Create the Perfect Format for Billing Clients for Accounting

Format for billing client for Accounting

okay the age-old question how much should I charge for the work that I do oh people are so opinionated on this one so let's make a bunch of people mad and I'll kind of share my framework for how I think through the different stages of firm running and what pricing makes the most sense at each of those stages it's kind of a combination of several different Frameworks But ultimately the goal is more right bigger numbers how do I get people to pay more for the output of my firm not just because I'm I'm tricking them into something pulling the wool over their eyes but because what my firm's outputting is actually more valuable than it was before specifically more value to that very specific type of person and that'll be a theme through this video there's a hundred different ways to approach this but super simple framework we're going to look at three different types of firms what makes sense in each of those stages so first up the day Zero firm literally picking up your first client this is usually a side hustle for most people you can take your maxims of here's who's the ultimate way to squeeze everything dollar possible out of a client and all these levels of higher thinking when it comes to pricing when you're at Day Zero you will literally do almost anything for anybody because you're figuring out how to pay the bills figuring out how to make this a full-time thing because that job you got yeah just about any any clients better than that job that you got right now and when your firm is in this stage you are a price taker your price is going to be dictated by the substitutes the other options that that client has now maybe you're coming into this with some sort of expertise from a past job maybe that gives you a leg up so that you aren't quite the same as everybody else in town but most people aren't starting there you're just you're taking anything that you can get so when that client comes in the door they're probably benchmarking okay what's this person going to charge me against the guy across the street on the first day that's probably what your competition looks like and so the goal across these stages is to get away from them is to get away from the substitutes be one of one so that you have control over your pricing but you're not that snowflake yet you probably suck at what you do you're wildly inefficient and this is why it's gonna make a bunch of people mad you can win clients on hourly pricing if the guy across the streets charging 150 bucks an hour for something you charge 120 bucks an hour for there's clients that will make the decision based on are you ultimately gonna cost less than that other firm probably not because you're still learning and are probably wildly inefficient but getting somebody to pay to do that learning not the worst gig doesn't mean you exclusively have to do hourly and that you shouldn't do some value billing some Bixby like just start waiting into that a bit but here is permission to Bill hourly when you are first getting started there you go now I'm framing this as day Zero firms eighty percent of firms are still in this bucket what you do is the exact same is what everybody else does so people are gonna buy based on price and at the end of the day long term that's not the client that you want you don't want the client that's shopping for the lowest hourly rate but again gotta start somewhere and in these early days remember that the clients you have today are never going to be your Forever clients 24 months from now what you can increase your prices to will be shocking to you so the sooner you can kind of condition yourself to get ready for that the better the clients are picking up today they're not going to be your Forever clients now common traps in this stage where people get stuck here and they're not able to address to the next stage big one is not finding a niche it takes time for most people some people can Cruise right into it but honestly finding a niche or a few different niches it can kind of feel like a stop start Affair sometimes you'll start down a path and you won't get it right and you know what that's totally normal you're not gonna get it right on your first try the other thing I think people do is they think of niching down and specialization as just an industry thing where there's actually a whole bunch of dimensions on which you can specialize maybe it's industry and something else maybe industry doesn't matter maybe it's geography maybe it's the type of person that you work with maybe it's the way that you deliver those Services find some combination of people that has a very specific problem that you can be the solution for the guy across the street is not the solution for the other big struggle here is is charging what you're worth nobody gets out of bed when they start their own business and they're just like good at this you learn this through taking your lumps is that ultimately people will complain about pricing but people generally won't complain about your prices not being high enough and we have this evolutionary trait that's really hard to to not blow those complaints out of proportion those people take up a bunch of headspace and so when you think about how you price everything that you do you usually skew too low because of those couple people that complain when you're not taking into account all the people at the other end of your Client List who will happily pay more you gotta optimize for everyone and what we end up doing is we chronically underprice what we do for too long because of this again nobody figures this out before they just do it totally like that's normal a lot of people get stuck in this stage because of that a couple other traps you don't get selective enough about the clients you bring in if you're starting to see this path taxidermist that seems like my thing but you're taking in lobotomists those two groups don't have the same problems but if you keep letting them in the door it's keeping you from going down the path that you ultimately want to go down and then the flip side of that being unwilling to cut the people that also don't take you down that path people that are already on The Client List specializing is going to entail hard decisions and on the day you start you don't know what that specialization is going to look like so the clients you brought in on the first day you're probably gonna have to cut them losing actually but if you never do you can never evolve to that next stage again 80 of firms still living that life not Specialized or anything but you're better than that so let's talk about stage two A specialized firm this is a firm that by finding a niche or three it doesn't just have to be one in my book you've eliminated 99 of the substitutes there will still be substitutes there will be other people who specialize in serving that type of client and that's fine the big deal is you threw out the vast majority of other firms they're no longer competitors of yours which means you can go from being a price taker that's heavily influenced by substitute services to setting your own price to Value pricing for the first time you're making up the rules because as far as your clients concerned you're probably one of one that's not entirely true but you got way more pricing control than you did before now the first time you build this that client base usually comes from a referral Network you get a couple clients that love what you do they send their friends you go out to your favorite clients that you love working with you say hey you got anybody else that you're networked with that has the same problems that you do ask don't be afraid to and that Client List usually starts from a referral network but at this stage this is when you start dabbling in content creation and putting yourself out there there and a higher leverage way and this is oh it's so uncomfortable for accountants I get it it's not accounting it's not tax I didn't sign up to be an influencer for getting a sec I'm an accountant but here's the thing I've said it before the moment Al Gore flipped the switch on the old internet your problem became distribution that is your bottleneck as you grow Beyond this stage of firm running your job has changed from doing the work managing the work to now finding the people who are out there for whom the problem you solve is ten times as painful as the clients you have on your list today we cannot comprehend the reach that you have sending a tweet making a LinkedIn post the internet is bigger than our minds can get around there are so many people out there with so many different types of problems and every time you create a bit of content every time you put yourself out there you're enabling Serendipity because you don't know who's going to be on the other side of that that relationship that could kick something off for you that could be your next great client this is where we struggle is that building a referral Network what we've already done is so much more familiar familiar to us it's really hard for us to just put that stuff out in The Ether and just trust it and the fact that 99 of accountants are going to get hung up on that that's a great reason for you to do it so I'm going to say it again your job is to find the People For Whom the problem you solve is 10x more painful than the people who are on your Client List now those people will pay so much for what you do and be so appreciative of what you do and admittedly it gets hard to know how much time do I invest in that which can sometimes feel like a slow burn versus just doing the work but what is the likelihood that within your little Network within your neighborhood if you think of all the people out there that could be your clients that you are just going to stumble into the top 100 clients you could possibly have the 100 people for whom that thing Hurts the Most it's not going to happen and the more you invest in putting yourself out there the more you're going to enrich that Client List load it up with people for whom that problem you solve is really really painful do it the reason I'm here it's the reason you're watching me you got to do it firm running is largely unchanged from the time the internet came around and going from the second to this third stage this is where we are driving firm growth in a way that the internet will enable now common traps at this stage the clients who are great for you aren't necessarily clients who are great for your team so you got a specialization maybe it's something from your background that you know a bunch about it's one thing to build a practice around yourself it's another to build a practice around a team of people who have that expertise you'll find as you get into this the people that you can serve are very different than the people that your team will serve and this is kind of an inflection point where you got to decide is my job going to be to do the work or is my job going to be to run the business and there isn't a right answer there like there's no shame in being the one to do the work where it breaks down is when you want the results of one thing without acknowledging the decision that you've made can't take the best of both I really enjoy running firms I got out of doing the work wasn't that fun honestly I wasn't that great at it but I've got a weird combination of expertise from software to production all these different things my staff doesn't have that expertise so I had to stop bringing work in that was great for me instead bringing work that was great for my staff and upskill my staff in new ways to ensure they had a depth of expertise in the specialization that we wanted to go further into so that was sending them to Industry conferences investing more and pouring into them the expertise that my clients need so another big bottleneck here is an unwillingness to upskill your team members in that domain expertise if you don't have the people that can do it right now the other got to go out and find the people who can I gotta upskill the people you got into that stuff and a lot of people do this from a standpoint of what if they leave what if you don't invest in them and they don't leave in my mind there isn't really an alternative the last big stumbling block at this stage is you don't have the Staffing model figured out you don't have a compelling reason for people to come to work for you in the same way that you got to be the best firm for a certain type of client you got to be the best employer for a certain type of person also and until you figure that out you fundamentally can't grow fur now there's ways to balance that with diversification in your hiring we've talked about that before leaning into contract leading them to Offshore channels where there's a much more abundant supply of people rather than these super hard to find onshore people there's a whole bunch of different ways to crack that nut but you can't really move past this until you got a sustainable hiring model now on the subject of pricing this video sponsored Financial sense they actually just recently put out a whole nice pricing Guy what's it called how to price accounting and bookkeeping services for ultimate profitability sounds nice huh they worked with Lauren fogelman on this covers some great stuff like is your crappy pricing attracting the wrong type of client I quote like a magnet your pricing either pulls dream clients to you or clients from Hell oof it unpacks the relationship between value and pricing between fixed pricing and value pricing how to increase prices on existing clients how to communicate those pricing changes it's good stuff I will link the full guy in the video description and if you haven't seen it before Financial sense it's a practice management system used by over a thousand firms keeps you organized got automated client requests you know how I feel about those oh and check this out and reports this is the kind of thing that I'm going to use to make kind of client strategic decisions so the way I think about this is I have a revenue expectation per team and this is the kind of reporting I'm going to use to look at Cross sections of my client base and decide is this the type of client I want to take forward with me or is this now a legacy type of client that I've outgrown that is financial sense does a whole bunch of stuff if you have weighted into practice Management Systems before and got sticker shock check out Financial sense you get an outrageous amount of software for the money now the third type of firm oh is where it gets good high leverage firms so this is where your firm is reducing the amount of one-to-one work it does and doing more of the one to many work we've talked a bit about this in the past this works when you're you're solving a very specific type of problem for a very specific type of person if you aren't there yet you're probably not going to be able to sell a course that's helpful for people right let's say you try to sell a QuickBooks course to help your client do that reconcile books all that why aren't they just gonna go watch Hector Garcia right your one of many services aren't going to work until you get really really specific so at this stage you're working with a very specific type of person who has a very specific type of problem that you can solve for and it's at this stage that digital products Mastermind groups I talked about that in another video how you can set up these absurdly profitable you know one hour calls with 10 people who pay 500 bucks a month to be there you're starting to invest in more scalable higher leverage stuff and your business actually kind of starts to look like more of a Creator business from selling sponsorships in a newsletter to affiliate Partnerships to building adjacent businesses that solve kind of adjacent problems for that same client base the upside here is You're Building into your practice all of these things that require no incremental amount of effort from you and they drive Revenue both for current clients transfer prospective clients and that is the ultimate form of Leverage that the internet will enable for you you're still doing one-to-one these people still have tax needs they still have accounting needs but you're doing a little less of it to make more space to invest in one to many and of all the things that we've talked about this is the only aspect of firm running that's changed in the last 20 years surely the way that you run a firm has to be impacted by the internet right sure software has changed and all that but how do you go out and find the people for whom what you do is going to be most beneficial and then deliver both one-to-one and one to many services to those clients that is the firm of the future now the fallacy with this framework is that it's binary is that it's not as if you get up one day and we're like oh we're number two now the reality is You're Building several different practices in parallel at any given time if you're a day Zero firm someday you're going to pick up your first client that will take you a step closer to being that specialized firm and there's going to be some stops and starts you're not going to get it right on the first time that's completely normal but alongside that firm that you first built you're growing a new practice that's aspirational that's taking you to something better it means doubling down on that new thing and it means making some hard decisions on the old thing but to me this framework is helpful for where do I go next because as much as we talk big picture and value pricing and all these kind of grandiose things the reality is all this stuff starts with what client are you going to take next who's the next one you're gonna pick up who's the next one you're gonna fire how are you gonna invest in your team what's the stuff you really need to delegate next so think of this through the lens of how can I start building my dream practice one client at a time what do you think he never even told me how much to charge you stop that okay there is no right answer key just keep pushing the envelope the more specific that problem gets the more charge the more they're gonna love you or you're gonna have a rad firm more it's gonna be a cool place to work for for the type of people that are into that thing just give me a price list okay you're not getting it it's not like that you can't just price list it again go back to the