Mark Wickersham is the #1 Amazon best-selling author of Effective Pricing for Accountants. He ran an accounting practice for seven years and is now a mentor to over 150 accountants in the United Kingdom. He is also an avid cyclist.
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Price Has Nothing to Do with Cost
- What is the most important thing you can share about pricing?
- Pricing has absolutely nothing to do with cost.
- In the 1990s, he believed you had to price based on time.
- In 1999, he discovered a better way of doing things.
- Pricing is about psychology, communication, and marketing.
- As professionals, we are not taught those things.
- Customers do not care about how many hours you spend doing the job; they only care about the result.
- Hourly billing is commercially stupid because the evidence proves it.
- When firms understand value pricing at a deep level (less than 10% do), they can get up to 100% higher prices.
- Firms that price based on time are not focused on the value side of the equation; they are focused on keeping prices low.
- In 2014, he surveyed 725 accounting businesses and asked how they priced.
- He learned they charged a large range of prices.
- A common accounting service is to act as the customer's registered address.
- 68% of the respondents did not offer the service, did it for free or included in a bundle.
- Only 32% charged a separate price for the service.
- There are a lot of services that accountants give away for free because they do not know how to price it.
- Of the 32% who charged for the service, the most common price was £100/year; they were just copying each other.
- One firm charged £480 and had no problem selling it.
- Mark taught a firm how to value price the service.
- Four customers signed up and a fifth customer paid twice as much.
- The firm was able to see an increase simply by charging for something it used to give away for free.
The Importance of Learning to Price
- Why do entrepreneurs fail to learn pricing as a skill?
- Of all the areas of business that you should learn, pricing is the most neglected.
- Pricing has the fastest and best impact on bottom line results.
- We can change how we price today and see results tomorrow.
- In seven months, one firm who worked with Mark added £30,000 to its profits.
- If you increase your average price by 33% and not lose a customer, you will double your profits.
- What can an entrepreneur do today to start learning to price?
- Ron Baker‘s book the Professional's Guide to Value Pricing is priceless.
- There are dozens of resources available on Amazon and YouTube.
- You need to commit some time to learn it.
- You have to have determination and focus on getting pricing right.
- Get over the things that hold you back and get in your way:
- Lack of confidence is a big issue.
- Lack of knowledge and systems also contributes.
- Everyone believes they have price-sensitive customers. In reality, only about 20% of people who are price sensitive, and they are not customers of a professional business.
- If you are an Apple user or Starbucks customer, you cannot be price sensitive.
- Most people in society are value-sensitive.
- They want as much benefit as possible for their dollar.
- You purchase Apple products because of the perceived value.
- Your mindset changes once you start focusing on value rather than cost.
- If you communicate and add value, price becomes irrelevant.
Psychology, Options and Pricing
- How does psychology influence a buying decision?
- Accountants love systems, processes and checklists.
- Without a process or system for pricing, it happens randomly.
- When an accountant uses the 7-step Fastest Way to Double Your Profits, you are guaranteed to get better results.
- Step 6 is to determine how you make the price seem tiny.
- How you communicate the price is important.
- “Chunk it down” is Mark's approach to breaking down the price as a monthly figure, rather than annually.
- The Power of 9 is another psychological concept, e.g., using £499 rather than £500.
- Left-digit management means since you read numbers from left to right, you place a greater emphasis on the left-most number.
- If you are truly motivated to make your customer's life better, then you owe it to the customer to make your sales process compelling.
- You cannot help your customer if they say no.
- What is some of the research behind charm pricing?
- There is a lot of research in pricing psychology, and it appears to be contradictory.
- Left-digit management research is more compelling.
- Mark has found that 7s work in his pricing.
- Test different things and do not overuse a particular technique.
- Every piece of research can have contradictions and might not apply to every industry.
- A logical purchase would more likely benefit from verisimilitude.
- An emotional purchase, like at a restaurant, would benefit from a more simple price, like ignoring the $ or £ symbol.
- The psychology aspect is toward the end of the pricing spectrum.
- What is more important than psychology when setting a price?
- The first step toward value pricing is recognizing that different customers place the value on different things.
- Most accountants now fully agree and accept that they have to move to value pricing, but they do not know how.
- Most accountants are using fixed pricing, which is different from value pricing.
- If you have a single fixed price for a professional service, it is guaranteed to be the wrong price.
- There is a power behind having three choices.
- Keep your base bundle the same price, but create a bigger, better solution for the higher options.
- Providing three options allows the customer to decide which he should buy, rather than whether or not he should buy.
- You can provide options for anything, including creative work such as logo design.
- If you think it will not work, it is because you have not spent the time to creatively figure it out.
- What is one of your best stories about creating value for a customer?
- There are many examples on Mark's YouTube channel of inspiring accountant stories.
- Sophia Botchway, a sole practitioner, was using Mark's software tool with her customers.
- Sophia realized that she had been undercharging by 60-70%.
- She used the process in 2 weeks with five customers, and everyone said yes.
- She doubled her fee for an existing customer.
- She signed up £10,000 of work in one week vs. her old way where it would have been £2500.
- She now has the confidence, process and system to price well.
About Mark Wickersham
- Website: wickersham.co.uk
- Pricing Software: pricinginthecloud.com
- Twitter: @wickersonabike
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