In part six of his series on profitable practice management, Steve Billingham looks at how to bring clients around to your terms.
In this week’s article, I want to give you six strategies and tactics to help you defend your fees when you come under pricing pressure from your clients; a scenario that is increasingly likely in the more transparent post-Retail Distribution Review (RDR) world.
1 Help clients see the value:
If your clients genuinely value what you do, price comes a long way down the list of their concerns. Making sure you give clients what they need, want and value, and ensuring they understand and appreciate the difference that you make, should be your number one objective.
2 Restate the benefits:
Remind clients of the real, tangible benefits of the service you provide. Do not overlook the emotional benefits, such as peace of mind and confidence. These things are enormously valuable to clients. Ask yourself: what benefits are we actually delivering? Recent research from the US suggests that buyers of accountancy and financial services see the following as crucial factors:
Six ways to defend your fees when clients haggle
• Working with someone they can trust
• A different perspective that results in better decisions
• Solutions to their problems
3 Quantify the benefits:
If you can quantify the benefits in financial terms for clients, it helps them to see the value of using your services even more clearly. For example, a significant saving in inheritance tax or a much lower income or corporate tax liability gives your fees genuine context. Try to put some numbers on the financial benefits you have delivered.
4 Break it down:
When shown as one amount, your fees could easily look like a significant amount of money to many clients. Break the total down so they can establish a clear context for what they pay you: for example, £1000 per year is the equivalent of £2.74 per day – a small price to pay for the value you provide.
5 Explain what makes you different:
If you just look and act like every other firm in the country, then you are likely to find that pricing pressure may be particularly acute. What makes you different? How do you stand out? Why should people choose you rather than someone else? Make sure you have got some credible and compelling answers to these questions.
6 Be confident:
When it comes to being firm about your fees, the number one issue is confidence. Believe in yourself and the difference you make. Your experience and expertise is valuable. If you do not recognise that, you will struggle to convince clients of it. Once you agree to discount or reduce your fees, your clients will expect it from you forever, and that is a slippery slope to mediocrity.
It is understandable in the current economic climate that clients might raise questions and put pressure on your fees. A true sign of confidence is when you are willing to walk away from clients who are price sensitive, or constantly look to haggle about the fees you charge.
The most powerful response to clients who challenge your fees is to simply tell them the following: “If price is your number one criteria, we probably aren’t the right firm for you to work with.” Ninety per cent will back off and accept your terms. Those who do not are probably not your ideal clients anyway.
Three shifts in sector
Takeover rumours continue
Raised £116m in total
Protecting and dividing family wealth
'Pensions could veer off course'