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How to Implement Value Pricing

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Everyone is talking about moving from the billable hour to the value priced model - but nobody actually shows you HOW to do that. The process is not an easy one and achieving the appropriate margin for the value you create, troubles most accounting firms. Unless you have very high leverage of people per partner it is very hard to achieve the profit (that we believe) you are worth. One of the major keys to success stems from the pricing systems you use. Join us for our webinar to learn about the value pricing system they use that that will help you achieve the results you are looking for.

On the webinar we will discuss;

● What is the key attitude to have when changing from billing by time to value?
● What is THE most important part in pricing services to clients that must be done correctly?
● What are the best methods to use to overcome issues raised in pricing upfront when clients have been accustomed to “undervalued” bills in the past?
● The 11 key areas a firm must focus on to make value pricing a success.

Published in: Business
  • Would have liked to see the value pricing that was done while we were on line. It was discussed but no reference slide.
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How to Implement Value Pricing

  1. 1. Rob Nixon CEO & Founder, PANALITIX www.panalitix.com – www.robnixon.com rob.nixon@panalitix.com
  2. 2. We have worked exclusively for the Accounting profession for over 20 years We have offices in Australia, Philippines, the UK & USA We have served over 160,000 Accountants in over 30 countries We currently have over 2,500 users (Accountants) in 9 countries We are currently connecting to 86,000 SMBs through Accountants.
  3. 3. @therobnixon | www.panalitix.com| #firmofnow
  4. 4. @therobnixon | www.panalitix.com| #firmofnow
  5. 5. WE EXIST TO HELP Accountants navigate disruption and become the disrupter Accountants run a great Accounting business Accountants grow their firms Accountants deliver business advisory services to their clients Accountants transform businesses. @therobnixon | www.panalitix.com| #firmofnow
  6. 6. TODAY How to Implement Value Pricing
  7. 7. AVERAGE OF 800 FIRMS COACHED Averages – of the full financial year prior to implementation Starting average End of year 1 Year 1 increase End of year 2 Year 2 % increase on year 1 Year 2 increase on the starting numbers Revenue Profit – before partner salaries $947,418 $304,915 $1,556,258 $587,290 64% $1,936,512 24% 104% 93% $801,620 36% 163% @therobnixon | www.panalitix.com| #firmofnow
  8. 8. #firmofnow
  9. 9. FREE tickets (YES in chat)
  10. 10. PROFIT CAPACITY GROWTH @therobnixon | www.panalitix.com| #firmofnow
  11. 11. POLLING QUESTION What is most important to you in 2017? 1.Profit improvement 2.Creating capacity 3.Growing clients & revenue. @therobnixon | www.panalitix.com| #firmofnow
  12. 12. THE OLD BUSINESS MODEL Productive time (%) People Power Average charge rate Write downsX =- Revenue Labor costs gross profit overheads Profit = = X - @therobnixon | www.panalitix.com| #firmofnow
  13. 13. WHO WAS THE CULPRIT? @therobnixon | #firmofnow | www.panalitix.com Reginald Heber Smith 1889 - 1966 1919 – created ‘billable hour’ Why would you operate an outdated model developed by your great granddaddy?
  14. 14. POLLING QUESTION What is your current profit per partner? 1.<$100K 2.$100K - $200K 3.$200K – $350K 4.$350K - $500K 5.$500K plus. @therobnixon | www.panalitix.com| #firmofnow
  15. 15. PRICE EVERY JOB UP FRONT VALUE PRICING ON SPECIAL PROJECTS CLIENT COMMS PROGRAM WORKFLOW EFFICIENCY MODEL ALL CLIENTS ON CLOUD ACCOUNTING MARKETING THAT WORKS SALES SKILLS BUSINESS ADVISORY SERVICES THE 8 NON- NEGOTIABLES PROFIT CAPACITY GROWTH @therobnixon | www.panalitix.com| #firmofnow
  16. 16. PROFIT PER CLIENT MODEL 28 hours to complete $4,900 priced in advance $3,900 new projects $8,800 total client fee $175 average hourly rate 20 hours to complete 8 hours to complete 28 hours to complete $4,900 priced in arrears $245 average hourly rate $487 average hourly rate $316 average hourly rate 1 2 3 4 TOTAL NEW PROFIT FROM THIS CLIENT = $3,900 @therobnixon | www.panalitix.com| #firmofnow
  17. 17. Aaron Blau www.blauco.com Tempe, Arizona In the trenches @therobnixon | www.panalitix.com| #firmofnow
  18. 18. PROFIT PROGRESSION P R O F I T YOUR VALUE BELIEF & YOUR VALUE CONTRIBUTION Price arrears + AHR aware + charge rate increase1 Price arrears + AHR targets + some new services2 Some price up front + some write ups 3 100% price up front + efficiency + charge rates still4 Value Pricing + $1 per hour + time budget 5 No time sheets6 @therobnixon | www.panalitix.com| #firmofnow
  19. 19. ANNUALACCOUNTING SERVICE Basic Intermediate Advanced Cloud accounting software Cloud accounting software Cloud accounting software Lodgment of TAX Lodgment of tax Lodgment of tax Lodgment of annual return Lodgment of annual return Lodgment of annual return Year end review meeting Year end review meeting Year end review meeting Unlimited phone and email support Unlimited phone and email support Unlimited phone and email support Regular tax updates Regular tax updates Regular tax updates Interim financial statements Interim financial statements Year end tax planning Year end tax planning Annual cashflow forecast Monthly cashflow report $250 per month $500 per month $750 per month @therobnixon | www.panalitix.com| #firmofnow
  20. 20. Mark Said www.mksgroup.com.au Melbourne, VIC In the trenches @therobnixon | www.panalitix.com| #firmofnow
  21. 21. David Cowling www.robertsandcowling.com.au Brisbane, QLD In the trenches @therobnixon | www.panalitix.com| #firmofnow
  22. 22. Value Belief Value Perception Value Contribution TO VALUE PRICE @therobnixon | www.panalitix.com| #firmofnow
  23. 23. “Our charge rates are in line with others” “I’m too busy, I’ll just charge by the hour” “It’ll probably take X hours so we’ll charge Y” “I can get it done really fast” “There’s too much time on the clock – we better write some off” “I’m afraid of what the client will think” “What if they say no to me” “My clients will never pay that much” LIMITINGPRICINGBELIEFS @therobnixon | www.panalitix.com| #firmofnow
  24. 24. @therobnixon | www.panalitix.com| #firmofnow
  25. 25. @therobnixon | www.panalitix.com| #firmofnow
  26. 26. ALL CLIENTS BUYING EVERY SERVICE THEY NEED THAT HELPS THEM ACHIEVE THEIR GOALS!
  27. 27. GROWTH PROFIT CASHFLOW ASSET PROTECTION TAX MINIMIZATION FINANCIAL RETIREMENT SUCCESSION ESTATE PLANNING / LEGACY DELIVER THE AWESOME 8 CLIENTS @therobnixon | www.panalitix.com| #firmofnow
  28. 28. FOLLOW THE DIGIT FLOW Accounting Software Bookkeeping Compliance Business Advisory Wealth Development Estate Planning YOU @therobnixon | www.panalitix.com| #firmofnow
  29. 29. Key Area Now Partners Accountants Administration & Marketing Client numbers - groups Average project value Number of projects per year per client Average fee per client group per year (projects x fee / project) Revenue Salaries – excluding partners Office overheads Total costs Profit before partner salary Productivity / Utilization – Partners Productivity / Utilization – Accountants Average Hourly Rate (AHR) - client hours Average Hourly Rate (AHR) - all team all hours worked 1 4 3 200 $2,200 4 $1,760,000 $450,000 (74% GP) $310,000 $760,000 $1,000,000 (57%) 30% - 506 hours 75% - 1265 hours $316 $130 $1MPROFITPER PARTNER $8,800
  30. 30. POLLING QUESTION How much profit do you want to make? 1.<$150K 2.$150K - $300K 3.$300K – $600K 4.$600K - $1M 5.$1M plus. @therobnixon | www.panalitix.com| #firmofnow
  31. 31. POLLING QUESTION How are your enthusiasm levels so far on this webinar? 1.Not enthusiastic at all 2.Moderately enthusiastic 3.Pumped and ready. @therobnixon | www.panalitix.com| #firmofnow
  32. 32. PROFIT CAPACITY GROWTH @therobnixon | www.panalitix.com| #firmofnow
  33. 33. PROFIT CAPACITY GROWTH WIP and Receivables Write offs / ons Client service Upfront Pricing process People development Productivity Policies / processes Workflow management Efficiency model People mix / location. Administration team Firm cloud Team Performance Average Hourly Rate Niche markets Best buyer strategy Client selection Business Advisory Services. Value Pricing Brand development Lead generation program Sales process Retention system Average project value No. projects / client / year Services mix Communication program. Web dominance Sales skills Client cloud FIRM DEVELOPMENT PROCESS
  34. 34. POLLING QUESTION What will be the difference when you implement these strategies? 1.Better lifestyle 2.Personal / family happiness 3.Happier clients 4.Change my life 5.All of the above. @therobnixon | www.panalitix.com| #firmofnow
  35. 35. #firmofnow
  36. 36. >1,500 @ FIRM OF NOW Within 12 months attendees believe they can increase… LOW AVERAGE HIGH Profit $ by in next 12 months … Profit % by in next 12 months … Capacity % by in next 12 months … Revenue $ by in next 12 months … Revenue % by in next 12 months … 400% $15,000 $1,500,000$202,500 10% 75% 5% 100%31% $10,000 $1,500,000$317,421 5% 356%52% @therobnixon | www.panalitix.com| #firmofnow
  37. 37. PROFIT CAPACITY GROWTH WIP and Receivables Write offs / ons Client service Upfront Pricing process People development Productivity Policies / processes Workflow management Efficiency model People mix / location. Administration team Firm cloud Team Performance Average Hourly Rate Niche markets Best buyer strategy Client selection Business Advisory Services. Value Pricing Brand development Lead generation program Sales process Retention system Average project value No. projects / client / year Services mix Communication program. Web dominance Sales skills Client cloud FIRM DEVELOPMENT PROCESS
  38. 38. YOUR JOURNEY TO BETTER NUMBERS, MORE TIME & DELIGHTED CLIENTS @therobnixon | www.panalitix.com| #firmofnow
  39. 39. IMPLEMENTING PRE / DURING TAX SEASON Implementation Manager to guide you 18 Step Workflow process for efficiency Pricing Power / Value Pricing for margins KICKSTART business planning Finding opportunities during Tax Season TRUST / ELEVATE leads for after tax season @therobnixon | www.panalitix.com| #firmofnow
  40. 40. 2 x FREE tickets valued @ $594 (Next 2 HOURS ONLY 5PM EDT)
  41. 41. POLLING QUESTION How many people would you like to attend Firm of NOW? 1.0 2.2 3.2 – 5 4.5 – 10 5.10+ @therobnixon | www.panalitix.com| #firmofnow
  42. 42. 2 x FREE tickets valued @ $594 (Next 2 HOURS ONLY 5PM EDT)
  43. 43. Next 2 hours only - By 5pm EDT - TODAY 2 hour Early bird special 2 free tickets - save $594 Discount code – 2IN2 www.firmofnow.com

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