Improve Your Pricing Strategy With Technology

Knowing how to best price bookkeeping and accounting services can be tricky. Many clients prefer to know upfront how much they’ll be paying for services like tax filings or the production of financial statements. But because no two clients are alike, a one-size-fits-all pricing system usually results in some clients being undercharged.

Understandably, clients seldom respond well to price increases after the work is done, or even year-on-year for that matter. This makes it all more important for bookkeeping and accounting firms and professionals to have well-developed pricing strategies in place. 

Here are some of the ways that you can use advanced technology to improve your pricing strategy in a way that works for you and your clients. 

Save Time, Reduce Costs

If you’re not leveraging technology to streamline your own workflows, chances are you’re missing out on opportunities to pitch more valuable services to your clients. Using advanced automation technologies like Dext Prepare and Dext Commerce results in impressive time savings, particularly during peak season.

This improvement in efficiency saves both time and costs, boosting your capacity. You can then use that time to scale your business by taking on new clients and/or by offering higher-cost financial advisory services to your existing clients.

Dext user Business Sherpa Group had full-time employees whose focus was solely data entry. By using Dext, they saw the time commitment to data entry drop from five days a week to two. This represented substantial cost savings for Business Sherpa, but also an opportunity. They now had three days’ worth of staff time and resources that could be re-focused on putting that financial data to use and empowering their clients. The staff is happier too since they get to work on more interesting projects.

Prevent Overservicing and Write-offs

Even if you automate the data collection process, it’s still possible to have redundancies in your workflows. Using a tool like Dext Precision, you can establish standardized workflows for your team and outline clear steps for the completion of each service you offer. You can also follow the progress on each client file and track the amount of time your team is investing.

Customized dashboards and automated checks for data accuracy enable stronger collaboration and communication within your team, helping to reduce review time, eliminate outdated or redundant tasks, and prevent anyone from redoing work unnecessarily. And, by consistently tracking the amount of time spent on each client file, you can better plan the efficient use of your resources, reducing write-offs.

Charge for Technology Consulting

If a client has yet to make the transition to cloud-based accounting technology or has only scratched the surface, you can offer to analyze their business and identify a tech stack that meets their needs. Building out a financial data infrastructure is a valuable service. You can scale the cost of this service based on the size and complexity of the company’s operations.

When consulting, look for opportunities to add value. Some companies may be missing out on capturing key financial metrics that could tell them more about the health of their business. By illustrating how they can capture these indicators within the tech stack you are proposing, and by explaining how the data can be used (by you!) to generate insights, you’ll demonstrate your worth and lay the groundwork for future financial advisory work.

Charge for onboarding and set-up

If a client has a lot of gaps or errors in their financial data, these will need to be addressed before work can begin. If you’ve already helped them to set up a cloud-based accounting software and tech stack, you can use a tool like Dext Precision to evaluate their data quality. Based on their data health score, you can quote them a one-off fee to clean up the inaccuracies.

If they’re a new client and aren’t set up with this technology (or don’t want to give you access just yet), ask them to provide you with an overview of their current data collection systems as well as copies of their most recent financial statements, audits, tax returns, and any other documents that will help you assess the health of their data. You could then pitch them a combined one-off fee for data clean-up and technology onboarding.

Define Your Fee Scale

If one tax return takes you an hour and another takes you 10, you shouldn’t be charging each client the same fee. Yes, across your entire client base the time invested may balance out. But, then again, it may not. If you’ve been using technology to streamline your own processes and gather internal project data, you can leverage insights from tools like Dext Precision to improve the accuracy of your pricing.

Key indicators such as the size of the company’s operations, the complexity of the project or work requested, the comprehensiveness of a company’s tech stack, the quality and health of their data, and the amount of time your team has invested in similar projects in the past, can help you to predict how long a project will take and what resources will be required. You can use these indicators to establish your base rates and inform quotes.

Depending on the nature of the work or the nature of the client, you may choose to define a one-off fee-based structure or an hourly rate structure—or both! Insert Coin, a Canada-based accounting firm that serves clients in the gaming industry, went with a time-based structure. Gaming companies typically track their progress and costs by the hours and months they invest in a project, so the time-based model aligned with their processes.

Before offering a price quote, Insert Coin sends their clients an interactive slide that walks the client through their current annual financial costs—year-end costs, incidentals, bookkeeping and platform fees. They then break that down into the monthly cost for equivalent or greater services offered by Insert Coin and include the opportunity cost for the client if they perform these tasks in-house. Thanks to their expertise and a quality tech stack, Insert Coin often comes out as the winner.

Differentiate Between Standard and Advisory Services

Advanced automation tools free up time for you and your staff to do the more engaging work of analyzing data, solving problems, and providing useful insights for your clients. For a basic annual tax return, that might look like applying a new tax credit that saves your client $500, and simply letting them know. These customer service touches are simple and inexpensive ways to add value and keep clients returning year after year.

But, if in addition to that tax return you’re also analyzing your client’s sole proprietorship growth and making suggestions for how they can scale their operation, that’s a much higher value advisory service that can and should command a higher rate. Before you delve too far into advisory services, define when you’re going to start charging additional fees. You might define a mix of one-off fees for more common services and hourly rates for more complicated advisory services, or opt for a more integrated model. 

Here are some examples

Having reclaimed 20-30% of her time per client per week thanks to tools like Dext Prepare, Debbi Allison, owner of Open Book Consulting, was able to step into the role of an advisor and educator, helping her clients take a deep dive into their finances to understand opportunities for improvement. 

She implemented a value-based billing system, emphasizing a three-step process that involves defining the company’s needs and clarifying data, developing customized technology strategies to encourage positive financial behaviours, and planning for future growth and consistency. The three-step process starts with a consultation rather than a stated menu of prices, with services and quotes customized to suit the business.

Opting for a monthly set rate approach, Canadian virtual CFO business AMLB offers three packages. The first offers the basics—bookkeeping, financial statements, taxes, tech stack onboarding and an annual review. Their Controller and CFO packages add additional services to that, such as payroll management, tax strategy and planning, and CFO advisory services. The monthly cost goes up depending on the level of input the client wants, but with this approach, the client always knows what they’re paying up front.

By integrating technology into your workflows, you can create new opportunities to expand into higher-value services that can grow your revenue. Which financial advisory services you offer can be tailored per your clients’ interests, and prices can vary based on the complexity of the work. Using data, you can devise a pricing and service model suited to your own business goals while addressing the unique needs of the clients and/or industry that you serve.

If you’re looking for a way to improve efficiency, save costs, increase your revenue and grow your business, technology is the way to go. Advanced automation and cloud-based accounting software can help you define a service model and pricing strategy that reflect the high-quality financial services you offer.

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