I’ve spent the past few months talking with Intuitive Accountant’s readers about the pertinence of helping clients with one of the most challenging parts of their business: finding financing. If you’ve accepted this challenge, hopefully you’ve acquainted yourself with the loan products available, and how to answer other important questions, like whether or not they can even afford outside financing.
So, you’re ready to start implementing a “loan packaging service” in your business. You know you can easily implement it using a service like the Fundera Advisor Portal, but how do you price the service? What makes sense from your clients’ perspective? Taken from many conversations with clients and accounting professionals, here are the 3 most popular ways to price a loan packaging service:
All-Inclusive. If you are a practice that implements value-pricing, you can include this in what you are already charging clients. Value-pricing is an incredible business model, but it can be challenging to prove to clients that they are in fact getting what they’re paying for. Helping prepare your clients’ loan application and consulting them through the process is maybe a few extra hours of work for you, but a total game changer for the client. When you’re pitching clients on your value-pricing, you can include this as a service you can offer to them. It’s great way to set you apart from the competition.
One-Time Fee. Whether you implement value-pricing or bill by the hour, one way to price the service is as a flat fee. This way the client knows exactly how much they will be paying to essentially “outsource” the process to you. The difficulty here is deciding what that fee should be. You don’t want to underprice it and essentially lose money, nor do you want to overprice it and take more out of your client-who-needs-money’s pocket (or turn them off completely). The best way is to think about what you charge an hour (or would charge an hour), and estimate how long the average application would take you. If you’re working with Fundera, we’d say a maximum of 3 hours combined. This includes completing the information in the application, uploading documents (which you most likely already have access to), and setting aside time to consult with your client and the Fundera team. But, if you’re going to try going to some banks, or perhaps a few different places online, you might want to double that. To find a good flat fee, multiply the number of hours by your hourly rate. Sometimes you may spend more time, sometimes less, but overtime it should average out.
Bill for the Hours. If you work on billable hours, then you can simply bill your clients as normal. This is by far the easiest way to price the service. The one thing you may want to keep in mind, depending on the size of your firm, is if there are parts of the loan application you can have a more junior member of your team handle, you should do just that so you can actually charge the client a bit less for those hours. This will look great in the client’s eyes, as you’re helping them out in multiple ways financially.
I’m curious to hear your feedback on this. Which pricing structure would you go with? Why? Is there one not included here that you think we can add? If you’re currently offering this to clients, how is it priced?