Don’t sell yourself short – make sure you’re charging your clients appropriately and channelling your value where it’s needed.
Pricing is a funny thing. In some areas, there’s supposedly a squeeze on pricing, or even a race to the bottom (SMSF administration anyone?) but at the same time, I hear from lots of accountants that their clients are perfectly happy paying $2,500 to $3,000 per year for administration. So how do we break this down?
It’s important to think about what is a commodity, what is a value-add service, and what is really about the relationship – that feeling of security and certainty you get knowing that there’s an expert in your corner.
Let’s look at commodities first. This is where the SMSF administration conundrum appears. For some people, SMSF admin is in fact a commodity. It’s a straightforward service that is being increasingly automated, and therefore should be getting cheaper and cheaper. But from a client’s perspective, is this really true? Or do they actually see that the administration of the SMSF as an important component of the overall trusted relationship they have with their adviser? You can see how both these ideas can be true – it all depends on how the accountant describes the service they are providing, and what value the client believes they are receiving.
In terms of what else is a commodity, PAYG tax returns are rapidly getting there. The ATO’s online portal is straightforward to use, pulls in all the relevant information from product providers and other sources, and it’s free to use. Because there’s minimal (or no) advice required, it’s simply an administrative task. So it’s hard to see how an accountant can add a great deal of value to the client in this situation. Sometimes I think that the ATO could be described as a fintech provider! And we all know that fintech firms are disrupting the landscape, or at least trying to.
If we next look at value-add services, this is where bookkeeping, BAS statements and annual tax returns for small businesses fit. These are functions that could be carried out by the business owner (Lord knows I tried to begin with!) but really, it’s quicker, easier and more likely to be done correctly when there’s a trained accountant involved. And yes, I speak from personal experience. I do think that this is an area where accounting practices are slightly inclined to under-appreciate the value that these functions bring to the client. Just because it’s straightforward for you, doesn’t mean that it’s straightforward for the client. And this is important to remember. You shouldn’t be pricing on what’s easy for you, you should be pricing your services based on the value that those services deliver to your clients. As a client, knowing that my books and tax are all up to date and that I can run off whatever reports I want, whenever I need them, is a service that I seriously value. So don’t sell yourself short!
And further to this, using digital services, such as online document signing through Xero, actually enhances your service and your relationship with your clients. Much as I love my accountant, when we sit down in person, I want it to be for a discussion about structuring and strategy, not 45 minutes of ‘sign here, and here, and here, and here’. Being able to review and sign documents online saves me a whole lot of headaches, and also means that I know I have a digital copy available at my fingertips whenever I need it. Goodbye filing cabinet, hello phone.
Lastly, let’s talk about the real gold: the relationship that you have with your clients, and the invaluable advice that you provide to them. Technology can enhance this relationship, but it isn’t going to replace it in the short or even medium term. Eventually, artificial intelligence and robotics might be so good that you aren’t required anymore, but that is a LONG way off. Yes, you can build an algorithm to determine the best course of action for a given set of variables, but in truth those variables are often not black and white, and making trade-offs between various options is something that most people like to do in consultation with their accountant, not by pressing buttons on their phone.
So for relationship and structuring advice, you need to be charging appropriately. As I mentioned at the beginning of this article, clients aren’t just paying for the specific advice, they are also paying for the knowledge that you are available whenever they need you. And this is a very valuable service. All those times when the client gets a call from the Tax Office, or is having trouble with cash flow, or is suddenly worried that they made the wrong decision in bringing on a new business partner, that’s when a good accountant is worth their weight in gold. Because trying to work out how to proceed, when you really don’t want to stuff it up, is a very stressful and trying time for a small business owner, even though the answer might be very simple from your perspective.
I often hear accountants say they are their clients' most trusted advisers, and I think in many cases this is true. The funny thing is though, I still see many accountants who don’t truly understand how much their clients value them! I think the key here to try to put yourself in the shoes of your client.
Imagine that you don’t understand the basics of accounting and the Tax Office has just called you. Or if that’s a step too far, think about an area, marketing or HR, for instance, where it all seems a bit like gobbledygook even though you know it’s important. You can see that it’s easy for the marketing or HR specialist, but it’s damn difficult for you. This is where the real value is. Don’t sell yourself short.
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