Buying services is not like buying stuff and loading up the shopping trolley. Think of it this way: if what you offer can be obtained from anyone, you are competing against everyone. You won’t stand out from the crowd.
Most bookkeeping service businesses are generalists. It’s natural to want to say ‘yes’ to a prospective client. Indeed, it’s considered smart business to say yes and then upsell some more.
“Do you want French fries with that?” is, famously, the question asked by MacDonald’s sales staff. Not many bookkeepers would even contemplate asking a similar question. Accounting software vendors on the other hand, have perfected the art of offering a virtual shopping cart of add-ons and options. Two great business models yet the fact is nearly all freelance, contract bookkeepers are generalists who charge for their services by the hour. It’s the easiest way for bookkeepers as well as many other professional and trades to set their fees, but it’s also a big reason why so many struggle.
The hourly model is flawed for the work that a contemporary, technology-enabled bookkeeper should be capable of delivering. But designing and presenting the best pricing strategy for your bookkeeping business is no mean feat.
There is a fairly obvious conclusion to draw and that is most bookkeepers charge by the hour because it just feels safer.
Finding your ‘sweet spot’
Take a look at the chart below.
In the bottom right hand corner you have a valuable product or service, but its’ not unique, so you always have to compete on price. In the upper left corner, you have a mediocre product that unique – but you own a market that doesn’t exist!
In the bottom left corner, you have a mediocre product or service and other firms are doing the same mediocre thing. You want to be in the upper right corner, where you have a great service that’s also unique. That’s’ the place where margins are higher and where profits are made.
Bookkeepers should identify what extra services they can provide to get their clients into better shape. It goes without saying that good bookkeeping makes life easier for business owners as well as their accountants. It may be an iterative process to discover your sweet spot, where you can settle on a great service; once found, let it bloom.