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WEEKLY THOUGHT: Godwin Start-Up School

From speaking with some of you these days, I know that some of you are working through some pricing challenges. Please don’t ever feel like you’re the Lone Ranger…pricing is hard, if you’re thinking about it correctly.

Let me give you an example. When I started my CPA firm back in the year of our Lord 2002, pricing was easy. I just did what my previous employer did…I billed by the hour for my consulting work, used a similar price structure for tax returns, accounting, and payroll, and then I called it day. It took me like 30 minutes to build my pricing plan. After all, I had more pressing things to do, like get clients.

It didn’t take long to figure out that my pricing strategy wasn’t going to work for me long-term. I didn’t like some of the clients I was working with because they were price-shoppers. Some didn’t pay me on time, some didn’t pay me at all, and I wasn’t as profitable as I wanted to be. I hated tracking my hours, and I know for a fact that I didn’t charge for all my time because I would miss things. Billing took me FOREVER at the end of each month.

I changed it all up. I decided that hourly billing sucked, so I stopped. I decided I wanted to be more profitable and work with clients that “got” what I was trying to do. I decided that billing for tax returns like H&R Block and other tax shops was insane because that wasn’t what I was trying to build.

I gave up “billing” for “pricing.”

I learned that “billing” is done after the fact, where you send an invoice to a client and pray they don’t ask questions…that they’ll just pay it. Pricing is done up front, where everyone knows how much the service is going to cost, and there are no explanations or misunderstandings when the invoices go out. There are no surprises. The clients I work with now are the best in the world, and I have no worries about getting paid in full and on time.

My advice to you is to find a pricing method that works for you. Do some different things. Forget what other business owners tell you about “what the market will bear” and “this is a best practice for your industry.” Create your own best practice! There really aren’t any universal best practices…there is what works, and what doesn’t. The bottom line is that if you create value for your customer, and you charge commensurate with that value, the right customer will pay you. And they’ll be glad to pay you.

Just like you can’t charge $1,000 for junk, you shouldn’t charge $250 for brilliance.

Pricing will make or break you, even more than the quality of your work. Shoddy work will put you out of business, but pricing incorrectly will just make you bleed to death by a thousand paper cuts. Price correctly makes you more profitable, happier with your work, and that profit allows you to do more great things!

If you need more help with your pricing strategy, let’s talk about it. Email me today and let’s set up a meeting. Talk soon!

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