design, blogging, marketing and business development, innovative thinking, coaching, practice management, and acting as a change agent. Jason founded the THRIVEal +CPA Network to enhance and change the tax and accounting profession based on the foundational tenets of Community, Collaboration, Technology and Innovation. and start creating. Take a core product that you off er, throw in a scanner and an Apple giſt card, take them through a "Business Strategy Session" as part of the deal, and send them a bag of "Welcome Coff ee." Give it all a cool new name (use acronyms; everyone knows acronyms are really cool), and you've got a new innovation! Here is one I just pulled out of my hat: C.O.R.E. – Each service you off er in the C.O.R.E. service product is a dif- ferent value-added off ering you can bring to your customers. T is service could include a C.orporate Tax Return (basic corporate return), an O.pportunity Business Review (a session where you ask them 10 hard much and you need to throw people at your problems (which is one common example). To off er new creative services, we have to also be creative about our pricing. First, we must price our services based on the value of those services to the customer. Everyone is diff erent, and their perception of value is also diff erent. So begin pricing the customer, not the service. And you defi nitely have to stop pricing your services based upon the fl awed Marxian Labor theory. T e labor theory says things have value simply because of the objective value of the commodity used to make that thing. But that is simply not true. Value is subjective to each person in this world. T ings and products do not have value just because we used stuff to make them. Frankly, customers don't care what we used to make them or how much time went into creating a service. Customers only care about the outcome and how it makes their lives wonderful. Are you making your customers' lives wonderful? And if you are, are you get ing paid properly to do it? T is leads me to the third related issue: timesheets. Timesheets As professionals, we clock time, add it up and create a price out of it. T at is one of the most non-strategic things I've ever heard of! Our profession has priced our services based upon the labor used to make that tax return for so many years that we think any other way is simply impossible. Well, it's not only possible, but it is also freeing … to you, your team and your customers! Using the new C.O.R.E. service example earlier, you simply cannot create such a cool service the customer fi nds such huge value in and then bill the customer by adding up the number of hours it takes to make it. What if your work generated an additional $150,000 in profi t for the customer? Shouldn't you share in that? A service like this could be two, three or four times what it took to make it. Bet er yet, it should be a value that you and the customer agree to up front before you start the work. But if you add up the hours, you may only charge $3,000 to $4,000 for the whole package. "But Jason," you say, "my clients would never pay more than what it costs to make the service!" I have to refer to Blumer Truth #1: Customers will pay more than they say they will pay. T ey even surprise themselves, and pay more than they ever thought they could or would! Why not do them a favor and relieve them of their money if they agree to let you have it? It's your duty! Ha! So based upon our Daniel Pink enlightenments, you must be creative by making new services and properly pricing for them based upon the value to the customer, not your timesheet. As usual, I hope I've made you mad enough or challenged you to question and rethink what you are currently doing so you can identify areas in your fi rm to make changes. November 2011 • www.CPAPracticeAdvisor.com 21