In this episode of the BKOT podcast, Chris has discussed with Loren Fogelman who is a business coach to accountants at Business Success Solution. They had discussed " How To Raise Your Rate Without Losing Client".
#BKOT 45: BUILD A KICKASS OFFSHORE TEAM
HOW TO RAISE RATES WITHOUT LOSING A CLIENT
Hosted by: Chris Rivera, Director Client relations, Entigrity Offshore Staffing
Guest: Loren Fogelman, Business Coach for Accounting Professionals, Business Success Solution
Chris: Alright everybody, thanks for joining in. This is Chris Rivera with #BKOT built a kick-ass offshore team on episode number 45 and the whole idea is to bring on guests and influencers to share how you can get through the ever-changing accounting industry nowadays. And today we have with us Loren Fogelman of business success solutions. She's going to be sharing with us how to raise your rates without losing your clients and I love it. Loren, thank you so much for joining us today. Please tell us about yourself.
Loren: Absolutely Chris, so excited about this topic basically what I have found is as a sports psychologist turned business coach, that my education gave me the tools I needed to be able to help my clients be able to move forward, to be able to grow, advance their businesses but it also skipped three things because my scoring prepared me to be an employee working for someone else as opposed to being a business owner.
And three things that I needed to figure out on my own was:
- How to network when I am more of an introvert than an extrovert?
- How to be able to charge prices for my services when I didn't want to connect my fees at a time?
- And the third one was how to be able to enroll new clients when I didn't like the sales part?
So networking, pricing and sales were three things I needed to figure out on my own and I see that with the accounting professionals that I work with too and that from my conversations with them probably 57% of accounting professionals under charge for their services if not more and I am on a mission to increase their rates so they no longer feel like a slave to their business.
Chris: So how did it work? How successful are you in working with firms and that's awesome, but how did you all get started and how did you start your business?
Loren: Well, I actually, like I said, started out as a sports psychologist and I enjoyed doing that but I always have done some business coaching on the side and after a while I got burned out having two businesses. So I needed to make a decision as to which lane I was going to stick with and that's when I decided to stick with the business coaching from there I started as a generalist working with so many different businesses.
And I was always looking for what differentiated me and it took about seven years I would say Chris to be able to figure out that accounting professionals were the industry that I worked best with and that got the best results and that pricing was really my specialty of what I focused on with them. So it wasn't like right out of the gate, I knew it all it was really figuring it out over seven years or so and then deciding that this is really what I wanted to focus on and specialize with and from there once I actually made the decision to narrow things down that's when things really started to blow up and take off.
Chris: Awesome! Okay, now in regards to pricing, it's always hard to determine the value of someone's time especially when it comes to that dollar sign so how would you explain the relationship between the value and the price?
Loren: I think that the thing I want to start off with is value is subjective, what's important to you is going to be different than what's important to me. We want to really focus on what is most valuable from the client's perspective and it has absolutely nothing to do with time. Time is not what they want to invest in, they want to know whether you have the skill set and the expertise to be able to deliver on what they're hiring you to do. But another way of looking at this is looking at automobiles and vehicles on the highway when you are driving, there is going to be a wide range of cars some of them are going to be the most basic economy cars, most of them will be mid-sized cars and then there is going to be some premium cars.
As you know the most basic ones they might still have crank windows they're not going to have all the extra safety features but they might get you from your home to that meeting safely and you will arrive on time most of the mid-sized cars will have some amenities to them, they might have seat warmers, they are going to have the video cam for when you're backing up and other features to give you a comfortable ride and then the top of the line like the tesla's first of all they make a statement about you as you are passing someone else on the freeway and also they give you a very certain experience of what that ride is going to be like and it would test for us maybe you care about the environment as well but you definitely want a certain type of comfortable ride as you are going from your house to the meeting.
So recognize that your clients are like that too. Some of them are going to need very basics, most of them are going to fit into that mid-size category and then you are going to have your premium clients as well.
Chris: So when you're working with a client and you are helping them to raise their rates, where would you start and how do you find what they are worth per se how do you find that out?
Loren: Well, I take it right out of my five-step raise your rates formula, if you just follow the tips I am giving you right here you will absolutely be able to earn more and increase the value of a client.
- But the very first thing that you want to know is who your high value clients are because clients go a full range from low value to high clients and not all clients are created equal or a great fit for your firm so figure out who your high value clients are.
- And then number two is how to be able to communicate your value and doing it from the client's perspective of what's important to them instead of focusing on the tasks and how much time something takes.
- Number three is being able to package your services when you package your services then you start to bundle different things you do together and that achieves a specific outcome that starts to separate your fees from time.
- Number four is value pricing this is where you're no longer leaving money on the table you're getting paid for services that right now you might be giving away for free because you don't know how to charge for them and clients are actually paying you according to the benefits that they receive as opposed to how much time it takes.
- Number five is what I call consultation mastery this is where you had those enrolling consultations with clients and this works especially if you don't like the sales part because it focuses on what is important to your client and by asking great questions and them seeing you as a trusted advisor they actually naturally will ask you how does this work and you don't have to sell them whatsoever.
So the five steps to the raising rates formula is ideal clients, communicate your value, package of services, value pricing and consultation mastery.
Chris: I agree! I find that if you are billing by the hour it just puts a lot of pressure on both the business owner and the account per se in this example and also the client right. And so and it just makes the makes the client uneasy because they don't know how long the account will take or vice versa the account is put under a lot of pressure or deadlines trying to get everything under a certain amount of time but when you have it all have it all packaged it just makes sense so now both from the client's perspective and the business owner's perspective they know what they need to get done each and every month and so now the business owner obviously to budget the time out and spread that out over the course of a month as far as the services.
It just makes sense it makes sense rather than putting pressure on both with this hourly building. So what do you think when you're offering these packages you are going to earn more money? I am thinking right and so how does that end up working for a new client that you're working with per se.
Loren: When you are looking at packages, what you actually want to do is slow down the onboarding process. What you want to look at is first having that initial consultation it only needs to be maybe 15-30 minutes if you are following this process and then what you want to do is enroll them into some type of diagnostic where you are actually going into their financials and doing a deep dive, scoping out exactly what needs to be done to get their financials up to date and accurate.
And from the diagnostic review which is paid for it is not something that you give away any longer it is paid for then you can give them an idea as to what work needs to be done to be able to get their financials off up to view and now you can do your cleanup if we are talking about bookkeepers and it's accurately priced because you are not doing a quick review during the free consultation and then relying on client information where they don't really understand their financials to the same degree that you do anyway and that's part of why you end up with being out of scope and having the project end up being more time because you are relying on their self-reports.
So I would say what you want to do is change your onboarding process to an initial free consultation that's about 15 to 30 minutes and then what I do is I teach my clients how to offer a paid diagnostic where you are scoping it out but you are getting paid for something that you originally gave away for free so now you created a new stream of revenue and then you can go ahead and enroll them into the cleanup or whatever work needs to be done in that project to get them up to speed and accurate, and from there you can then enroll them into a monthly engagement.
The reason that this is a benefit is that it lets them test drive at a very small investment whether you are a good fit for them, but it also lets you see if they are a good fit for you or not, if they have too many questions and they need more hand holding than what you want to give or if they don't respond to your communications in a timely manner and because that it's delaying the project you do not have to move forward into the next level of engagement with them you can go ahead and realize that each time that you are working with them is a standalone product and you don't have to move it forward with them into the next one. So this protects you from ending up with one of those headache clients that you are holding on for too long and you wish that they would go away.
Chris: So getting this off the ground, what do you think should a client or client should they start with their existing base and identify clients. Do you think I would be more inclined to this? or should they start with all of their new incoming new clients or a combination or kind of where do you start?
Loren: Well first of all every single coin that I work with needs to raise their rates and they are also concerned about losing clients as they do that. What I would say is it's really up to you as a firm owner. About 75% of my clients start with the new clients because they don't have any history and it's easier there is not going to be as much pushback, they get comfortable with what questions will be asked how to have that value conversation and go through this enrolling process but about 25% of my clients they are at capacity they are not looking for any new clients right now and with them we are going through the process of raising rates with their current clients and being able to increase the lifetime value of a client and maybe shedding some of those non-ideal clients as well.
But doing so in a way where it doesn't affect their income they are actually earning more but they don't have to work with as many clients because now they are working with premium clients.
Loren: Yeah and so for the listeners today who are wanting to lighten their workload and seek more information on how they can increase their income. Can you provide a couple quick tips and where should they go?
Loren: I would like to be able to share how to start going through raising your rates right now. I will give you the tips and then I have a resource that has the steps all listed out. The resource is at businesssuccesssolution.com/package and it shows you how to start packaging your services as well as what I call good, better and best pricing.
With good, better and best pricing what you want to do is let's say new clients are coming to you and what you're going to do is go ahead and see what the needs are and come up with what your typical fixed rate would be but now you're going to offer them your new good rates. So you're going to review everything you're going to multiply probably how many hours you think it's going to take by your hourly rate and now your new good rate is going to be multiplying 1.5 what that fixed fee is.
I want you to involve three clients at that new good rate. This gives you some insights that clients are not as price sensitive as you thought that they were and you could start to get some confidence that you can earn more. After you roll three clients at your new good rate you are going to continue to have clients come into you once again scope out how much you think the fixed rate ought to be by calculating your time by your hourly rate and now we're going to multiply it by two that's going to be your new better rate.
Once again enroll three clients at your new better rate you are now working with a higher value client, you are earning double what you typically would have worked for before for the same amount of work, no additional work but you are now earning double and also they are getting better results because you are able to give more time to them after you enroll three clients at your new better rate you are going to have new clients coming to you once again you do your calculation for a fixed rate and now we are going to multiply it by three times.
This is your new best rate you are now working with premium clients and some of those clients that were price sensitive or that were headaches they were went away but you are actually making more money and you are not working as many hours after a while you know that you are going to need to change your rates again and you just go through this matrix all over again of your best rate now becomes your new good rate and you start to go through it again and that's a way to start raising your rates it is not value pricing but it's a way to start easing into it and the handout is at businesssuccesssolution.com/package that takes you through all those steps.
Chris: Perfect, awesome! Alright well I really appreciate your time coming in and talking to our audience about this because it is very important and I see the transition happening all across the board and four years ago folks were keeping those clients that were paying in the next or wanting you know three year ago types of pricing but now it folks are open to the idea on how they can work better with their clients, are they making the right amount of money and do I really want to keep this type of client, right?
And this method that you have spoken about identifies that and it's very easy but you are going to have to start to take that first leap and realize that your hourly billing is not necessary anymore. So again thank you for your time. I mean any final thoughts before we go today?
Loren: I want to say that people think much too long about raising the rates before they actually do it, sometimes months, other times years and some people never ever raise rates on their legacy clients. By doing this and following this process you will absolutely be able to increase your revenues and you will be working with a better level of clients plus you are not going to lose as many clients as you fear you will. So I just want to say this work I do with all my clients they all have that concern that takes courage not confidence, the confidence comes later on.
Chris: Yeah courage. I love it, yes, absolutely. So everyone check out Loren Fogelman again at businesssuccesssolution.com and again Loren thank you so much for taking time out and sharing this for the folks listening. We will be back soon with another episode. Thanks everyone's time this afternoon Chris signing off to take care bye Loren.
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