stop undervaluing yourself.
by jody padar
the radical cpa
as a professional in the industry, you may find some of what you do easy. just because you find it easy doesn’t mean it isn’t valuable and worth more than the time you put into it. if it were truly easy, your clients would be doing it themselves rather than paying you.
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undervaluing ourselves and what we bring to the table is a chronic problem plaguing accountants and cpas. why do i say this? because people pay more for the luxuries they value. let’s look at a comparison:
today, the msrp of a cadillac escalade is over $93,000 while the msrp of a chevy suburban is slightly under $64,000. if these automobiles were priced according to the time it takes to make them, plus the cost of their parts, the difference between their retail prices would probably be far less. to maximize profits, gm spends a lot of time and money researching how much their customers value their different products. certainly, the brand makes a difference, but the cadillac also offers a more luxurious package. it doesn’t cost gm a lot more money to offer these luxuries, but their customers place a much higher value on them, and gm understands that value.
pricing according to value really isn’t a radical concept!
accounting firms also factor brand into their pricing models by charging higher hourly rates, but the driving factor is almost always the same: hours x hourly cost = price. value gets lost in the mechanics of tracking billable hours. consequently, accounting professionals tend to undervalue themselves and what they bring to the table. measuring our value by the hour has done a number on our self-esteem.
perhaps we should start basing our value on the important things we know rather than the length of time it takes us to do a job. i highly regard factory workers, but the idea of paying for labor by the hour is a factory mentality. i don’t know a lot of accountants who would prefer to stand at a machine making parts all day. so, why do we insist on being paid like people who do such work?
clients pay you because they value your ability to provide a service. they may value your experience, your knowledge or your relationships, but there is always a reason they want you to do something for them.
value pricing is all about understanding your value to the client. it should not be based on the amount you think a client is able to pay. that’s charity. if you’re feeling charitable, it’s better to appropriately value your worth and then donate some of your profits to a worthy 501(c)(3).
value pricing means accepting your inherent value and not compromising it. it means pricing fairly and competitively.
one of my favorite mantras is “the world has changed.” accountants and cpas have to keep pace or fall behind.
perhaps you’ve wondered how to move forward in an age when a cpa firm a thousand miles away can compete against you for local business in your hometown. or maybe it’s not even a traditional accounting firm you’re competing with.
how many nights have you stayed awake wondering how you will get the work done when employees are harder and harder to find?
perhaps you’re struggling to evaluate and implement new technologies when new ones seem to be coming to the market daily. you’re an accountant, not an it person.
if we could only stop the world, but we can’t. we must forge ahead!
change always brings challenges. today, it’s harder to find people who want to join the accounting profession rather than join one with more sex appeal. the cost of keeping skilled professionals is rising. artificial intelligence and other new technologies are providing automated solutions to the compliance work that was once the backbone of the cpa profession.
but technology has also given us a great gift. it’s transforming the way we work, providing solutions to the difficulty of finding new employees and the challenge of rising costs. most of all, it pushes us to handle more advisory work where value-based pricing makes more sense.
advisory work relies more on technical knowledge, experience and relationship building, attributes impossible to price by the hour. you may well have to upskill to meet the demand for these services, and you’ll quickly learn clients value industry-specific insight and advisory services over compliance.