Season 3 Episode #003 What was the inspiration behind Pricing For Profit?
Listen to Amy's story about feeling overwhelmed and trying to do things the “right way”, then her pivot to doing what was right for her and her business, and learning to articulate the value of her work.
Key takeaway: Make your business work for you, not for someone else.
Host: Amy Hooke & Maia Coghlan
Topic: Inspiration behind Pricing For Profit
What was the inspiration behind Pricing for Profit?
Amy Hooke 0:00 Thank you for joining us again. Today. We have some more questions on the topic of pricing, and a little bit more information about pricing for profit. So yeah, and over tomorrow.
Maia Coghlan 0:13 Thanks, Amy. So today, I want to sort of take a bit of a step back and talk about the inspiration behind pricing for profit and why you actually created it.
Amy Hooke 0:30 Yes, so I think obviously, it started with my own journey of pricing. So what was happening in our industry was that everybody was talking about value pricing. And it was sort of like a buzzword for a time. And I had been, I started charging. When I first started my business, I started off charging $100 an hour, straight up, because a bookkeeper that I had worked with, previously, before I started the business, she, I had contacted her and said, How much do you charge? And she said, are like she basically said, She charged about 100 110. She said, like, or maybe 120. And she said, like do not charge less than $100 an hour. And I was like, well, that is a lot because I'd come from being a contractor. I think I was on about $40 an hour. And I know at the time that the employer that I was working for was charging my workout at about 60 or $70 an hour. So it made me quite nervous thinking about charging $100 an hour. But I remember when I did my first quote, and the client came back and they just said, Yeah, that's fine. And they just signed it. And I was like, Okay, that's cool. And so then I did a couple of quotes. And as that went on, that was sort of what I was charging. And then over time, I sort of started to feel like I didn't know, I felt like it was just putting a little bit of stress on me because even though I like I felt that I wanted to charge that much per hour, because I had been bookkeeping for so long. So I felt that my time was worth that. But what I started to notice is that I felt that the clients did feel I felt the clients felt stressed. You know, I feel like there's sort of like, it felt like there was this anxiety to try and get through the work quickly. And yeah, I just, it just sort of never really sit right with me. So then I started to think about the concept of charging, you know, more for bass work and less for bookkeeping. So I did that for a while. And it was still sort of a similar thing. I think I was charging about $80 an hour for bookkeeping, and then more for the bass work. And then one day, when I was doing a quote, I had this guy say to me, so I'd prepared the quote for him. And I think I had what I had added in, I decided to start charging a bass lodgement fee. So I added in a bass lodgement fee. And then this client looked at the quote, and he came back to me and he said, Oh, what's the best lodgement fee about? And I said, Ah, it's just something that people charge in our industry. And he was like, I don't care what it is. And I was like, oh, okay, so took me by surprise was very confronting. And he said, Yeah, like, why should I pay a fee just because your industry is decided to charge it. And I thought, even though I didn't really like the way that he did it, and it did feel confronting, I went away and thought about it. And I thought, yeah, like, why am I charging this? Like, why would I charge a client something that they can't see the value in or kind of understand. And so I put together this, I put together this thing called what I did was I wrote down like what I saw as the five benefits of paying the bus lodgement fee. And so I put a couple of couple of different things in there that explained, you know, the value of having a bass agent. So for example, we get more time to lodge we have we covered by Safe Harbor, bass agents, how do CPE and that kind of thing, so I and I will actually put a link to so that you can have a look at that, because I do. Yeah, like if that have that template available, we can actually put that out there. So it was when I wrote that out, I sent it to him. So I explained it in a way sort of like an insurance policy, you know, there's these benefits to paying the bass lodgement fee, and that's why I charge it and as soon as he saw that, he said, Yeah, cool. I'm happy to pay that was actually him that said, okay, so it's sort of like an insurance. And I said, yeah, in a way. So he, he was like, Cool. Like, he was like Yeah, more than happy to pay that. And the thing is, he was happy to pay it because he'd seen or recognised the value like he understood the value in it.
Maia Coghlan: So and that was sort of like a light bulb moment.
Amy Hooke: It was a light bulb moment. I was like okay, like unless the client can understand And the value like, why should I charge it? And it's really, I felt like previous to that I felt like, oh, they should know. Or if they don't like it, that's their problem. And I'd sort of picked up on some attitudes from the bookkeeping community, which was sort of around, you know, I guess viewing negatively a client who didn't like how much I was charging or the way I was charging. But then I realized, okay, like, I really need to put myself into the client's shoes and get to it, like, I realized it was my responsibility to explain that. So that was kind of the first, I think that was the first, as you said, light bulb moment, and or the first time that I really started to see okay, I can see that there is a real importance on presenting the value, helping clients to understand what they're actually paying for and why they're paying for it. And then I also saw the status as a glimpse of some of the benefits of charging fixed fee for some things. So yeah, that was, that was the early days, and then what happened from there. So this was the first time around having started my business. And so for those of you who haven't heard my backstory, you can actually go back to we've we've got four introductory episodes, which you can listen to where I go through and tell my story about how I ended up running savvy and my journey through having the bookkeeping business and then closing it down, and then re starting it again. So if you fast forward to the second time around starting the business, I knew straightaway, because the first time, there were just a number of things that hadn't worked. And I had identified that some of the things that didn't work. In the beginning, were definitely around how the pricing was set up. And also in between closing down the business and reopening it, I'd obviously then started working for savvy and so with savvy, I was designing websites for bookkeepers, which is a fixed fee, like no one charges an hourly rate for web design, it's always you pay for the website, you're paying for that completed product. So it's that shifted my thinking again, to like, How can I? How can I like, yeah, just think of this bookkeeping, as, like, not really a product, it's because it's very different, like people just expect bookkeepers to charge by the hour. But it really started to make me think about, like, what are the sort of, you know, outcomes that we're achieving, or like, how just, it really got me thinking more deeply about how to charge for services, and more about the concept of saying to a client, this is how much it is, and then it's really on me to make sure that I get it done within scope, if I don't, then you know, falls back on me that my profitability is then being lost. Rather than putting it onto the client, when you're charging by an hourly rate, the risk is really on the client. So I started to see there were all these benefits for the client by charging a fixed fee, but then, you know, as the journey went on, and I started to discover how the pricing could get set up so that they benefit from having the fixed fee and knowing exactly what they're going to pay, and then I benefit as well, because the way that I set the packages up, you know, they are profitable. So sort of, yeah, I guess that was a big part of, of the journey of getting from, you know, charging hourly to packages. So when I started the business the second time around, I straight up like I went straight into setting up packages for the business.
Maia Coghlan 8:34 And how did that then turn into a program that you offered to other bookkeepers?
Amy Hooke 8:41 Yeah, so it's been like everything else in the business and with savvy, like many things have kind of evolved over time. So what's really happened is that, you know, I had, for example, I had, I want to make sure I had proper engagement letters set up. And just like how I originally started doing website designs for bookkeepers, which I haven't really talked about, but you know, when when I started designing websites for bookkeepers, it was literally because I'd made a website and a bookkeeper said, Can you make me want to so it was very similar. It was like, oh, yeah, like I've got my pricing setup in a certain way. And and then saying to other bookkeepers, like, Hey, would you like me to do this for you? And I think originally, I'm just remembering back to the original, like the first time, we kind of got to do this with a bookkeeper. So we had, we'd started setting up engagement letters for bookkeepers, and getting it set up in panda doc, which is an app where they can collect signatures, so I'd started with that. And then from there, I had a bookkeeper come to me and say, I am too busy to set up my pricing. Would you be able to do it for me and I thought, yeah, I, I guess I probably could. So from there, I did that for a couple of bookkeepers. But then I started to realize it's really important to center the pricing around their specific goals. So I started to develop some tools in order for, you know, the bookkeepers that I was working with, to be able to make sure that the way we were setting up the pricing was really relevant to their business, because I didn't want to just copy and cut and paste from my business, because their target market, their level of expertise, you know, their location, there's so many different factors that come into, you know, what they would want to charge for their, their packages, so that really needed to get taken into consideration. So I started to develop resources, the resources were really to help me collect the information that I needed to support them in the setup process. And then I started to realize these resources are very, quite useful for bookkeepers to be able to have access to these directly. And then I felt like yeah, that was sort of a, you know, so we launched that as it was called pricing project at the time, which was like a, maybe a more simplified version of pricing for profit. And yeah, we started to take people through that process. And then I realized, I think at that point, we were still setting up quite a lot of it for them, they were setting up the engagement letters, and we were setting up, you know, the whole, like, the packages and things like that. And then I started to realize like, it would be really good if I can put these tools in their hands, to empower them to show them how it works, and show them how to once they finish the program to continue to maintain this and manage it themselves. And then it just kind of grew from there, you know, we turned it into the online learning. So the program used to be mostly done through it was some private, it was like for private mentoring sessions per member, and then 12 months of like a group session where they could get help. And then we realized that, you know, in the mentoring sessions, I was kind of repeating myself a lot. So I turned that into some learning content that they can work through on their own self pace, and work their way through the worksheet. And that the that started to work out really well, because we realized that most members could get through a majority through the program by watching the videos and following along, and then just come along to a group session to ask questions if they get stuck. So that that, yeah, that that's how it kind of turned into our program. And there was a point where we realized that pricing project wasn't really like that wasn't really capturing what it was all about. And so yeah, so we changed the name to pricing for profit, because we realized, like, that's what it is. The result? Yeah. Yeah, cool.
Maia Coghlan 12:39 I heard you say once, something about wanting a way for bookkeepers to have their pricing set up almost like a online store or something like, can you say
Amy Hooke 12:55 I think it was more like a, like a physical, I was thinking about like a physical store. I said, like when a customer comes in, because I feel like, I feel like personally, for me anyway. And I know, for a lot of bookkeepers I've worked with, there's a lot of anxiety around how much to charge and quoting, and especially once it comes to charging a fixed fee, because you're like, oh my gosh, like if I charge too much, they're gonna say no. And if I charge too little, then it won't be profitable. And I'll be working for free and all this sort of stuff. So I started to think to myself, like I tried to imagine myself, like trying to imagine someone like running a milk bar or something. And so a customer comes in. And they get like, just the items that they need, they get bread and milk and a chocolate bar, and they put it on the counter. And I just thought to myself, like a shop owner is never going to a shop owner is never going to like get anxious about how much it costs. It's like the price is the price. So I wanted bookkeepers to get a sense of like when a customer comes to them to say, Hey, I'd like to engage your services, they go here, here's the items to pick, go out, go pick the items off the shelf, put them on the counter and go this is the price. And then the customer obviously the the analogy does break down a little bit because you're not going to have someone go oh, okay, I didn't realize the bread and milk was going to be $15. So I'm not going to have it and walk it out. I mean, maybe probably not. You know, because the prices are on the shelf. But you know, it basically, I just wanted that easy feeling of like the price is the price if you want it you want to if you don't want it, you don't want it and then that way, it sort of takes that feeling of it being personal as well. Like I don't know if anyone else can relate to this. But I said like, I just remember feeling like insulted if someone questioned my prices. And you know, I started to realize that like it's not about me if I make it about the process and I make it about the templates and I make it about like the price is the price and I really don't care if they say yes or no, it's like just look at it. Can you afford it? Can you not afford it? Do you want it? Do you not want it? That's it. Just make it nice and easy.
Maia Coghlan 15:05 Yeah, someone might come into the milk bar, look at the milk, see the price and then walk out and walk out? Exactly, yeah. And the other, the other great part of it is that like, you know, if you're on your own, then then you just get a one liter bottle of milk. And then if you got, you got maybe a partner, you get a two liter bottle of milk. If you're a family, you get a three liter and it works the same way with the you know, smaller businesses will take the smaller package options, and the larger businesses will take the larger package options.
Amy Hooke 15:32 Yeah, exactly, exactly. You know, and we've even got, like part of the way we've got things set up. And even though this is sort of branching a little bit beyond pricing, for profits, this kind of happens afterwards. The way that we have things set up is we've got it so that when customers come to our website, they go through a process where they put in their details, to find out what more information and they get sent the prices, and then they can privately review those example packages and see whether it's right for them. And then you know, if they if the price makes them angry, you know, or if they don't like it, or if they're offended by the price? Well, they can kind of deal with that in the privacy of their own office. Like rather than letting me know because I really, like for me, it's sort of like, I don't know, it's like, not really any of my business, if somebody is feels offended about my prices, so I'd rather them have that conversation by themselves. So, you know, I sort of found like, Okay, I don't like it when people confront me about my prices, even though I've got things set up, you know, very well, I still don't really enjoy it. So I thought, okay, like, how can I kind of move some of this to, you know, for them to evaluate privately, because the reason that someone might react badly to your prices, you know, I mean, money is a very personal thing. And so when they see your price, it may tap into their own, like, thoughts and feelings and issues about money. Like, for example, maybe they've never set their pricing up as business owners the way that they want it. And so it could cause some kind of a like reaction in them. And so then they reacting towards you in a certain way, which has really nothing to do with you. So it's like, I guess, like, over that period of time, I learned for myself, and, you know, that's what I teach bookkeepers as they work their way through the program, that it's not, like, it's not personal, it's just like, make it about the process, and let that person kind of deal with their own, you know, their own stuff, but then also potentially see that as an opportunity, if someone comes to you down the track, you know, a client, you know, is having an issue with something, you know, look to see if there's an opportunity to help them, you know, figure out like, maybe is their business as profitable? Or have they set their business up to be profitable in the future? Like, yes, it's sort of like a few different kind of learning things in there, as you work your way through you, you know, sort of, I think it's really you're working your way through and changing your perspective and your mindset about pricing as you work your
Maia Coghlan 18:00 way, and we're definitely do another add another time, we'll do an episode about what you were saying before. And like that process when people come to our website. And, and, and like that part of the process. We'll do it we'll do another episode that goes a bit more deeply into that. Yeah, I think I think we've we've sufficiently covered the topic for today. So we'll put a link to the best lodgement fee template. And we'll also put a link to the page on our website that talks more about pricing for profit. So you can go there at the savvybookkeeper.com.au/pricing and read a bit more about pricing for profit there. And if you scroll to the bottom, there's a button that says Apply now if you'd like to apply to join the program, and we'll get in touch with you that way. And if you've got any more questions about pricing for profit, or about anything else, we will be posting this podcast episode on YouTube as well. And you can ask any questions in the comments there.
Amy Hooke 19:05 Excellent. Well, that was fun. It was good to talk about pricing for profit and kind of the backstory of that. So yeah, well we'll see in the next episode to talk a little bit more about your business in questions. See you next time. See you then.