It was an honor to present value-based pricing to the SAIPA breakfast participants some weeks ago. I thought I might share the content of our session in this blog post and also ask some questions at the end of the blog.
Companies that offer unique or highly valuable features or services are better positioned to take advantage of value-based pricing than are companies with commoditized products and services
The Operating Environment of a bookkeeper and accountant today:
The standard processing and compliance work are changing due to technological and customer expectations that are changing.
Technological improvements in automation, robotics, cloud access and mobility is changing the way bookkeepers and accountants perform their work today and will significantly improve it moving forward. Additionally, to technological improvements customers are becoming more demanding of the experience, understanding and interpretation of the numbers from their advisors
This is not the first-time technology has advanced this industry. The core service (accounting, audit and tax) is rapidly changing through market disruptions across the board:
Value-based price (also value optimized pricing) is a pricing strategy which sets prices primarily, but not exclusively, according to the perceived or estimated value of a product or service to the customer rather than according to the cost of the product or historical prices.
…basing pricing on the product benefits perceived by the customer instead of on the exact cost of developing the product. (Source: https://en.wikipedia.org/wiki/Value-based_pricing)
The key to VBP is to understand the perceived value of your product or service.
VBA: A combination of an appropriate price and perceived value, and to understand perceived value one has to understand the customer decision process:
Problem / Need Recognition
Evaluation of Alternatives
Post Purchase Behaviour
“Businesses aren’t going to look to their accountants to simply collate and analyse information any longer —technology can already tick that box. Businesses want advice on what to do next and will seek out accountants and bookkeepers who can offer actionable, proactive services that add value to their business.”
Executive Vice President of Sage Product Marketing
This was a nice exercise I did comparing what I want from my accountant, which is outsourced vs. what I receive as a service.
Assess your practices & literacy
How do you differentiate from your peers?
Know your customer
Out of 1000 SMB owners surveyed by The Sleeter Group, 62.2% said they would prefer or require their accountant to be a specialist in their industry
SAGE PUBLICATION: THE POWER OF ADVISORY SERVICES
Gartner Hype Cycle: Innovation Productivity
I brought in the Gartner Hype Cycle to point out some timelines and technologies that would influence the industry in the next couple of years.
Sliding Into the Trough
Climbing the Slope
“if you don’t like change, then you’re going to like irrelevance even less.” Ed Kless Senior Director of Sage Accountant Solutions