Season 3 Episode #002 What is Pricing for Profit??
This week on the Bookkeepers' Voice Amy and Maia answer some FAQs around what is Pricing For Profit, what are the benefits, and what is not?
Listen in to find out how the program works and whether it's the right fit for you. We talk about setting financial goals and knowing exactly what you need to get there, making sure your pricing is right for your business, and smoothly transitioning your clients from fixed pricing to packages or to new packages.
Key takeaway: Create a financial picture of your business to lead you towards your goals.
Host: Amy Hooke & Maia Coghlan
Topic: What is Pricing For Profit?
What is Pricing for Profit?
Amy Hooke 0:00 Hi, thanks for joining us today. We are I'm here with Maia again this week, and we are going to be going into some more questions that our members and members of our community ask about various topics related to their business. So today, we're going to be focusing on some questions around pricing. So I'll hand over to Maia to us some of those questions.
Maia Coghlan 0:26 Alright, so today, I wanted to specifically ask some questions about pricing for profit. And this is a program we've had for a while and we've brought out a new version. But some people aren't actually sure what exactly pricing for profit is. So that's what we're going to talk about today. So, Amy, what is pricing for profit?
Amy Hooke 0:53 Okay, well, I guess the just the short version is that the it is a pricing model for your business. Or even more broadly, it's actually a financial model of your business. So that's sort of the big picture of it. So the and then if you zoom in on the details, and what the purpose of it is to do, is it begins with transitioning your clients from charging by an hourly rate, and making that transition process as smooth as possible. So it begins with figuring out your business model, your pricing model, or the financial side of things, figuring out your goals, and then that leads you through the process of creating new packages. And then through that step by step of having a look at your existing client base and transitioning your clients on to their new packages and direct debit as well. Cool.
Maia Coghlan 1:49 So how does that work? Like if someone signs up for pricing for profit as a program? What does it sort of look like to them from?
Amy Hooke 1:59 Yes, so Well, what we do is we go through and we do an in detailed, we do an analysis of their business. So what we do is we really create a financial picture of the business. So we go through and there's a whole there's a whole set of lessons to go through and the lessons step by step lead you through filling out a series of worksheets. And then what happens is each of those worksheets links together and provides certain information about your business for making some strategic decisions. Because one of the biggest problems that I see, I mean, bookkeepers come to us because they want to transition their clients from an hourly to packages, or perhaps they've already set up some kind of packages, but they're wanting to recreate them because they feel that they're not quite right, or they're wanting to just double check and make sure that they're right. So so we step through that process of just capturing all the existing information about the business first. And then once we've got that we've got a snapshot of where where you are right now, then what we do is we focus more on the future. So what do you want in the future for your goals, and then we tie the two together, we link those together to make sure that the way that you're setting up your pricing in, you know, in your new packages is going to lead you towards your goals and not further away.
Maia Coghlan 3:30 Cool. So what would you say would be the ultimate benefit for someone to do pricing for profit? Amy Hooke 3:40 Yeah, so obviously, the benefits are, so one of the benefits that people come in, to, to achieve in the first place is to have the packages set up. So that's usually a big thing on the to do list. For bookkeepers, it's that, you know, having wanting to have created those packages. And, you know, to be able to charge new clients that come in on those new packages, but also to get the existing client base across onto new packages. That is often a really big thing. In our mind. That is the thing that we that we come in, or that's sort of the pain point that we feel that we're trying to solve. So when bookkeepers come and start working through this program, that's usually what that's usually the benefit that they're looking for. But there are other other benefits. So what happens is through this process, because we focus on the profitability of the business, rather than just thinking about income and prices and hourly rates and things like that, so one of the biggest outcomes or results that we get for bookkeepers is that their income is increased significantly. So I usually always try and be very conservative with my numbers. And I have really, over the past year or so been spent Talking about, you know, participants getting around 20% income increase on their monthly Billings. But we, that rate has significantly improved since we've re created the program. And so we've been able to test that out, like many times with different participants, and that average is has increased, it's it's really quite close to the 40%. Mark for many clients. Wow, obviously. Yeah, exactly. It's it's a pretty amazing result. It does depend on how the business is in the beginning. But most bookkeepers, I could fairly accurately calculate an unexpected ROI range. So the amount of I guess, when I say ROI, like how much of a return on your investment for paying for the program, would you get within a certain period of time? So yeah, it's really between 20 and 40%, in that in that 90 day period of completing the program. So that's, that's another one of the benefits, that's, you know, it's not normally something that someone comes to us for, but when they find out, they can get that they definitely are interested, I mean, who wouldn't be an extra 20 to 40% income without doing any extra work? So that's the first thing. And then the second thing is just to be able to, to actually have the clients, the rate, or the I guess the result that we get is, it has been 97 to 98%, of proposal acceptance rate. So obviously, you know, when people come in, they're thinking, Am I clients really going to accept these packages? Is it going to be hard? Am I going to be nervous? Like, what if they don't like it? What if they say no, or they leave, but so far from our participants, on average out of them, when they send all of their proposals out to their clients, 97% of those clients will accept the packages. So there's, you know, the bookkeepers obviously coming to us because they wanting to get their pricing set up. And they're often they come because they want their engagement letters set up as well. But these are the additional benefits that they get. The other thing that's really good about the program is obviously you're set up for future clients. So it's one thing to get your existing clients transitioned across, but you're also able to be able to quote a lot faster, once you've completed the program, because you have everything in place to be able to complete the quotes for the new clients as well. So really, overall, there's a lot of time saving benefits, and there's also a lot of income, increase benefits, and then just the peace of mind as well, that comes with that.
Maia Coghlan 7:51 Yeah. Wow, that sounds amazing. So how long does it take from signing up to join the program to having that increase in monthly income? Amy Hooke 8:04 Yeah. So it takes it, we say it's a 90 day program, because most bookkeepers should be able to complete it in 90 days. And I'm talking about a bookkeeper with a larger client base. So let's say 60 to 100 clients, you know, if you've got sort of more towards the 100, Mark, that you know, and it depends how much support you've got whether you've got any staff members who can assist you with that, then obviously, it's a bigger job. But even with clients who have those larger client, bookkeepers who have the larger client bases, they've been able to make those transitions in around that 90 day period. Then on the flip side, I mean, we've had some Avon members who have come through who do have large, fairly large client bases, and they've completed the bulk of the program within two weeks. So that's, that is what's possible, not the entire program, but to to get to the point where the packages are ready to send. Yeah, it is possible. If you had a big chunk of time where you can just dedicated work straight through it, it is possible that you could get through it into weeks. But I would really set the expectations to be realistic given that most people have other things on that it would take 90 days, if you were able to commit, say two hours a week to completing the program, you would it would take about 90 days.
Maia Coghlan 9:28 Cool. All right. So so if I have a bunch of inquiries coming in, and I want to send out like I need to send out quotes and I need to get my packages organized by like, tomorrow or next week. Is this program what I need?
Amy Hooke 9:45 No. So even though so obviously, it is possible to get through the program fairly quickly. We have found in the in the past that we have had people come to us and say that they urgently need to get a quote out and they're really joining the program, too. Get access to some of the materials that they might need to quickly get set up and to create a quote for a client. Whilst it is possible to get set up fairly quickly, I do not recommend it because it is going to be additional stress. So when you come into the program, it's really important because the point of the program, the goal of the program is not to get a quote out that week, the goal of the program is to make sure that your pricing is set up to support your future income goals. So what we're doing is yes, you can get various parts of it done quite quickly. But that's not really what it's about. It's about the, you know, the long term financial goals of your business, and making sure that you get things set up in a way that's going to support those goals. So whilst whilst you can get things set up fairly quickly, I feel that the amount of stress that you will put on yourself, of coming in and trying to do a quote so quickly, there's a very good chance that you'll feel overwhelmed, and you won't be able to go through the steps with clarity and to be able to, I guess efficiently set that up. So yeah, that I do feel that it's not really an ideal reason to join.
Maia Coghlan 11:23 That's pretty good advice. All right. So that's all my questions today on pricing for profit, but we are going to be doing some more episodes talking about pricing for profit, and how it works, what it involves all kinds of things, answering your questions about pricing for profit. So if you have any follow up questions, any queries, or about any other topics as well. Of course, you can comment on the YouTube video where we'll post the podcast as a YouTube video as well. And if you want to know more about pricing for profit, and if you would like to apply to join the program, you can go to thesavvybookkeeper.com.au/pricing where we've got a whole bunch of information about the program, and there's a link at the bottom of the page that says Apply. Now you can fill out a form and we'll get in touch.
Amy Hooke 12:20 Yeah, great. Sounds good. We'll see you in the next episode.
Maia Coghlan 12:23 Yep, see you there.