Pricing Affects Every Area of Your Firm

It's Time to Change!

As a professional in the industry, you may find some of what you do easy. Just because you find it easy, doesn’t mean it isn’t valuable and worth more than the time you put into it. If it was truly easy, your clients would be doing it themselves rather than paying you.

Undervaluing ourselves and what we bring to the table is a chronic problem plaguing accountants and CPAs. Why do I say this? Because people pay more for the luxuries they value. Let’s look at a comparison: 

Today, the MSRP of a Cadillac Escalade is over $81,000 while the MSRP of a Chevy Suburban is slightly under $60,000. If these automobiles were priced according to the time it takes to make them plus the cost of their parts, the difference between their retail prices would probably be far less. To maximize profits, GM spends a lot of time and money researching how much their customers value their different products. Certainly, the brand makes a difference, but the Cadillac also offers a more luxurious package. It doesn’t cost GM a lot more money to offer these luxuries, but their customers place a much higher value on them and GM understands that value.

Pricing according to value really isn’t a radical concept!

Accounting firms also factor brand into their pricing models by charging higher hourly rates, but the driving factor is almost always the same: hours x hourly cost = price. Value gets lost in the mechanics of tracking billable hours. As a consequence, accounting professionals tend to undervalue themselves and what they bring to the table. Measuring our value by the hour has done a number on our self-esteem.

Perhaps we should start basing our value on the important things we know rather than the length of time it takes us to do a job. I have high regard for factory workers, but the idea of paying for labor by the hour is a factory mentality. I don’t know a lot of accountants who would prefer to stand at a machine making parts all day. So, why do we insist on being paid like people who do such work?