But time isn't really what your clients are paying for, is it? They're paying for your knowledge, your experience, your technical skill and foresight.
So why aren't you billing that way? Assign value to your services and present it as a flat fee to your clients.
Now, finally, CPAs are starting to sit up and take notice.
Take Chris Farmand.
For years, Farmand walked robotically through a billable-hour world, a slave to the timesheet — and he hated it. He worked for his father in Jacksonville, where each Monday morning devolved into father-son arguments and set the tone for another miserable week ahead.
“I called it 'Bloody Monday,'” said Chris, who now heads up his own firm, Chris Farmand and Company. “From 9 a.m. to noon my dad and I would go through the WIP (work-in-progress) report, trying to figure out what to bill, what not to bill, how much to bill. It was disastrous. And it dawned on me that as my dad got older, what he reviewed was taking longer than it did five years ago — sometimes time and a half or two times longer. Clients don't need to pay for that.”
Chris had grown to despise the timesheet. He decided something had to change.
So in January 2010, he convinced his father — “someone who had tracked his time for 34 years,” Chris said — to move the firm to a value-based fee structure.
His goal was to enact a transparent, value-based system in which clients would know the price for accounting services up front, and in a series of exhaustive interviews he found that most of his clients were dying for something like that.
They launched the new fee structure just in time for tax season 2010, and the results were astounding.
“I've never worked as little during tax season in my life, and we've never been more profitable,” Chris said. “Plus, clients were ecstatic. Now, they could tell what their accounting bill was going to be for the entire year. They loved it.”
They weren't the only ones. The new structure eliminated those hated Monday morning WIP reports, and Chris and his father discovered that they actually like one another.
“As the business processes have improved, my relationship with my dad has improved, too,” Chris said. “Our relationship now is one of collaboration. It's not like we don't argue at all anymore — we're father and son, after all. But we used to argue 95 percent of the time.
“Now,” he added with a smile, “it's like 10 percent of the time.”
It makes incredible sense. Ron Baker might put it this way: Forget about your time. Instead, create value and charge accordingly.
Listen to my interview with Chris in its entirety here:
Want to learn more?
- Tom Hood interviewed Ron Baker recently and picked his brain about value pricing. Watch the interview here.
- Read Baker's books on pricing.
- Chris wrote a series of three articles about his bid to trash the timesheet on his blog April 16 (which, coincidentally, also happens to be his birthday). Read the articles here, here and here.
- Check out Chris's sample fixed price agreement.