How did you come up with the price you charge clients? Did you pick a number based on what you heard someone else charge? (which happens to be against FTC trade rules) Or do you have an elaborate estimating process? Hopefully, your answer is somewhere in between.
No matter what your pricing process looks like, there really is a lot to consider before setting your price. Here are six ideas to think about.
- Your (or your staff member’s) experience.
The experience level of the person who does that work is one of the most important criteria in pricing. Are they just starting out in their career with little client experience? Do they have experience from a previous workplace that is relevant? All of these questions should be considered when pricing your services.
- Your credentials.
A CPA is able to charge more than a non-CPA. An EA is able to charge more than a non-EA, but not as much as a CPA. An Advanced Certified QuickBooks ProAdvisor can charge more than a Certified QuickBooks ProAdvisor that is not Advanced.
To some degree, the more certifications you earn, the more you can charge. However, the certification needs to add value in the clients’ eyes or be recognized widely in the marketplace.
- Niche expertise.
Experience in a client’s industry is highly valued by clients, even more so than you might think. Clients put a higher value on niche experience than accountants do. Be sure to take this into consideration in your pricing process.
- Your reputation.
By reputation, I specifically mean business community reputation. Are you considered a town leader? Are you active in your Chamber of Commerce? Do you support nonprofit causes? Is your name mentioned in the local newspaper or on television news shows?
Your activity and leadership in your business community can help you build trust faster as well as command a higher price.
- Your education.
Having a college undergraduate or graduate degree will let you price your services higher. If you have a lot of experience, it can make up for not having a degree if you don’t have one.
- The market.
The one thing most of us use to start our pricing is the least important of all of these factors. Don’t make the mistake of pricing solely based on market. Trying to be the lowest cost provider will get you a business model that fails.
Think about whether your current prices reflect where you stand in these six factors. You may have some adjusting to do. And interestingly, if you value-price, none of this matters.