The New Year's Resolution

January 4, 2016, 9:30 AM. My phone rings, and like clockwork, I know who it is. You see, this client calls me shortly after New Year’s EVERY YEAR to share that he’s ready to get taxes done, but oops! He didn’t keep track of his records and needed them caught up. I had too many of these businesses every January and February. I bet you do, too.

However, that New Year’s Eve I resolved no more worrying about cash flow in July. No more working myself to the bone and NEVER seeing my family during tax season. NO MORE feeling undervalued for the hard work I put into these businesses every year, only to wait another twelve months before they came calling again.

In the weeks before my resolution, I researched everything I could find about this new pricing strategy called Value Pricing. I felt bad about charging catch up clients too much because I figured they would just go elsewhere and I would lose out on the chunk of money that I need to put in savings for slower summer months. So, I would find a price that the client would more than likely pay without too much negotiation and off we’d go. The problem was that I had priced TWELVE MONTHS OF BOOKKEEPING at far less than my monthly clients. I was rewarding these year-end procrastinators for waiting!

There are many fantastic resources about Value Pricing. Essentially, we determine the value of our services by “packaging them” into a few different options with varying add-ons and service levels and add pricing after we’ve had a “value conversation” with our prospect. We establish the lowest price we’ll take to perform the work called “walk away pricing”.

What I was looking for, however, was how to convince my annual clients that they needed a monthly service instead of waiting until January. Two things needed to happen:

1. No more feeling guilty about larger than normal fees. If they want twelve months of bookkeeping done in a week, then they would pay for twelve months of bookkeeping PLUS a fee for piling their mess onto me at the last minute. I decided since there would be no advisory services or forecasting as part of these catch-up services, my minimum fee would be my walk away pricing times twelve, plus an “inconvenience” fee of 25%.

2. When my last minute friends flinched at the price I quoted for clean up, I offered to wipe out the “inconvenience fee” in exchange for a signed 12-month contract, which reflected the value pricing and packages I had created just for them. I had to SHOW them how a monthly plan would benefit them and provide added value to the health of their business year around. They didn’t care that I struggled in July. What they wanted to know was how I was going to make sure THEY didn’t struggle in July. They wanted to see how if I touched their books more than once a year, I could assist in important business decisions or alert them when things went off the rails.

I soaked in as much information I could about sales psychology. Customers love things presented in threes. I learned how to price my top package well out of the reach of 99% of the businesses I targeted (price anchoring), to naturally make the middle and lowest package look reasonably priced. I learned how to price my lowest package so the middle package seemed like a STEAL OF A DEAL for a few more bucks. I learned how to steer my clients and prospects into the middle package, which is where I felt they got the best value from me and where I did my best work.

I lost some of my annual friends. I did fewer catch-up projects that year, but I made more money on the projects I did work on. I saw an increase in my clean up revenue stream after making these changes and also saw my husband, kids, and pillow a lot more. I converted annual clients into monthly recurring clients. I didn’t struggle that July, or any of the months following. Now I have an easy-to-predict monthly revenue stream that I can count on to budget my business and my life. I have happier clients who value my input and treat me as a partner. Value Pricing did that for me. It can do it for you, too.

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Kristy Monahan is the Chief Solutions Officer and resident App Addict at Dynamic Bookkeeping near Seattle, WA. When she’s not researching ways to make business easier, she can be found making lives easier for her bookkeeping and payroll clients. To learn more about Dynamic Bookkeeping, visit http://www.kristymonahan.com.