The law firms do it, accounting firms do it and so do bookkeepers: they each determine what they consider to be the going rate, the “market price” for the service they are delivering and either match it or discount it. But there is an underlying fallacy in this method; it’s a fallacy that a market price exists at all for a service.
For sure there is a market price for milk or petrol but when it comes to professional services, following the crowd is a sure-fire way to discounting the value of your service.
Professional service is the key to pricing
Consider two plumbers: plumber ‘A’ is an ‘emergency’ plumber for leaky taps, installations and the like. He operates in a hugely competitive marketplace but has invested heavily in marketing and infrastructure (a call centre and multiple vans). He invests in AdWords, SEO campaigns, letter box drops. He has a headline service charge and an onsite quote. With six vans on the road and the capacity to service most calls (he notes that he once had a callout to rescue a cat which got stuck in a down pipe), he says many customers do comparison shopping but most have an urgent need and opt-in for his rapid response service.
Plumber ‘B’ is a specialist blocked drains and sewerage service. B has invested heavily in high tech equipment that is far too expensive for the average plumber. Whereas A yields an average of $150 per service call, B typically charges $900 for a job.
There is no real market price guiding either A or B. Each have highly evolved systems and processes for handling customers, from enquiry to service delivery and ensuring profitability is the price driver.
Differentiating your service
The fact is most bookkeeping and accounting firms tend to look the same. And because most firms do not have the budget to stand out from the crowd and compete with larger firms who buy space on Google, there is a real disconnect between wanting to attract new clients and actually attracting a client who may be searching for a bookkeeper just like you.
Too few professionals spend any time investing in building a profile that can act like a magnet and one that genuinely presents a point of difference.
Standing in the customer’s shoes
Customers will be drawn to professionals who understand their needs. You can’t be an expert across the board but you can be a specialist in a specific vertical. ‘Finding your niche’ is somewhat of a cliché but there compelling reasons why specialising should be considered:
• There is a perception if not a reality that specialists are experts
• Customers expect to pay higher fees to a specialist
• Being a generalist can be inefficient when you’re unfamiliar with the industry
Generalists will have a mix of low to high quality clients; a specialist tends to have a higher proportion of high-quality clients. Interested in developing your niche? Download our guide