how to implement value pricing
TRANSCRIPT
Rob Nixon
CEO & Founder, PANALITIX
www.panalitix.com – www.robnixon.com
We have worked exclusively for the Accounting profession for over 20 years
We have offices in Australia, Philippines, the UK & USA
We have served over 160,000 Accountants in over 30 countries
We currently have over 2,500 users (Accountants) in 9 countries
We are currently connecting to 86,000 SMBs through Accountants.
@therobnixon | www.panalitix.com| #firmofnow
@therobnixon | www.panalitix.com| #firmofnow
WE EXIST TO HELPAccountants navigate disruption and
become the disrupter
Accountants run a great Accounting
business
Accountants grow their firms
Accountants deliver business advisory
services to their clients
Accountants transform businesses.
@therobnixon | www.panalitix.com| #firmofnow
TODAY
How to Implement Value
Pricing
AVERAGE OF 800 FIRMS COACHED
Averages – of the full financial year prior to
implementation
Starting average
End of year 1
Year 1 increase
End of year 2
Year 2 % increase on year
1
Year 2 increase on the starting
numbers
Revenue
Profit – before partner salaries
$947,418
$304,915
$1,556,258
$587,290
64% $1,936,512 24% 104%
93% $801,620 36% 163%
@therobnixon | www.panalitix.com| #firmofnow
#firmofnow
FREE tickets
(YES in chat)
PROFIT
CAPACITY
GROWTH
@therobnixon | www.panalitix.com| #firmofnow
POLLING QUESTION
What is most important to you in 2017?
1.Profit improvement
2.Creating capacity
3.Growing clients & revenue.
@therobnixon | www.panalitix.com| #firmofnow
THE OLD BUSINESS MODEL
Productive time (%)
People Power
Average charge rate
Write downsX =- Revenue
Labor costs
gross profit
overheads
Profit
=
=
X-
@therobnixon | www.panalitix.com| #firmofnow
WHO WAS THE
CULPRIT?
@therobnixon | #firmofnow | www.panalitix.com
Reginald Heber Smith
1889 - 1966
1919 – created ‘billable hour’
Why would you operate an outdated model developed by your great granddaddy?
POLLING QUESTION
What is your current profit per partner?
1.<$100K
2.$100K - $200K
3.$200K – $350K
4.$350K - $500K
5.$500K plus.
@therobnixon | www.panalitix.com| #firmofnow
PRICE EVERY JOB UP FRONT
VALUE PRICING ON
SPECIAL PROJECTS
CLIENT COMMS
PROGRAM
WORKFLOW EFFICIENCY
MODEL
ALL CLIENTS ON CLOUD
ACCOUNTING
MARKETING THAT WORKS
SALES SKILLS
BUSINESS ADVISORY SERVICES
THE 8 NON-
NEGOTIABLES
PROFIT
CAPACITY
GROWTH
@therobnixon | www.panalitix.com| #firmofnow
PROFIT PER CLIENT MODEL
28 hours to complete
$4,900 priced in advance
$3,900 new
projects
$8,800total client
fee
$175average
hourly rate
20 hours to complete
8 hours to complete
28 hours to complete
$4,900 priced in arrears
$245 average
hourly rate
$487average
hourly rate
$316average
hourly rate
1
2
3
4
TOTAL NEW PROFIT FROM THIS CLIENT =
$3,900
@therobnixon | www.panalitix.com| #firmofnow
Aaron Blauwww.blauco.com
Tempe, Arizona
In the trenches
@therobnixon | www.panalitix.com| #firmofnow
PROFIT PROGRESSION
PROFIT
YOUR VALUE BELIEF & YOUR VALUE CONTRIBUTION
Price arrears + AHR aware + charge rate increase1
Price arrears + AHR targets + some new services2
Some price up front + some write ups3
100% price up front + efficiency + charge rates still4
Value Pricing + $1 per hour + time budget
5
No time sheets6
@therobnixon | www.panalitix.com| #firmofnow
AN
NU
AL
AC
CO
UN
TIN
G
SE
RV
ICE
Basic Intermediate AdvancedCloud accounting software Cloud accounting software Cloud accounting software
Lodgment of TAX Lodgment of tax Lodgment of tax
Lodgment of annual return Lodgment of annual return Lodgment of annual return
Year end review meeting Year end review meeting Year end review meeting
Unlimited phone and email support Unlimited phone and email support Unlimited phone and email support
Regular tax updates Regular tax updates Regular tax updates
Interim financial statements Interim financial statements
Year end tax planning Year end tax planning
Annual cashflow forecast
Monthly cashflow report
$250 per month $500 per month $750 per month
@therobnixon | www.panalitix.com| #firmofnow
Mark Saidwww.mksgroup.com.au
Melbourne, VIC
In the trenches
@therobnixon | www.panalitix.com| #firmofnow
David Cowlingwww.robertsandcowling.com.au
Brisbane, QLD
In the trenches
@therobnixon | www.panalitix.com| #firmofnow
Value Belief
Value Perception
Value Contribution
TO VALUE PRICE
@therobnixon | www.panalitix.com| #firmofnow
“Our charge rates are in line with
others”
“I’m too busy, I’ll just charge by
the hour”
“It’ll probably take X hours so we’ll charge Y”
“I can get it done really fast”
“There’s too much time on the clock –
we better write some off”
“I’m afraid of what the client
will think”
“What if they say no to me”
“My clients will never pay that
much”
LIM
ITIN
G P
RIC
ING
BE
LIE
FS
@therobnixon | www.panalitix.com| #firmofnow
@therobnixon | www.panalitix.com| #firmofnow
@therobnixon | www.panalitix.com| #firmofnow
ALL CLIENTS
BUYING EVERY
SERVICE THEY NEED
THAT HELPS THEM
ACHIEVE THEIR
GOALS!
GROWTH
PROFIT
CASHFLOW
ASSET PROTECTION
TAX MINIMIZATION
FINANCIAL RETIREMENT
SUCCESSION
ESTATE PLANNING /
LEGACY
DELIVER THE
AWESOME 8
CLIENTS
@therobnixon | www.panalitix.com| #firmofnow
FOLLOW THE DIGIT FLOW
Accounting Software
Bookkeeping
Compliance
Business Advisory
Wealth Development
Estate Planning
YOU
@therobnixon | www.panalitix.com| #firmofnow
Key Area Now
Partners
Accountants
Administration & Marketing
Client numbers - groups
Average project value
Number of projects per year per client
Average fee per client group per year (projects x fee / project)
Revenue
Salaries – excluding partners
Office overheads
Total costs
Profit before partner salary
Productivity / Utilization – Partners
Productivity / Utilization – Accountants
Average Hourly Rate (AHR) - client hours
Average Hourly Rate (AHR) - all team all hours worked
1
4
3
200
$2,200
4
$1,760,000
$450,000 (74% GP)
$310,000
$760,000
$1,000,000 (57%)
30% - 506 hours
75% - 1265 hours
$316
$130
$1M
PR
OFI
T PE
R
PAR
TNER
$8,800
POLLING QUESTION
How much profit do you want to make?
1.<$150K
2.$150K - $300K
3.$300K – $600K
4.$600K - $1M
5.$1M plus.
@therobnixon | www.panalitix.com| #firmofnow
POLLING QUESTION
How are your enthusiasm levels so far on this webinar?
1.Not enthusiastic at all
2.Moderately enthusiastic
3.Pumped and ready.
@therobnixon | www.panalitix.com| #firmofnow
PROFIT
CAPACITY
GROWTH
@therobnixon | www.panalitix.com| #firmofnow
PROFIT
CAPACITY
GROWTH
WIP and Receivables
Write offs / ons
Client service
Upfront Pricing process
People development
Productivity
Policies / processes
Workflow managementEfficiency model
People mix / location.Administration team
Firm cloud
Team Performance
Average Hourly Rate
Niche markets
Best buyer strategy
Client selection
Business Advisory Services.
Value Pricing
Brand development
Lead generation program
Sales process
Retention system
Average project value
No. projects / client / year
Services mix
Communication program.
Web dominance
Sales skills
Client cloud
FIRM DEVELOPMENT PROCESS
POLLING QUESTION
What will be the difference when you implement these strategies?
1.Better lifestyle
2.Personal / family happiness
3.Happier clients
4.Change my life
5.All of the above.
@therobnixon | www.panalitix.com| #firmofnow
#firmofnow
>1,500 @ FIRM OF NOW
Within 12 months attendees believe they can increase…
LOW AVERAGE HIGH
Profit $ by in next 12 months …
Profit % by in next 12 months …
Capacity % by in next 12 months …
Revenue $ by in next 12 months …
Revenue % by in next 12 months …
400%
$15,000 $1,500,000$202,500
10% 75%
5% 100%31%
$10,000 $1,500,000$317,421
5% 356%52%
@therobnixon | www.panalitix.com| #firmofnow
PROFIT
CAPACITY
GROWTH
WIP and Receivables
Write offs / ons
Client service
Upfront Pricing process
People development
Productivity
Policies / processes
Workflow managementEfficiency model
People mix / location.Administration team
Firm cloud
Team Performance
Average Hourly Rate
Niche markets
Best buyer strategy
Client selection
Business Advisory Services.
Value Pricing
Brand development
Lead generation program
Sales process
Retention system
Average project value
No. projects / client / year
Services mix
Communication program.
Web dominance
Sales skills
Client cloud
FIRM DEVELOPMENT PROCESS
YOUR JOURNEY TO
BETTER NUMBERS,
MORE TIME &
DELIGHTED CLIENTS
@therobnixon | www.panalitix.com| #firmofnow
IMPLEMENTING PRE / DURING TAX SEASON
Implementation Manager
to guide you
18 Step Workflow process
for efficiency
Pricing Power / Value Pricingfor margins
KICKSTART business planning
Finding opportunities
during Tax Season
TRUST / ELEVATEleads for after tax
season
@therobnixon | www.panalitix.com| #firmofnow
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POLLING QUESTION
How many people would you like to attend Firm of NOW?
1.0
2.2
3.2 – 5
4.5 – 10
5.10+
@therobnixon | www.panalitix.com| #firmofnow
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