Nearly every problem in an Accountancy firm can be traced back to the simple fact that most of us over-service and undercharge our clients, which leads to our clients not valuing us as much as we know they should.

This then leads to a lot of accountancy firms simply not making enough profit to be able to invest into marketing which actually works, into growing and developing their team or into implementing the correct processes and technology.

Even if you’re one of the few firms which has figured out how to correctly charge your clients in the first place, the complexity of the services you provide and the constantly changing nature of your client’s businesses, means that the scope of work can very quickly become out of alignment with what they’re paying you.

So one of two things happens.

  • You over-service and undercharge your clients (nightmare for you.)
  • You attempt to hit them with an ‘ambush invoice’ at the end of the year… IF….. you can figure out what they actually owe you (nightmare for you AND them.)

Neither work, and all you want is to be paid for the hard work you do right?

There are several ways firms attempt to solve this, but over the years, we’ve refined a process in our firm, which DOES work, which we call our 1-3-12 Method™.

The Mistakes Firm Make In Solving This

One of the key mistakes that firms use in trying to solve this is that they attempt to use a ‘faddy’ pricing method which they’re told will work.

Anything that includes the words “3 tier pricing” sets an alarm bell of for me, because while it may seem appealing up front, it doesn’t even begin to accommodate the constantly changing scope of work. It assumes that every thing stays fixed throughout the year which is why it’s perfect for an Apple Mac, but not for when complex professional services meets an ever changing businesses.

Another mistake is if you’re still charging annually. This just doesn’t allow for constant adjustment required. This is why you need a monthly recurring revenue model and to use GoCardless as your payment mechanism. This puts you in total control of what your client should be paying you so you can make those incremental adjustments throughout the year.

And the final mistake is if you only have a few people within your firm who can correctly price services for clients.

Think about it. If you have 10 staff and 500 clients, then you need to be carrying out 42 annual fee reviews every month. That’s 2 a day.

On average they’re going to take an hour to do, and if this task can only be carried out by 2 people within your firm, the thought of doing them with any greater frequency is a non-starter.

So how can you possibly ensure that your clients are always paying you what they should be when we’re in this constant state of change, when resources are tight and when we’re being fed misinformation about what works?

How We Solved This Problem With The 1-3-12 Method™

So in our firm – MAP – we concluded that the only way we can make this work is to be carrying out fee reviews:

  • Every 1 month for payroll
  • Every 3 months for bookkeeping
  • Every 12 months for everything else

But the only way we could make this work was if we could enrol every member of staff into this mission, if we had a consistent pricing system that they could confidently use and if it took no longer than 3 minutes to complete. And by complete we meant, to correctly price, produce the proposal, produce the letter of engagement, have it legally agreed, invoice the client and adjust the fee the client pays us.

We were using spreadsheets in conjunction with what was then the best software for this, but it just wasn’t workable with this strategy. So GoProposal was born.

So this is how the 1-3-12 Method™works

Every 1 month for payroll

Every month we review how many staff our clients now have. If it’s changed, even by one member of staff, a new proposal is sent to the client.

If one month passes without you doing this, you are actually communicating to your clients that your services have no value. This is the start of training them not to value what you do.

Every 3 months for bookkeeping

Every 3 months we carry out a fee review around bookkeeping, based on the number of transactions a client has going through their accounts. The only tricky part here is getting this data to inform this. QuickBooks is now providing this data and a new product about to hit the market pulls this data from Xero too. So watch this space.

We use pricing bands here that allows some flex, up and down.

Every 12 months for everything else

Then every 12 months, we carry out a full fee review with every client for every other service. Some of these such as VAT Returns or Annual Accounts (which we now call Panoramic Accounting) are impacted by their annual revenue.

We actually invest more time into this review as we use our GLOSS Method™ for this, to ensure we’re providing the most value we can to our clients. But in theory, this could take 3 minutes if it was a straight forward review where only price increases or their revenue would affect the fee.

Engage The Entire Team

People think that your team won’t like to price or sell services.

They won’t if it’s difficult or timely to arrive at a price, but they will if it’s easy, transparent, logical and fast.

We have 20 members of staff in our firm and every single one of them has the power and the inclination to do this.

Only by having a systemised approach to this and creating an army of people who can run the 1-3-12 Method™ can this approach work.

But the upside is the end to over-servicing, the end to undercharging, the start of a more profitable accountancy business and that start of having a client-base which values you much more.

Find out where we got the concept of the 1-3-12 Ruleand join in the conversation on LinkedIn.

James Ashford

James Ashford

James is the Founder of GoProposal, Director of MAP., Keynote Speaker & Bestselling Author of "Selling to Serve". He helps accountants and bookkeepers around the world to price more profitably, sell more confidently and to give significantly more value to their clients.