The accounting industry continues to get more competitive, so winning accountants have to continue to market. Despite clients’ and prospects’ ongoing pleas for price concessions, conventional wisdom says: withstand the urge to lower fees. Don’t drop prices. Maintain price integrity. It’s hard to raise prices once you have dropped them. Although these hard and fast pricing rules often appear as an absolute, they need to be observed in moderation.
Pricing is where marketing meets finance. Marketing is communicating a firm’s value and finance is realizing that value. What progressive firms’ decision makers have to realize is that marketing is not an event, it is a process. From a marketing perspective, pricing is in fact a process. As an event, firms are encouraged to stand firm on fees. In practice, as a process, winning firms apply moderation to such rigidity.
To sustain revenue integrity, price concessions should be selectively made. In instances where extreme price pressure is the economic reality, success requires a changed mindset. Concede prices only when it makes sense for established clients and highly valued prospects. But, it is imperative that under no circumstances do firms stop marketing aggressively. Market through referrals, public relations, advertising, networking and collateral. Keep looking for additional clients. A full sales pipeline is the best offense against fee pressure.
Fundamental to strengthening a practice is acquiring clients with whom the practice wants to work. Clients fitting that description are often called “A” clients. Filling your client list with “A” clients yields more satisfying work and more interesting engagements. Clients that beat you up on prices risk demoting themselves to “B” clients, “C” clients, and worse. The reason that you want a full pipeline is to have the option of de-selecting (i.e. firing) “C” clients. Clients who undervalue the firm’s contribution will question fees. Clients who operate in a firm’s area of strength and recognize the firm’s overall value contribution will march over the dying carcasses of inferior competitors to benefit from your expertise and superior service.
Price integrity is important. However, client selection is a higher priority. The decision is easy between having a client who whines about fees and one who is absolutely certain of your superior ability and accomplished expertise in their niche. Recognize that a short-term, challenging environment may result in fee concessions. But, a long-term marketing process enables quality firms to communicate and demonstrate excellence in specific specialties. Clients who truly recognize the value will eventually be ready to pay for it. The clients that decide to behave as “C” clients can go to the discount rack and be a competitor’s headache.
Firms need to be aggressive in building their expertise and reputation through working with “C” clients in order to replace them with “A” clients. “C” clients, still have the option to learn to behave as “A” clients and deserve the privilege of working with your “A” quality firm. They just need to hurry!
By Glenn W Hunter
Principal of Hunter and Beyond