How to Raise Your Fees
“What was the single most important lesson you’ve learned in running a successful practice?”
I’ve been asked this often and wow is it ever a loaded question. There are so many possible answers but if I had to pick only one, the answer I would pick is the most profitable one: Value Billing.
I think there are several components to mastering the skill of Value Billing and while I think it’s a bigger topic than can be covered in one short article, I will discuss three very critical elements to achieving this skill.
- Determine the right price (value) of service
- Sell the proposed value
- Overcome fear of increasing fees
Determine the right price (value) of the service you’re quoting
This requires that you ask not only a lot of questions, but the right questions. You must determine the amount of work required to execute the engagement and, more importantly, also determine what the engagement is worth to the client.
Here are a couple of the things that will impact the perceived value of the services you will render, just to name a few:
- Tax savings achieved for the client
- Stress relieved to the client
- Increase in profits for the client
- Increase in leisure time for the client
The list goes on and on, but I’m sure you get the picture.
Sell the proposed value
While the client may not be well positioned to properly measure the value of the service you’re rendering, you understand your own value and need to explain it to them. Accountants and bookkeepers are often surprised that the client “just doesn’t get it”. That’s something you have to live with. They often don’t get it, so you need to tell them.
- How much taxes they’re saving
- How much nicer life will be once they hire you
- How much more money they will be making
- How much more time they’ll have with their spouse (Although careful with this one- it could work against you)
- How much more time they’ll have with their children and/or buddies or doing things they enjoy like golfing or fishing
Overcoming fear to increase fees
This is a hard one for most. How can I increase fees by 10%? How about increasing it 20%? More than 20%? How does the idea of increasing your fees make you feel?
One of the first things my mentor had me do when I engaged him to help me was to increase the fees for year-end preparation by 50% on most clients, 100% of a few, and increase fees for personal tax preparation by even more than that.
Was I scared? You have no idea. It took Grant, my mentor, quite some time for him to convince me. Despite him assuring me all was going to be okay, I could not bring myself to do it.
But eventually I did. And the results? They were unbelievable. And the best part was, it was a LOT EASIER than I ever expected.
Here’s the tremendous benefits of me overcoming my fears and raising fees:
- Profits more than doubled in one single year
- I lost almost no clients (to my great surprise), which was mostly a relief, but admittedly also a bit of a disappointment too. There were a few clients I was hoping would jump ship
- I could now afford to pay my team what they were worth (finally)
- I was finally making more than my team
- I could attract better people
- I could afford better equipment, better marketing, better everything
- I could afford to take vacations, buy new toys
- I could afford to give more to my favorite charities
But all this first required that I overcome the fear. My fear.
And here’s the weird part. I mentor many clients. Most everyone I mentor had fees that were, in my opinion, far too low. Most everyone has followed my lead, took the leap, and increased fees well in excess of 10% and many by 50% or more across the board.
And the results? They’re always the same. They always come back saying it was easier than they ever expected. A LOT EASIER. I discovered that price resistance is far greater in the providers mind than the client’s mind.
So how did I go about ridding myself of my fears?
There’s no easy answer to this question as we’re all different, but here are a few tips:
- Do it right. Learn the secret to increasing the fees without losing clients. This skill is not terribly difficult to learn, but is too long an explanation for me to include in this newsletter
- Be clear on the promise it will bring. There’s nothing like seeing the future and having a clear vision of what your firm and your life will be like once you’ve increased the fees. People will do great things if the promise is bold enough and clear enough. If not, we lose motivation to do the hard work
- Get a mentor. Hire someone who can walk you through the process and who will ensure you stay the course when the devil talks you out of this great idea. And the devil will, and man is he convincing. Especially because he’s often disguised as fear, and even extreme fear at times
Raising fees is something I’ve preached more times than I can count. I only wish I knew the words to convince you. But I’m banking that you are like me and you just need to hear it often enough. Maybe like me, you’ll one day see this for what it is: simply a fear to overcome to achieve so much in return.
Did you find this article helpful? There’s a lot more to this topic, including multiple videos I’ve made as well as a 2022 Raise Your Fees Challenge I’ve issued. You can find it here:
If you have a question or something to add about this month’s article or want to share how you’ve successfully raised your fees, you can reach out anytime.