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A CPA’s product? It’s value, not time

CPAs talk a good game about adding value to their clients’ lives.

Then we send them the bill, which all too often has nothing to do with value.

Too many CPAs continue to cling to the increasingly outdated billable hour. It’s a practice with deep roots in the CPA profession — in many professional services, in fact. And it makes less sense as time goes on.

Think about it: We’re asking clients to pay us for our time, not for the service we provide or the value we add.

“What is a CPA firm's product? It's not an hour, but that's what we're selling,” practice development consultant Joe Woodard told the crowd at the 2016 Winning Is Everything Conference in Las Vegas. “A CPA firm's product ought to be a transformed and thriving business.”

The billable hour is baked into the CPA profession’s DNA, but that’s beginning to change. More and more CPAs, especially younger practitioners who are eager to transform the profession, are embracing value pricing as a best practice — and with amazing results.

“Value pricing is not about what you are selling. It's about what the client is buying,” said Ron Baker, a CPA and founder of the VeraSage Institute, the leading think tank dedicated to educating professionals. “In the words of Peter Drucker, ‘The customer never buys a product. He buys value.’ Consumers want to know the price of everything before they buy. Why should accounting be different?”

That’s the mentality behind a new product from the folks at Sage. Dubbed “Sage Value,” it gives CPAs a blueprint for how to value their services and engage clients in a vital conversation about the value embedded in those services.

Available free to Sage Impact customers, Sage Value helps CPAs walk their clients through a conversation about what they find valuable. Once value is identified, Sage Value helps CPAs review pricing options with their clients and generate a proposal that benefits both parties.

In short, it helps CPAs work with their clients to identify value and assign a price to it. That’s been the sticking point in this entire value pricing conversation, and now there’s a tool that walks CPAs through that process.

“The billable hour is a horrible customer experience,” said Ed Kless, a senior director for partner development and strategy at Sage. “Who wants to buy something when you don’t know the price up front? It sets the customer and the professional in an adversarial relationship from the very beginning: The professional wants to maximize hours, the client wants to minimize them.

“Traditionally,” Kless added, “the focus has been around the professional trying to determine his or her costs, which leads to delivery of the price, at which point we hope the customer understands the value. (Sage Value) shifts the model the other way. It puts the customer first and asks, ‘How do we maximize the value provided?’ The value lets us set a better price. Then we ask, ‘Can we do it for that price?’ Costs are justified by your price. They aren’t a derivative of your price.”

It will be a while before the profession wholeheartedly embraces the value pricing concept. Still, says Kless, we have to start somewhere. Sage Value is a helpful starting point.

“The end of the billable hour is not within reach, but it’s within sight,” Kless said. “It’s what the market is demanding. Customers don’t like the experience with the billable hour. As Baby Boomers retire, a younger generation of thinkers is taking over, and they don’t want that (billable hour) model because it’s not sustainable.”

Or as Ron Baker says, “Your customers are not price-sensitive. They are value-sensitive. No one brags, ‘I’ve got the cheapest CPA!’”

Get complete details about Sage Value here.

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