There's no shortage of struggling businesses out there. We're apart of a Facebook group for accountants and I want to share with you a post and my reply on something that most small businesses get wrong......price.
This content is biased towards clients services businesses as product based businesses will have different pricing strategies.
The content is edited as little as possible and the only things that have been removed are personal details. I've even left my spelling mistakes in there as well.
Let us know what you think. Do you think that you should increase your prices? We'd love to know your thoughts.
******** is feeling emotional.
Earlier this year I signed up to ******** and loved the Facebook [group] but could not find the time or the brain power to get my head around the package so I never even set it up and in the end I had to cancel it. After 7 years of giving it all away for nothing I knew things had to change but it all came to ahead last week when a client emailed me complaining about how long I am taking. I take too long because I have 150 cheap clients and now I need myself and 2 staff to do work so profits will be at £300 per month in 2 years if I don't change....there I said it. Im not chartered Im AAT, Institute of Financial Accountants and IAB and work from home with 2 staff so I cant charge massive fees but I have to increase. There....I faced that too. Can you good people help me. Can I ask of those of you who have increased fees:
What % of clients did you lose
What % of your original turnover did you manage to increase by even after the loss. I received my complaining email on Friday, I stumbled upon a webinar about feel the fear and increase price anyway by ******** on Monday and with some gentle nudging and mega support from my husband I resigned to Go Proposal yesterday. Im petrified of not getting to grips with the package again, upsetting clients, increasing pricing so lose all my clients or leaving pricing so cant afford to stay in business. Any help would be much appreciated.
Hi ******. This is going to be long but it's struck a nerve with me and where we have been in our business. I'll start with the background context. We started our business in 2010 and grew very quickly. Most of it was word of mouth referrals. In 2013, our 1st daughter was born with a cleft palate and oesophageal atresia (oesophagus in two halves). The doctors set us up with the expectation that she'd have a surgery at 36 hours to fix the oesophagus, a surgery at 6-9 months and probably surgeries at 2 years old and about 8 years old. To cut a long story short she's now five and has had 17 surgeries. 8 in the first year alone. 13 months after, our server crashed. We had no support from MYOB to get the back up restored and we had no tax software for 3 weeks. A week after we got the software back up and running we had our second daughter. Yeah, the kid that we were told we wouldn't be able to have without going back for IVF.
So in 14 months, we had 2 babies, a server crash and 8 surgeries. Times were good....NOT. My partner went through postnatal depression, as a lot of mums do and she kept up the client work but stopped invoicing clients. We were still billing by the hour etc back then. It pushed back a lot of problems but it eventually exposed every vulnerability and weakness in our business. The next 3 years were full of bad staff, angry clients, no cashflow and just sadness. Worst of all we were bad parents. We were trying to survive and our babies were the ones that were being neglected. The market is brutal. It doesn't care what you've got going on. If you're not serving your clients they will crucify you.
If you're pricing yourself too low you won't be able to have time with your family, attract good staff, service your clients and I can guarantee that you won't have the time or the money to commit to biz dev.
We're still recovering. It's been 5 years and we're still recovering.
Here's how I brought us back from the brink of extinction.
1) I sacked every client who
• complained about price
• cost us in efficiencies
• brought any negativity to the business
For every client asked us to justify our pricing, we were spending twice as much time justifying our price than actually doing the work.
2) I sacked every staff member who wasn't adding value to the business or was killing the culture of the business
All up I sacked 20% of our clients AND we also lost our biggest client.
The extra time we got back was incredible. All the negativity that we got rid of.....incredible. We could service the remaining clients a whole lot better and we really didn't notice a cashflow hit because we switched to upfront quoting and packages. We got a really good staff member who was literally doing twice as much work as our next best employee. She loves working in our business and does everything for us for the right reasons. She has done so much good for us that I've toke her that if she wants to start her own business that I will help her.
3) I stopped looking at my competitor's pricing (there's always someone who will do it cheaper than you but only you can bring the value to your clients that you do and love them the way that you do)
4) I put more value on my time with my children than the price that I thought clients would be happy to pay.
We're still recovering. At face value, we don't have a big firm but most people would have quit by now. DON'T QUIT! Be grateful for what you have. My gratitude comes from the fact that I'm not a 7-year-old girl in a third world country that has to walk 7 kms to get water every day. Sounds stupid but this is my default when I'm having a bad day.
Don't be scared to increase your prices nor to do it aggressively. I guarantee that you lose clients. Most of them will be the negative ones because they won't respect at any price point. They're probably the ones that are saying, "I can get it done cheaper somewhere else". Let them go for it. Let them get screwed on service by someone else. Don't let it cost you your reputation.
I guarantee that you'll have clients who will stay with you for reasons other than price. I also guarantee that you'll get your time back to service your clients better and if you get your pricing correct, you'll have more time for your family and to do biz dev and build your brand to get better clients to replace the bad ones.
Increasing your prices does not disadvantage your clients. Don't feel guilty about increasing them. If you have more time and you'll be able service your clients properly but really impact their business you won't lose them to anyone, let alone your own shortcomings in your business. Apple don't make the best products. They make expensive products but the reason that we buy there stuff is because they provide a unified experience (an ecosystem if you will) across all of their devices and they have the resources to throw at marketing.
I'm from outside the accounting industry. I worked in our business just to get it started. I stayed because I had to with our daughter. The biggest problem that I see in the industry is that there are people who are happy to provide a shitty service for a cheap price. What's worse is that there are people with better skills who are trying to compete on price with them. WTF!!!! I think you're either spending money in your business or personal life that you don't need or I think it's more likely that you are undervaluing your own skills and what you're bringing to the table.
Lastly, in the depths of my desperation, I suffocated myself in Gary Vee's content. I learnt, I got motivated, I took action. His stuff might resonate with you or it might not. See for yourself. We're turning the business around and we're on the cusp of adding to our team. I'm also using my extra time to create content mainly in a vlog that I'm starting. This is stuff that I couldn't do on our old pricing.
******, I hope that throw fear to the side and you start playing offence. Feel free to DM me and I'd be happy to talk with you online about our experience and what you can do.