americans canadians mark wickersham
I’ve just finished collecting data for the largest ever benchmarking study on how to price bookkeeping services.
2683 people participated in the survey. It was split pretty evenly between bookkeepers and CPAs and the majority of participants were from either the U.S. or Canada.
This survey was sponsored by Insightful Accountant, so thank you to the team that worked with us to push this survey out across the globe.
We are analyzing the data right now and one of the things we have noticed is this:
American bookkeepers and CPAs are better at pricing than Canadians.
I have done a video on this. If you would prefer to watch that click here.
We created 12 specific scenarios, a dozen client portfolios, and asked people to suggest what price they would give for each client. From that we took an average to be the portfolio price.
We then split that data based on location.
Interestingly, the Americans are charging significantly higher prices - 41.8% higher than the global average. That’s staggering!
The question is: Why are Americans better at pricing?
We started to look more closely at the American segment of our data. What we found was that there was a greater chance that an American participant was using value pricing techniques, as opposed to hourly rates.
If you read my previous blog, I shared some of the problems with hourly pricing.
I found that in the U.S., there is a smaller percentage of people using hourly rates…
40.2% of the entire survey respondents said they were using hourly rates to come up with a price for bookkeeping services, whilst only 25.6% of American firms were using hourly rates.
This is one of the things that separates the U.S. from the rest of the world when it comes to pricing. They are moving away from hourly rates and towards value pricing.
The survey revealed those firms charging based on the hour make less money than those who are using value pricing. Those using value pricing are getting much higher prices.
One of the reasons Americans are good at value pricing is there seems to be a greater acceptance of value pricing in the U.S.
I spend a lot of my time in America speaking at big conferences, and my friend Ron Baker has been teaching value pricing in the U.S. for many years. Intuit have also been talking a lot about value pricing as part of their Firm of the Future campaign.
From my experience, Americans are much more accepting of the fact that times are changing and pricing methods need to change. Value pricing is without a doubt a much more effective way of pricing. They have really taken to this way of thinking and are starting to implement value pricing across the country.
When it comes to pricing, Americans are ahead of the rest of the world.
Of course, that doesn’t mean there is no room for improvement.
The data from the US shows there is still a huge number of bookkeepers and CPAs that are charging too little for their bookkeeping services. We have to charge more. Bookkeeping is a highly valuable professional service - it deserves a high price.
There is a lot of talk nowadays about cloud technology, automation, and the increasing pressure on compliance services, particularly bookkeeping. This is definitely the case, we will see an increasing change.
But nevertheless, bookkeeping is still a valuable service.
We must learn to communicate the value of what we do so that clients can truly understand the benefits of our services. The bookkeepers and accountants who are able to do that will make much more money.
One of the questions I asked in the survey was whether the participants ran a general business, or whether they have a niche.
It was no surprise when the results showed that those people who had a specialism were earning higher prices.
A bookkeeper I work with runs a virtual bookkeeping business and she specializes in e-commerce. She makes a lot more money than she used to, and she makes more than most bookkeepers.
There is no doubt, that as you specialize, add more value and move to value pricing you will make more money.
The completed research report is due to be released September 2019.
If you want to find out more about this research report and how to price your bookkeeping services, I am running a webinar at the end of August 2019. I will be running it twice, once on August 27th and once on the 29th at 11 a.m. EST.
I will be teaching you effective strategies for pricing your bookkeeping services so you can make your practice much more valuable and profitable. I will also be sharing more insights and preliminary findings from the bookkeeping study and show you how you can get your hands on your own copy of the completed research report.
You can click here to register for the webinar.
I look forward to seeing you there. Wishing you every success on your pricing journey.
-- Mark Wickersham, Chartered Accountant, public speaker and author of amazon #1 best seller “Effective Pricing for Accountants”