Business Models vs. Pricing Strategy for Accountants

So I read this article: https://www.dhirubhai.net/pulse/business-models-vs-pricing-janis-skriveris/ and re-contextualized it for accounting firms. And used ChatGPT to help with the framework and DALL-E for the image above... Enjoy.

In the rapidly evolving landscape of the accounting profession, the way we engage with our clients and the services we offer are continuously being transformed. With advancements in AI and technology, tasks that once took hours can now be accomplished in minutes.

However, while automation and tools can bring efficiency, they cannot replace the unique insights, creativity, and human touch accountants bring to the table. As we navigate this new era, the traditional methods of offering and pricing our services may no longer suffice. It's essential to think outside the box and adapt to innovative business and pricing models that resonate with our clients' evolving needs. Embracing this change is not just about survival but about thriving and offering unparalleled value in a tech-driven world.

I am not suggesting you implement any of these or all of these.. or none of these for that matter, just opening your mind about the possibilities. Let's delve into some of these modern approaches that can redefine the accounting profession.

Open Source

Definition: Services offered free of charge, usually to promote community engagement or as a marketing strategy.

• Example 1: Offering a free basic tax guide or e-book to clients and the general public to generate leads and showcase expertise. As opposed to selling such guides or not providing them at all.
• Example 2: Providing free webinars or workshops on basic accounting principles or recent tax changes. As opposed to paid seminars or no educational offerings.
• Example 3: Launching an open forum or community where clients can discuss and share financial tips and challenges. As opposed to closed, proprietary client portals.

Freemium

Definition: Offering basic services for free, with premium services available for a fee.

• Example 1: Giving clients free access to a basic online bookkeeping tool, with advanced features or consultations available for a premium. As opposed to charging for all software access.
• Example 2: Providing a free initial consultation, with detailed tax planning or business advisory services at a cost. As opposed to charging for all consultations.
• Example 3: Offering a free basic payroll processing tool with premium add-ons like tax filing or benefits management. As opposed to comprehensive, chargeable payroll services.

Flat Rate Fee

Definition: A single, fixed fee for a particular service.

• Example 1: Charging a flat fee for individual tax return preparation, regardless of complexity. As opposed to variable pricing based on income brackets or itemized deductions.
• Example 2: Offering business advisory sessions at a fixed rate per hour. As opposed to variable fees based on business size or industry.
• Example 3: Providing standard financial statement presentations at a set price. As opposed to tiered pricing based on company size or transaction volume.

Tiered Pricing

Definition: Different service bundles offered at different price points.

• Example: Bookkeeping services - Basic (monthly statements), Advanced (bi-weekly statements with analysis), Premium (weekly statements, analysis, and quarterly reviews). As opposed to a one-size-fits-all service.
• Example: Payroll services divided into Basic (just payroll processing), Intermediate (payroll processing and tax filings), and Premium (end-to-end payroll management with employee benefits handling). As opposed to a singular comprehensive payroll package.
• Example: Tax planning sessions offered at basic, intermediate, and advanced levels based on client needs. As opposed to a standard tax planning session for all clients.

Per Feature Fee

Definition: Clients are charged based on individual features or services they opt for.

• Examples 1: Charging separately for balance sheet preparation, income statement analysis, and cash flow projections. As opposed to a bundled financial statement package.
• Example 2: Offering individual modules or support for separate aspects of an accounting software, like inventory management, accounts receivable tracking, and accounts payable management, and charging per module. As opposed to offering only a full-fledged accounting software suite.
• Example 3: Billing for specific tax advisory topics, like international tax, estate planning, or business deductions, separately. As opposed to a flat fee for general tax advisory.

Usage Based Fee

Definition: Charging clients based on the volume or intensity of service utilization.

• Example 1: Charging businesses for bookkeeping based on the number of transactions processed. As opposed to a monthly or annual subscription.
• Example 2: Providing QuickBooks support and charging based on the number of support tickets or hours of consultation. As opposed to a monthly support fee.
• Example 3: Billing for payroll services based on the number of employees managed. As opposed to a flat fee irrespective of company size.

Beyoncé Model

Definition: Unexpected or surprise offerings that disrupt traditional service norms.

• Use Case 1: Launching a surprise year-end tax saving guide for clients right before tax season. As opposed to routine, expected publications.
• Use Case 2: Introducing an unexpected bundled service, like a business advisory package that comes with a free financial software training session. As opposed to separate, traditionally priced services.
• Use Case 3: Offering a sudden discount or promotional rate for a new service to garner interest and uptake. As opposed to standard marketing or phased rollouts.

Compared to some more familiar models...

Subscription Model

Definition: Clients are charged on a recurring basis (monthly, quarterly, yearly) to access a service.

• Example 1: Monthly Bookkeeping Service, clients pay a monthly fee to have their books updated, ensuring they're always ready for tax season.
• Example 2: Quarterly Tax Review, For a set fee, clients receive quarterly reviews to ensure they're on track with their taxes.
• Example 3: Yearly Financial Health Check, a yearly subscription where the accountant reviews the client's entire financial health, giving them insights and advice for the upcoming year.

Value-Based Pricing

Definition: Charging based on the perceived value the client receives rather than the time or effort spent

• Example 1: Tax Savings Strategy, If an accountant's strategy saves a client $20,000 in taxes, they might charge 10% of the saved amount.
• Example 2: Business Growth Consulting, charge based on a percentage of increased profits due to the accountant's advisory role.
• Example 3: Asset Management, If the accountant helps increase a client's investment portfolio's value, they charge a percentage of the increase.

Retainer Model

Definition: Clients pay a set amount upfront to retain the services of the accountant or firm.

• Example 1: On-Call Advisory, clients pay a monthly retainer to have the accountant available for financial advice on-demand.
• Example 2: Priority Service, clients on a retainer get priority during busy tax seasons, ensuring their work is done first.
• Example 3: Dedicated Account Manager, for a retainer fee, clients get a dedicated accountant who knows their business inside out.

Performance-Based Pricing

Definition: Charging based on specific results achieved

• Example 1: Tax Rebate Claims, the accountant only gets paid if they successfully claim a tax rebate for a client.
• Example 2: Debt Recovery, the accountant gets a percentage of any old debts they manage to recover for a business.
• Example 2: Grant Applications, the accountant gets paid a bonus if they successfully secure a business grant for a client.

Project-Based Fee

Definition: Clients are charged a flat fee for a specific project

• Example 1: Business Setup, a one-time fee for setting up the financial systems for a new business.
• Example 2: Financial Statement Preparation, a set fee for preparing annual financial statements.
• Example 3: Audit Assistance, a one-off fee for helping a business through an external audit.

Hourly Rate

Definition: Clients are charged based on the number of hours worked

• Example 1: Consultation Sessions, clients pay for face-to-face consultation sessions by the hour.
• Example 2: Specialized Tasks, for tasks outside the usual scope, clients are charged by the hour.
• Example 3: Training, if an accountant provides training sessions on accounting software or financial practices, they charge by the hour.

Contingency Fee

Definition: Charging a client only if a specific outcome is achieved

• Example 1: Dispute Resolutions, the accountant gets paid only if they successfully resolve a tax dispute in favor of the client.
• Example 2: Claim Settlements, paid only if they secure a favorable settlement for a client in a financial dispute.
• Example 3: Investment Success, only gets paid if the investments they recommend perform above a certain benchmark.

Commission-Based

Definition: Charging based on a percentage of sales or revenue achieved.

• Example 1: Financial Products/Software/Solutions, earn a commission for every client they get to sign up for a specific financial product.
• Example 2: Business Referrals, if the accountant refers clients to another business (like a bank or insurance company), they get a commission.

Pay-as-you-go

Definition: Clients only pay for what they use

• Example 1: Per-Payroll Cycle, businesses only pay for payroll services when they use them, useful for businesses with irregular payroll cycles.
• Example 2: Software Consultations, clients only pay when they need consultation or troubleshooting for their accounting software.
• Example 3: Clients can request financial reports as needed and pay per report.

Hybrid Model

Definition: Combining two or more of the above models.

• Example 1: Monthly + Value, a client pays a monthly bookkeeping fee but also pays a bonus if the accountant identifies significant tax savings.
• Example 2: Retainer + Hourly, clients pay a retainer for priority service but are billed hourly for additional tasks outside the retainer's scope.
• Example 3: Subscription + Commission, clients pay a subscription for regular financial advice, but the accountant also earns commission for specific product recommendations.

Conclusion:

There is not a single answer, and there is almost unlimited combinations of creative ways you can structure your services so they adapt to how the clients feel most aligned with your business.

These innovative models could serve as a testament to the profession's resilience and adaptability. By drawing inspiration from various sectors and intertwining it with our core strengths, we can create a unique blend of services that stand out in the marketplace.

As accountants, our journey doesn't end with embracing change; it's about leading it. By continually reimagining our offerings, we not only elevate our profession but also carve a path for future generations of accountants to follow.

Let's champion creativity, leverage our unique strengths, and redefine the future of accounting together.