Episode #002 The Savvy Story Part 2: How a bookkeeper “just fell into pricing”
How did Amy, a bookkeeper with a complicated past and a challenging business, move from running a bookkeeping business, to a web design business, to mentoring bookkeepers and teaching pricing?
She “just fell into it!”
This is part 2 of Amy's story. The real message of this story is “Pricing doesn't have to give you headaches.“
Series: 2 of 3 The Savvy Story.
Host: Amy Hooke
Guest speaker: None
Topic: Pricing doesn't have to give you headaches.
I know, I talk a lot about pricing. It’s because I believe it’s SO important for bookkeepers to get their pricing right. But what you might not have heard is my story about how I actually got into this whole pricing thing in the first place…
I got into pricing by accident. Actually, I just fell into it.
I was teaching business planning to bookkeepers (as I mentioned in my last email) and knew my business planning method could help them a great foundation for their marketing, hiring, and pricing.
And at the time, “value pricing” was becoming well known and generating a bit of a buzz in the industry. In case you haven’t caught wind of it yet – “value pricing” is different to fixed pricing.
Value pricing is all about understanding the value or ROI of a service for your client and charging accordingly.
Fixed pricing is locking in a set fee set fee for your time.
Package pricing is what we teach at Savvy, and it’s a bit of a hybrid of Value and Fixed.
Back when I was a bookkeeper, I tried to do it myself. I thought “I’m a bookkeeper! I’m not stupid and I don’t need someone to tell me how to do this. I’m sure I can figure it out.” I never did any training or webinars on pricing, but…
- I tried a software program that calculates your pricing for you – it was awful
- I made a complicated spreadsheet and tried to work out how much to charge.
The complicated spreadsheet made me anxious about introducing my new packages to clients. My biggest concern was overcharging and losing the client, or undercharging and getting paid peanuts.
The process was difficult. Maybe you’ve had similar experiences trying to figure out your own pricing packages?
As I shared in my last email, I’d started to move away from bookkeeping into building websites for bookkeepers and mentoring them. I had to price some services that I didn’t have an emotional attachment to: websites, ongoing services, coaching, mentoring, and Pandadoc setups.
I was stepping away from bookkeeping and looking at my pricing with fresh eyes, when I finally learnt a method that works! And I wasn’t so attached to the outcome.
In fact, when I priced my new range of products and services, I didn’t care as much – it wasn’t about my primary expertise, it was about what value I was providing for someone else. And also I knew that if I got the price wrong, I could learn and tweak it for next time.
Then when I priced my Pandadoc service, I started to understand pricing on a whole new level.
I realised that if my clients were to do this themselves, it would take them MANY more hours than it took me. If it took them 15 hours at their hourly rate of $65, the value of getting it done for them almost $1,000!
So then I realised that even if it only took me an hour to do it, I should charge, not what it cost me, but what it would worth to the client.
All the dots in my head started to join together!
That’s when I realised for a bookkeeper to price their services, they need to be able to take themselves out of the situation and look at things from the client’s perspective, and also look at it from a proper business planning perspective. Thinking more about the big picture goals rather than the minute details of dollars for hours.
From my private mentoring sessions, I know for a fact that this is actually really hard for so many bookkeepers. We spend so much time looking at tiny details – it becomes almost impossible to see the forest for the trees.
But once you figure it out, it can price your services more effectively and run your business more profitably.
You need to set big picture goals for yourself and your business.
If you know that you want to make $150,000 this year, how many of of each package do you need to sell? Then you can logically figure out what’s realistic for your business, and how much you need to charge.
After I figured this all out for myself, I started teaching these methods to the bookkeepers. I knew that even though I never achieved package-based pricing in my bookkeeping business before I closed it down, I finally understood how it all worked. The penny dropped!
Well, I thought it had. I just needed to do one more thing. Test it out on people still running a bookkeeping business.
I got together with some existing clients and broke down the numbers, and figured out their pricing. It was so simple! Here’s what we covered:
- Their income goal
- Their business expenses
- Their home budget and personal expenses
- How much they were going to pay themselves
- The profit they’d like to take from the business
Add it all up and that’s how you get to your income goal!
Of course, there’s only so much I can include about pricing methods in one email so if you’d like to learn more or get some further help, here’s how you can do it for free:
Okay, that’s it from me for today.
I’ll be back with another story in a couple of days – but not about me!
I’ll share about what happened when one of my clients figured out their pricing and how it had flow on effects for their whole business.
See you next time.