In many businesses, including my general area, it is customary to quote package prices. For example, there might be a price for a tax return, and then a price for self-employed accounts and a tax return, one for lettings accounts and tax return, and one for company accounts and tax return.
Clients and prospects know what they are getting, and the businesses offering think in terms of value and profit per package on an average basis, knowing that on some they will make a very good margin, and now and again they will make a loss. It is the overall net profit on the portfolio of compliance clients which counts.
À la carte
My approach is not quite like that, because although my firm does some of that sort of work, I prefer not to be too tied in to fixed prices. I like the flexibility to tailor my fees according to the value the client actually receives, so that allows me to charge more according to their particular needs, or sometimes less if they really do not want the Full Monty. That aside, a lot of my business is not compliance anyway, and that work has a value which the client and I determine between us in the sales process. The fee will suit both of us if we agree on one, and it is down to me to sell the value.
I think that initial fixed price packages have to be flexible sometimes because not every client with broadly the same description of requirements actually needs the same service. The “one size fits all” approach does not always work. If sellers of services stick to the “fixed” formula they will lose business because their prospective purchasers cannot fit themselves into the packages offered.
How not to do business
A small accountancy or tax practice will have particular requirements for tax software. For example they might have a hundred personal tax clients, but only five partnerships and eight company clients (but their client portfolio might be disproportionate the other way round).
My old software provider charged per module for personal tax, partnerships and company tax. That added up to a lot, especially when they put their prices up. I no longer had value for money, compared with competitors who offered all-in-one packages for those who had client proportions skewed as in my example. I would have paid a high price for services I mostly did not use.
You might say that the old provider did not want my business, but that is not what they said when I tried to negotiate a better deal, and their website purports to attract smaller practices. Anyway, they did not have the common sense to make a deal with me. I wanted something which had real value and not want to pay for what I did not want.
Bespoke suits me!
I took my business to a software house who gave me an all-in deal which was exactly what I wanted. It is good value for me and it works, so I am no trouble to them as a client either.
It is always important to listen to our clients and our prospects to know what they need, and to ensure that they buy on the value of what we give them. If they are happy with us they are happy to pay.
Do you know businesses that have a limited selling policy of “that’s what we offer, so take it or leave it”?