One of the most difficult challenges as an accountant growing your own practice will be implementing a fee increase. Many accountants struggle with their own fear and mindset when it comes to knowing their value and what to charge and most worry that they will lose clients. This article aims to address what you may consider being the worst case scenario when you increase your fees and you are getting push back on pricing. Here are 10 tips to stand firm.
Why may you get push back on pricing?
Before we tell you how to stand your ground and implement a fee increase successfully, it’s important to note that push back on pricing, i.e. a client saying no, isn’t really the worst case scenario. Losing a client is.
When a client says no to a fee increase, many are just hedging their bets, hoping that you cave and carry on working doing more for less. This crucial time is an opportunity, one where you can prove your worth and change that no to a yes.
Here are a few reasons why there may be a push back on pricing from your client:
- You only recently put your rates up
- The price increase was too steep
- They don’t have the budget
- They'd rather pay less (even if the service isn’t as good)
- They don’t feel you provide the value for money
10 tips to stand firm when a client says no
Although it might be scary thinking of push back on pricing, and not knowing how to handle it, it’s important to realise that pushback is rare. Most of your clients will agree and will take it on the chin, but if the odd one doesn’t, here are a few things you can do to stay strong.
- Know your why - what is driving you to put up your fees? Having more time? Finally being paid what you’re worth? When you know why you are doing something, it becomes much easier to stand firm as that’s the only way you will achieve it.
- Lose the discount mindset - you’re not a new practice anymore taking on anything and everything just to pay the bills. You need to lose this discount mindset and know the value that you bring clients. The ones worth keeping will pay for it.
- Lose the “I need to win every client” mindset - similarily to slashing your prices, the beginners need to win might still be the reason you’re not getting paid what you should. You need to change this mindset to “I need to win bigger and better clients.”
- Be prepared and accept that you will lose some clients - stop worrying about rejection and just accept that you will lose some clients when you increase your fees. Normally, these are the clients that you want to lose anyway. By preparing yourself for some losses and accepting it, you’ll be more able to stand your ground with your prices.
- Know what the market is charging - have the confidence to listen to what other people are charging so you can understand what opportunity there is to raise your rates and still be acceptable to the market. Don’t get too caught up in what your competitors are doing, however. Just concentrate on your prices and be ready to justify why they're different from competitors to your clients.
- Aim to emphasise your value - if your clients are talking about your competitor's prices being lower, you need to tell them that you are ‘not competing on cost, you are competing on service.’ Demonstrate the value that you can bring them.
- Role play potential “what happens if?” scenarios - it may help you to stand firm if you’re prepared for potential scenarios. Practice these with someone and you will be much calmer if and when there is a push back on pricing.
- Be aware of different cultures - some cultures, e.g Indian, ‘want a deal.’ For these clients, be upfront and offer them the option of you telling them the price that they will pay or a higher price which you will discount.
- Build your confidence - do the easy fee increase conversations first to build your confidence up, then approach the ones you know you need to change their fees but you wouldn’t be sad if you lost them. By the time you work your way up to your big clients, you’ll be much more prepared and able to stand firm.
- Negotiate only as a last resort - if you have a great client that you love to work with and the type of work fits your niche but they just don’t have the budget, negotiate a rate that works for the both of you. This needs to be a last resort but you could bundle in things which are more valuable to you in exchange for less of an increase (e.g. paying monthly via direct debit, teaching them what software they can use themselves to reduce your workload), agree to less experienced staff members taking on their workload or for a longer turnaround time.
Having the fee increase conversation with clients is difficult, especially when they do push back on pricing, but a lot of the time, if you stand firm, you can demonstrate your value and help them understand that this increase is necessary for the level of service to continue. You may lose clients going through this process, but just remember, if you have some clients willing to pay your higher rates then others will too!