How to Implement Value Pricing

Rob Nixon
CEO & Founder, PANALITIX
www.panalitix.com – www.robnixon.com
rob.nixon@panalitix.com

We have worked exclusively for the Accounting profession for over 20 years
We have offices in Australia, Philippines, the UK & USA
We have served over 160,000 Accountants in over 30 countries
We currently have over 2,500 users (Accountants) in 9 countries
We are currently connecting to 86,000 SMBs through Accountants.

@therobnixon | www.panalitix.com| #firmofnow

WE EXIST TO HELP
Accountants navigate disruption and
become the disrupter
Accountants run a great Accounting
business
Accountants grow their firms
Accountants deliver business advisory
services to their clients
Accountants transform businesses.

TODAY
How to Implement Value
Pricing

AVERAGE OF 800 FIRMS COACHED
Averages – of the full
financial year prior to
implementation
Starting
average
End of
year 1
Year 1
increase
End of
year 2
Year 2 %
increase
on year
1
Year 2
increase on
the starting
numbers
Revenue
Profit – before partner salaries
$947,418
$304,915
$1,556,258
$587,290
64% $1,936,512 24% 104%
93% $801,620 36% 163%

PROFIT
CAPACITY
GROWTH

POLLING
QUESTION
What is most
important to you
in 2017?
1.Profit improvement
2.Creating capacity
3.Growing clients & revenue.

THE OLD BUSINESS MODEL
Productive
time (%)
People
Power
Average
charge rate
Write
downsX =- Revenue
Labor costs
gross profit
overheads
Profit
=
=
X
-

WHO WAS THE
CULPRIT?
@therobnixon | #firmofnow | www.panalitix.com
Reginald Heber Smith
1889 - 1966
1919 – created ‘billable hour’
Why would you operate
an outdated model
developed by your great
granddaddy?

POLLING
QUESTION
What is your
current profit per
partner?
1.<$100K
2.$100K - $200K
3.$200K – $350K
4.$350K - $500K
5.$500K plus.

PRICE EVERY
JOB UP
FRONT
VALUE
PRICING ON
SPECIAL
PROJECTS
CLIENT
COMMS
PROGRAM
WORKFLOW
EFFICIENCY
MODEL
ALL CLIENTS
ON CLOUD
ACCOUNTING
MARKETING
THAT WORKS
SALES SKILLS
BUSINESS
ADVISORY
SERVICES
THE 8 NON-
NEGOTIABLES
PROFIT
CAPACITY
GROWTH

PROFIT PER CLIENT MODEL
28 hours to
complete
$4,900
priced in
advance
$3,900
new
projects
$8,800
total client
fee
$175
average
hourly rate
20 hours to
complete
8 hours to
complete
28 hours to
complete
$4,900
priced in
arrears
$245
average
hourly rate
$487
average
hourly rate
$316
average
hourly rate
1
2
3
4
TOTAL NEW
PROFIT FROM
THIS CLIENT =
$3,900

Aaron Blau
www.blauco.com
Tempe, Arizona
In the trenches

PROFIT PROGRESSION
P
R
O
F
I
T
YOUR VALUE BELIEF & YOUR VALUE CONTRIBUTION
Price arrears + AHR aware + charge rate increase1
Price arrears + AHR targets + some new services2
Some price up front + some write ups
3
100% price up front + efficiency +
charge rates still4
Value Pricing + $1 per hour
+ time budget
5
No time sheets6

ANNUALACCOUNTING
SERVICE
Basic Intermediate Advanced
Cloud accounting software Cloud accounting software Cloud accounting software
Lodgment of TAX Lodgment of tax Lodgment of tax
Lodgment of annual return Lodgment of annual return Lodgment of annual return
Year end review meeting Year end review meeting Year end review meeting
Unlimited phone and email support Unlimited phone and email support Unlimited phone and email support
Regular tax updates Regular tax updates Regular tax updates
Interim financial statements Interim financial statements
Year end tax planning Year end tax planning
Annual cashflow forecast
Monthly cashflow report
$250 per month $500 per month $750 per month

Mark Said
www.mksgroup.com.au
Melbourne, VIC
In the trenches

David Cowling
www.robertsandcowling.com.au
Brisbane, QLD
In the trenches

Value Belief
Value
Perception
Value
Contribution
TO VALUE PRICE

“Our charge rates
are in line with
others”
“I’m too busy, I’ll
just charge by
the hour”
“It’ll probably
take X hours so
we’ll charge Y”
“I can get it done
really fast”
“There’s too much
time on the clock –
we better write
some off”
“I’m afraid of
what the client
will think”
“What if they say
no to me”
“My clients will
never pay that
much”
LIMITINGPRICINGBELIEFS

ALL CLIENTS
BUYING EVERY
SERVICE THEY NEED
THAT HELPS THEM
ACHIEVE THEIR
GOALS!

GROWTH
PROFIT
CASHFLOW
ASSET
PROTECTION
TAX
MINIMIZATION
FINANCIAL
RETIREMENT
SUCCESSION
ESTATE
PLANNING /
LEGACY
DELIVER THE
AWESOME 8
CLIENTS

FOLLOW THE DIGIT FLOW
Accounting
Software
Bookkeeping
Compliance
Business
Advisory
Wealth
Development
Estate
Planning
YOU

Key Area Now
Partners
Accountants
Administration & Marketing
Client numbers - groups
Average project value
Number of projects per year per client
Average fee per client group per year (projects x fee / project)
Revenue
Salaries – excluding partners
Office overheads
Total costs
Profit before partner salary
Productivity / Utilization – Partners
Productivity / Utilization – Accountants
Average Hourly Rate (AHR) - client hours
Average Hourly Rate (AHR) - all team all hours worked
1
4
3
200
$2,200
4
$1,760,000
$450,000 (74% GP)
$310,000
$760,000
$1,000,000 (57%)
30% - 506 hours
75% - 1265 hours
$316
$130
$1MPROFITPER
PARTNER
$8,800

POLLING
QUESTION
How much profit
do you want to
make?
1.<$150K
2.$150K - $300K
3.$300K – $600K
4.$600K - $1M
5.$1M plus.

POLLING
QUESTION
How are your
enthusiasm
levels so far on
this webinar?
1.Not enthusiastic at all
2.Moderately enthusiastic
3.Pumped and ready.

PROFIT
CAPACITY
GROWTH
WIP and Receivables
Write offs / ons
Client service
Upfront Pricing process
People development
Productivity
Policies / processes
Workflow management
Efficiency model
People mix / location.
Administration team
Firm cloud
Team Performance
Average Hourly Rate
Niche markets
Best buyer strategy
Client selection
Business Advisory Services.
Value Pricing
Brand development
Lead generation program
Sales process
Retention system
Average project value
No. projects / client / year
Services mix
Communication program.
Web dominance
Sales skills
Client cloud
FIRM DEVELOPMENT PROCESS

POLLING
QUESTION
What will be the
difference when
you implement
these strategies?
1.Better lifestyle
2.Personal / family
happiness
3.Happier clients
4.Change my life
5.All of the above.

>1,500 @ FIRM OF NOW
Within 12 months attendees believe
they can increase…
LOW AVERAGE HIGH
Profit $ by in next 12 months …
Profit % by in next 12 months …
Capacity % by in next 12 months …
Revenue $ by in next 12 months …
Revenue % by in next 12 months …
400%
$15,000 $1,500,000$202,500
10% 75%
5% 100%31%
$10,000 $1,500,000$317,421
5% 356%52%

YOUR JOURNEY TO
BETTER NUMBERS,
MORE TIME &
DELIGHTED CLIENTS

IMPLEMENTING PRE / DURING TAX SEASON
Implementation
Manager
to guide you
18 Step Workflow
process
for efficiency
Pricing Power /
Value Pricing
for margins
KICKSTART
business planning
Finding
opportunities
during Tax Season
TRUST / ELEVATE
leads for after tax
season

2 x FREE tickets
valued @ $594
(Next 2 HOURS ONLY
5PM EDT)

POLLING
QUESTION
How many
people would
you like to attend
Firm of NOW?
1.0
2.2
3.2 – 5
4.5 – 10
5.10+

Next 2 hours only - By 5pm EDT - TODAY
2 hour Early bird special
2 free tickets - save $594
Discount code – 2IN2
www.firmofnow.com

How to Implement Value Pricing

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How to Implement Value Pricing