the new value pricing paradigm with david yeghiaian and michelle river | gear up for growth

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gear up for growth
with jean caragher
for 卡塔尔世界杯常规比赛时间

gear up for growth spotlights the best strategies for smart and effficient growth in today’s competitive landscape. more gear up for growth every friday here.|  more capstone conversations with jean caragher every monday | more jean caragher here | get her best-selling handbook, the 90-day marketing plan for cpa firms, here | more 卡塔尔世界杯常规比赛时间 videos and podcasts here

 

transcript
(produced by automation. not edited for spelling or grammar.)

 

jean caragher 

hello and thank you for joining in for gear up for growth powered by 卡塔尔世界杯常规比赛时间. i’m jean caragher, president of capstone marketing and your host, this episode is focused on shifting the pricing paradigm away from the billable hour. i am delighted to introduce our two panelists. michelle golden river is a cpa firm growth and profitability strategist with specialties in pricing and positioning. she is the ceo of fore llc and the creator of advanced pricing methods. david yeghiaian is the chief strategy officer for kerber rose, where he oversees strategy, acquisitions, marketing, human resources, it, finance and more. michelle and david, welcome to gear up for growth.

 

michelle golden river 

thank you, jean. it’s a pleasure to be with you today.

 

david yeghiaian 

thank you.  i agree. yes. look forward to our discussion today.

 

jean caragher 

yes, me too. i have been excited about this episode so we know that the traditional way that accountants bill clients is that they track the billable hours that they worked with the client, they multiply that by their billing rate, and they send the client an invoice. what do you think is the main source of resistance by accountants to change this pricing model? david, why don’t you kick it off for us?

 

david yeghiaian 

sure, the main reasons are tough, so i may give you a few. i mean, ultimately, i’ll start with change. i mean, they’re just not used to it, you know. but i would the sub items of that one are, i think, what when we hear, what we’ve heard here, is the change relates to we’re concerned about being off, meaning, am i really going to estimate things? well, what happens if i have that one client that expects more and i didn’t figure that in? and then certainly, the other one is, what about my whip? how am i going to measure my wip? so i think those two relate a lot to the reason of, i don’t know if i want to change because we need to address those two things. that’s what’s come up a lot with our firm.

 

jean caragher 

okay, michelle, your thoughts,

 

michelle golden river 

yeah, i think, i think david hit the nail on the head is, is that it’s change, and it’s funny because, and david, you know, we’ve had so many discussions about this, but the things that you named are all things that shouldn’t matter in a new model, a new business model. and so to your question, gene about changing pricing, the biggest hurdles are that we really need a broader business model change to comfort, to be more comfortable accepting a revenue model change. so revenue is just the revenue model is just one of about nine elements of a business model, and the business model needing to shift is the most important underlying thing to create success for adoption of a new revenue model change. so what i mean by that, very specifically, is that when you look at your hours as you described, which is exactly how most people do it, your hours are your cost structure, that’s that exists to be able to calculate your viability, right? but your revenue model is a different thing. accountants have taken their cost structure, which is allocating hours to clients and projects, and have turned that into their revenue model. and they’re not supposed to be the same thing. their accountants are not the only ones that have done that. you can look at engineers, architects, technology, a million other people who chart plumbers, people who charge by the hour, but when you start having efficiency gains, that model doesn’t hold it doesn’t hold up as you speed up your work. so i have some thoughts i’ll share, but i’ll let you

 

jean caragher 

right. yeah, no, i. i know we’ll cover a lot, you know, over the course of the episode, for sure, and we all know that, in general, people do not like change. you know, we’re comfortable in what we do and how we do it, and we’ve done it for so long. and now, what do you want me to do? right? i’m not going to focus on the hours, but you know the value that i’m bringing to it, it’s a whole different mindset, right? yeah, right. so, michelle, continue a little bit and tell us what prompted you to create advanced pricing methods.

 

michelle golden river 

sure. yeah. i mean, there’s really, i think, three reasons. the the main reason that i created it initially, is because no one, none of us, likes to commit to a price to purchase something without knowing what the price tag is. and that’s just me as a buyer. i tend to buy things. i like to buy some things more than others, but i don’t ever want to not know how much something is going to ultimately cost me before i’ve committed to investing in it. and when you think about how people buy our services as a cpa firm, that’s exactly what we’re asking them to do. hey, i’ll let you know when i’m all done how much you owe me. that is a terrible customer experience, and more importantly, it takes any sense of control away from the buyer. buyers should have control over how much they spend and what they choose to buy and not buy. so that’s the number one reason. and generationally, i think boomers tolerated that approach. i don’t think they loved it. still love it, but they tolerated it. the generations behind boomers hate it. they absolutely detest not knowing what their spend is going to be. and as we’re seeing more and more gen x and millennials take over the businesses that we work with and become the leaders of those businesses, we’re hearing a lot of great thing about how come you can’t tell me how much this costs. the next reason is really that customer worth and firm worth have nothing to do with each other. and what i mean by that is that the amount we decide based on our i mentioned earlier, our cost structure and our viability, the amount we think, well, i’ve got to make at least this much to make it worth my while to do that, that’s firm worth, and that’s very important. we have to consider that, but the worth to the customer has nothing to do with that number. so i mentioned cost structure and revenue model is two elements of the total of all the nine business model elements, the number one most important element is customer value or worth the worth proposition or value proposition, neither the cost structure or the revenue model has one wit to do with the value prop. so we need to separate those things, and in our minds today, we mush them together and buyers. buyers are actually not price sensitive. they’re worth sensitive. so recognizing that, that’s my second reason, recognizing that and bringing that into our business model, that the client’s worth proposition the roi is a separate matter that we’ve never sufficiently addressed, and some of us haven’t addressed it at all. some of us address it a little, but it’s still confusing. how can we address that in a consistent manner, customer by customer by customer. the third reason really is that basing price on time, as i mentioned earlier, is not holding up with technology advances. basically basing a price on time is a strategy with a looming expiration date, with automation, ai, data analytics and all of those technologies, we’re shaving our time inputs by half or more. and if you think about that, half or more, if we can do twice as much work in the same amount of time, but we charge by the hour, we have twice as many clients, twice as many projects, and the same amount of revenue, which we are smart enough as business people to know, is just really, that’s

 

jean caragher 

really not going to work for anybody, right? i know. michelle, you know the clients really are not they don’t care how long it takes you to do something, right? and if you’re doing it quicker, it doesn’t mean that you should be making less money doing it because of what you’re providing to the clients. david, i see you nodding your head

 

david yeghiaian 

absolutely. i mean, it is, and i think that is such a so i came from other industries before this, and that is such a major change in this industry, because they are used to billing by the hour. and, i mean, when we first brought michelle out, and she just talked about this getting and this is, i mean, it’s a change, and it’s a cultural piece of getting the cpas to in a certain effect, to understand there is value in what we do and worth in what we do. and it’s not just the hour. and i agree, is at the end of the day, the client cares that we get it done and we get it done well. and we get it done on time, whatever their time is. and yes, we should price and do our value according to that absolutely.

 

michelle golden river 

i know it’s funny, because sometimes, sorry, dean, the faster you do something, it’s the more valuable it can be to somebody. absolutely,

 

david yeghiaian 

yes, absolutely.

 

 

jean caragher

so david, kerber rose adopted advanced pricing methods. what was the turning point that prompted you to lead that initiative?

 

david yeghiaian 

sure, there are a few items. we’re in year three right now, and we started this. we do an annual strategic planning process, and as part of the one we started three years ago, we were looking at, we came across michelle, and we wanted michelle involved, because we were looking at, and i’m not gonna lie, i don’t know if we really knew what advanced pricing was at that time, and michelle has done a great job of educating us and training us on it, but we’re but part of what really drove us to do that was with several items we have. we have multiple services. meaning, i mean, we do, certainly tax and audit and advisory, we have wealth management, we have human resources, we have marketing, we have it. and what we were seeing is, in a good way, our clients were doing multiple services with us. they were getting multiple invoices from us, because we would have their tax and then three months later they would say, hey, it’d be nice if you guys do you guys do hr? well, sure, so now a different person would go out there, have a series of meetings, and then they’d be getting a tax bill and an hr bill every month. you know, so, so part of it is just doing a better job of cross selling our services, a better job of collaboration amongst our service lines, a better job, ultimately, of serving our clients and giving them what they were asking for, which is they all kind of want one stop shop. and certainly, they want things easier. they don’t want 1010, invoices from the same firm every month as well. you know, one of the other items certainly was differentiation, again, from a strategic standpoint, this is something that we weren’t seeing a lot of our competition do. so it does provide us with some differentiation and competitive advantage and and i think we’ll talk about that more later on. what our clients have been saying, you know. and the other one, you know, frankly, we have 13 offices, so, which is a lot of offices for our size firm. so again, going back to just some standardization and better communication and collaboration, this process has almost forced us to have to do that to work together for the good of our clients. so there were several factors involved that that led us to go down this path.

 

jean caragher 

so tell us what your biggest challenge has been in the implementation of advanced pricing methods and how you overcame it. again,

 

david yeghiaian 

i’m not going to give you one. i’m going to give you a few,

 

jean caragher 

because i can’t i don’t believe that all your partners are just,

 

david yeghiaian 

yeah, no, no, yeah. i mean, i mean, i would, i mean, ultimately, i mean, buy in is still part of, part of the, one of the major items, i mean, and i think that’s normal anywhere. frankly, we still have, i mean, we have, i’ll kind of call it three tiers of of engagement. we have the tier that absolutely is bought in and does a large amount of our apms. we have a middle group that is pretty good about it, does some, doesn’t do some. and then we have a group that i don’t know if they’ll ever get completely engaged in it, and, you know, so so part of it is buy in. part of it is, and i’m going to kind of go back to their complaint is this takes too much time. and michelle and i have had many discussions on that one, almost to a laughable stage of it does take a little more time, but the proposals are way larger. it’s multiple. it should take more time if we’re doing a good job on the front end, really engaging that client in what what do they need, and proposing it to them. so there’s a few factors there. i think we’ve seen some items where our people haven’t followed the process, which, again, then their complaint is the process doesn’t work. well. it does work if you follow the process. and i would say tracking, you know, we’ve, we’ve kind of, and i think michelle would attest, that is always a tough one. and i think we’ve made some improvements and just how we track, how we measure and then getting pricing mentors, which is a key part. and michelle can talk more about the role of pricing mentors, certainly, but that’s one where we have a good group in a good way. i don’t know if there’s, there’s ever enough, because the more apms you do, you need more pricing mentors to help out. so again, that’s a good problem, frankly. so there’s a few, a few obstacles that we’ve run into that again, we’ve, thankfully, michelle has been there over the years that we’ve been implementing this to bounce ideas off of and give us suggestions, you know. and we can talk more about kind of how we’ve addressed a lot of those in a little bit as well.

 

jean caragher

wonderful. so michelle, what are the challenges do you see that firms have when it comes to adopting and implementing apm? sure,

 

michelle golden river 

you know i and i knew, i’m so glad david named the ones that he named, because i knew he’d hit the primary ones that are distinct and specific to advanced pricing methods adoption or revenue model change in general. i think, to add to what david said, the fact is that when a firm struggles, if a firm struggles more than others struggle, because change is a struggle, right? and most people don’t have some firms do, but most don’t have a change management professional on staff, which is a you know, that’s a whole job in and of itself. when a firm struggles more than others, it’s for the exact same reasons that they struggle with any new initiative leadership, not effectively leading it, and that they don’t make a clear ask of the team number two and goes hand in hand with that low effectiveness, with accountability strategies like they just don’t follow through. you might say you got to do this, but there’s no consequence or reward if they do or consequence if they don’t. the third one is that align, lack of alignment with strategic plan and the very important comp system gene. we go way back. we both know that if the strategy is over here and the comp plan is over here, and they don’t line up, comp wins, um, so if they, if there’s not alignment, like, hey, we need you guys to do this. and i think, and i don’t know for a fact, but when david says, people say, well, this takes too much time. is that because, and i don’t know, david, but is that because the comp system rewards people for spending time on, on chargeable matters, or other stuff that is not doing that? and so is it, it takes too much time? is it, you know what? what is it taking the time from, and then kind of going back to after comp system alignment is keeping momentum is so hard. it’s hard for everyone on any initiative, but on this in particular, to encouragement, praise, communicating what’s working to help others. it’s one thing for somebody like me or even david to say, hey, this works. i see it with bill over here. bill needs to say, this worked for me, for that one person that really trusts bill to go, wow, if it worked for him, maybe i’ll try it so, without a ton of effort toward, and this is every initiative, not just advanced pricing, without a ton of effort toward intentionally keeping momentum alive and reminders of why the change is necessary and good. herein lies the biggest problem with this initiative, compared to say, changing a tax software, they don’t get a choice. they don’t get to keep using the old tax software when you’re changing something, where they can still get, you know, be allowed. allowed is the wrong word if they’re able to if it’s still considered acceptable to do things in an old way, people are going to slip back into that old way if it’s still available to them. so until you cut off that old tax software completely. you may have people who fight it, kicking and screaming to start using the new one

 

jean caragher

absolutely. and you know, michelle, you used another word. we hear a lot, too in the industry, accountability and how hard that is, because it does. you know, one of my interviews with david maestro, i asked him about that and asked, like, why are accountants, like, so averse to being accountable? he’s, like, it’s just, it’s not just accountants, like, it’s people in general. you know, it’s, it’s harder to be accountable. you know, it does make your life a little more difficult, and it’s a little more pressure and expectations. so, you know, you just add that to the mix of a change initiative. it’s, it’s hard, and it would be easy for people to just turn the other way and they, you know, i’m just not interested. like this is not going to work for me. it is. it is.

 

michelle golden river 

and i did. i wanted to circle back to to something that that david mentioned about, you know, taking people saying it takes a lot of time. gene, you did an interview a while back for association for accounting marketing, where you spoke with bruce walt of horn and eric myshack from beach fleshman. and i remember distinctly, and it was so powerful when bruce said it, but he said, when we when we adopted advanced pricing methods, we intentionally, and he led sales, he said we intentionally slowed the sales process down to do it right. and that’s very hard for us in the accounting profession, because we think somebody does us the honor of inviting us to give them a proposal. we have to turn that thing around overnight and. and if we’re not instantly handing it to them that next day, that we’re not doing it right, i think we kind of have that feeling. but it’s funny, because if i ever say, what does it typically mean, and i do this in almost every room, what does it typically mean, if a client demands the proposal the next day, and everyone goes, they’re price shopping. and so we all know that, like, if you say, can i get this to you in a week or so? would that be okay? most people are like, yeah, no problem. but the ones that are price shopping are like, no, i have a board meeting tomorrow, and i’ve got my other three. i need yours too. so i don’t know. everybody’s like, yeah, i don’t want to be price shopped, yeah, well,

 

david yeghiaian 

and i was just going to add on that. and in addition to the price shopping of is that the type if they’re doing that now, how are they going to be if they actually come on as a client? are they going to be asking for everything last minute, all the time? and is that the kind of client we also want? right?

 

jean caragher

exactly, exactly. so we’ve kind of touched upon this idea. does a firm have to reach a particular revenue level in order to move away from the billable hour, whether that’s advanced pricing methods or, you know, subscription pricing, or or whatever it is, does a firm need to achieve some sort of size milestone in order to be successful with that. michelle, what do you think?

 

michelle golden river 

well, my i don’t think so at all. i mean, you know, we all know that a speedboat moves faster than a cruise ship, so the small firms can adopt anything they want immediately, right? because they don’t have to go through hierarchy and, you know, big, cumbersome change management stuff, but big firms, you know, can put more resources to something. so i’d say the that’s the advantage that a larger firm has is, you know, somebody spending a quarter time or half time helping others adopt a new approach. but no, not at all. i think any firm can price in advance, which is the client experience goals, just giving whether it’s a fixed price or any kind of price that is known to the buyer, that’s all that we’re saying that that is critically important. a price in advance is really cool. and then the second thing i would say is that pricing based on worth instead of time, is is imperative for us. ultimately. i’m not saying like the world the sky is falling, and if you don’t do this tomorrow, it’s a problem, but i will say it is all you probably don’t even if you’re in a firm you probably don’t even realize the degree to which it’s already eroding us. i believe that the that, and i have some data to back it up, that i think that charging by the hour and becoming more efficient over even the last decade, decade and a half, has led more. it has contributed more to our current capacity problem than the talent shortage has, because look at what we did. we added a whole bunch more clients and a whole bunch more projects, and still charged by the hour. and so we aren’t affording to hire more talent, assuming we could find them fair point, but that is the biggest contributor to everyone feeling so maxed out all year around anyway. so i digress for a minute, but i’ll go back to that any price can any firm can price up front. any firm can learn how to price based on worth. and those are the two fundamentals in advanced pricing methods. there are a couple of others, but whether you’re a solo, small firm, big firm, you can apply the approaches immediately, as soon as you learn it. and it scales really beautifully. i have probably as many small firms using it as large firms. so, you know, 1,000,002 million, 3 million, all the way to over a billion. it scales beautifully. and that’s probably, that’s, that’s probably something that surprised me, is how well it can scale. but i would say that any size firm, as soon as they start using it, they report the same thing. they say, when we use it, it works, and they say we should be using it more than we are,

 

 

right? well, i know that our viewers and listeners are going to be very happy about that, because i think sometimes when we’re talking about different programs or initiatives, smaller firms tend to think, oh, this is not for us, because, you know, we’re not a bigger firm with those extra resources that you were referring to, whereas what, what i’m hearing is, no matter what size firm you’re with, it is possible for you to make a change in your pricing model to whatever you decided to be right? david, tell us quickly just the size of kerberos and whether that or how that perhaps had an impact on your decision to change your pricing model, or did that make it easier or more difficult?

 

david yeghiaian 

i would say more difficult, more so our size. we’re about 250 team members. and i think we’re, you know, we’re, i think we’re in the top 200 now. but you know, as you know, that there’s a large gap between those top 10 and everybody else. i think our 13 offices, they’ll make us more complex, along with, and i know other firms have multiple services as we do, we’ve added a lot, probably, over the last five to seven years, in terms of it, hr wealth management, which is added to the complexity. because, you know, i mean, you know, those things aren’t learned quickly. so a lot of our cpas are still learning of, well, i don’t even know how to engage the hr person in this discussion, because if you say you want business taxes done, that’s i’m happy with that. that’s all i want to know. so that’s, i mean. so there’s been a couple different change initiatives that we’ve been working on all at once here, along with, obviously, again, just the 13 offices makes us more complex. and what we’ve seen, and michelle hit this on the head, obviously, we’ve had senior leadership support. it was in our strategic plan, but we have noticed this the next level of leadership down is probably where we’ve seen the make or breaks, meaning, if you look at so we have our 13 offices are in three regions. in effect, the the leader of the region that where we get the most apms, has the most success stories, is the most engaged. so, of course, his team and he’s literally at our meetings, and michelle mentioned this, he said, hey, and he’s pointed to somebody in his office to say, you know, so and so wasn’t on board with this at all. and i asked him to try a couple, and then that person will stand up and say, you know, i got to tell you, i thought it was going to be time consuming. i thought it was this, and it’s been great, you know. and i would love to say that has worked in all the regions to, you know, like that, but you know that no change occurs like that, but, but it michelle is dead on. of exactly, of, you know, once they try it, you can see the successes, you know, and, i mean, and we have our own data to support that as well. and it goes back to kind of, my, my third, a third and a third of people, of some, some are still going to say, hey, that sounds great, but i’m just, i’m still going to keep doing what i’m doing, it’s worked for me for 35 years, and it’s gonna work for me for my last 10 so, yeah,

 

jean caragher

right, yeah. i think, you know, celebrating those successes and communicating those successes can be so powerful, because that’s the evidence of, you know, spending that extra time and the result that it has, not only for your clients, but for your firm

 

david yeghiaian 

correct. just to add sorry on that, and michelle mentioned this, and that is something we learned, because i think in the first year, it was david being the champion and saying, we got to do apm. here’s why we got to do it. and it moved to the shareholders actually being the proponents of it, you know, it took us a while to learn that, you know, and it does. it works much better, you know, i mean, and i build clients as well, but it’s still different when they hear their peers actually talking about it.

 

michelle golden river 

i’d add on to that, i was on a call the other day with where i had a couple of firms in the same association talking about it, because they we just got all those firms together and and one of them mentioned this. they said that all of a sudden, they’re about two years in less, less far along than than david’s firm. and they said, all of a sudden it became a thing, a fomo thing, a fear of missing out, thing, where other people are hearing enough success stories and that they’re starting to say, wait, wait, what are they doing? i want to learn how to do that. i want to be in there. and they’re starting to feel left out, which is great, which is, but i don’t know what the tipping point is, and how many, how many people you’d have to have in a firm to experience that. so when did you start noticing that? david,

 

david yeghiaian 

i would say we started to see that at the end of the first year, where, again, we just were seeing the people more engaged. and again, they had their own success stories to share, which, which demonstrated it. and then, of course, it goes back to just the element of including other service lines, not because you need to, because the client wanted it, and which compounded the success stories. and we are, and again, i think we may cover this, but we continue to do a really good job from that of getting good client testimonials and feedback. and we’ve just recently implemented net promoter score. and so there’s some things we’re doing to not only just from $1 standpoint to show success, but from a client satisfaction standpoint and a client experience to show some of those successes as well. well,

 

jean caragher

this is a perfect segue to my next question, because it is about client experience. we hear a lot about that these days. how does implementing a pricing model not based on the billable hour, contribute to a client experience of a firm? how does what changes are you seeing, or reactions from clients, feedback from internally, what do you see? david,

 

david yeghiaian 

sure. i mean, we started with seeing a lot of anecdotal things where the clients would would literally say, wow, that was just a really positive experience. you know, you brought out multiple people to talk to us. you took, you know, and this is funny, i’m going to go back to the complaint. was time, but the client’s comment was, you really invested a lot of time with us while your proposal was very professional. i can’t believe you gave us a few different options to consider. i can’t oh, that that’s so nice of you that you’re spreading payments out over 12 months. oh, so there was a lot of things like that that, you know. and it goes back to the this process just is really good. we’re not, you know, we had a couple others in here that we were talking to, and, you know, they just seem focused on just our tax services. and you guys really asked a lot of questions. so it’s again, and i’m going to notice that a complaint earlier was the process isn’t great. the client comment is, the process is real good. so which is part of our continued communication of, let’s listen to our clients here about this. we have, i mean, we’ve obviously seen, you know, cross sells increase, you know, from that, and as i you know, we’ve gotten more client testimonials from it that we’ve been able to integrate on our marketing or social media. and then, as i mentioned, we just this year, started doing a net promoter score, and they literally have just come in, literally, like two days ago, so i don’t have the data, but i’m interested to see the apm clients versus the non. if there’s a difference, i’m hoping there is, and i expect there to be,

 

jean caragher

when i listen to you, what i heard was that you and your team are are focused on the client, and you’re talk you’re meeting them in their space. i may not be saying this very well, but you’re not as focused on what you’re doing as opposed to what you’re doing in the way that the client wants you

 

david yeghiaian 

to do it. absolutely. i mean, and, yeah, and that’s the essence of of the first part of the, i mean, the discovery meeting, which is the first part of the process, which is, i mean, heaven forbid we, we meet with a client or a prospect, and we actually ask them a lot of questions and listen to what their needs are, you know, you know, it’s, i mean, it’s not rocket science. it’s just good business to be able to do that. and everyone is different. i mean, there’s some we’ve talked to and they’re like, you know, hey, i’m planning to sell in in a couple years. well, okay, you probably need a valuation. you probably need a succession plan. you might need coaching for the you know, your son, who, or daughter, who you’re giving it to. those are, those are all pieces that now we can incorporate, versus you’re just looking for somebody do your business taxes this year, which they want. because, i mean, ultimately, what are you doing is we’re helping them be more successful in their business,

 

jean caragher

so another thing we’re seeing in the industry today is firms working with too many clients. so some firms are firing clients. some firms are not taking on any new clients because they just are over capacity. how can implementing, again, a pricing model not based on the billable hour. help right size of firms, client base. so david, do you? do you find yourselves turning down more opportunities, or rethinking opportunities? or talk to us a little bit about

 

david yeghiaian 

sure? absolutely, i think we are. i wish we were turning down maybe more than we still i would say i think it’s caused us because so we’ll always take the meeting. but yes, it causes us to pause to say, hey, this this client is only interested in price. it doesn’t make sense. this client really needs all these other things, and they don’t seem interested in them. can we really help their business out to the best of our abilities, or do they really just want an accountant? and again, i don’t mean that in a in a bad way, but that’s that’s not our mission either. as an organization, our mission as a firm of kerberos is to help our clients and employees be successful. so if, if we truly believe based on our questions, they need more things to and we need to do deliver them, and they don’t want them, they’re probably not the right client for us. so it, i think that has helped us, because i do think probably four or five years ago, you know, and i don’t know if we were that different from anybody else of what you know, your client will take you. yeah, you know. and exactly that of we know, you can’t do it anymore, because of capacity, because of staff, because of a zillion factors, and with our growth also, you know, there’s just certain clients we we can’t choose to work with anymore, you know. so, you know, it’s been a combination of factors i think that has helped us be more selective. and again, you talked about firing, we use the term optimization of we’re just, we’re optimizing the clients that we’re working with.

 

jean caragher

yep, i use that word a lot, too. i do a workshop. yeah, we’re going to do it again, and i’m going to be, i’m going to be a lot more basic on the terminology i use, dancing around it now

 

david yeghiaian 

we’re all still talking the same thing. but yeah, it sounds nicer though, doesn’t

 

jean caragher

so michelle, in your experience, what factors need to be in place for a firm to successfully execute a new pricing model. i know you talked early on about that being part of a whole firm strategy and additional changes that need to happen, but the firms that you’ve worked with and that have really embraced this, what is, what’s different about them? sure, yeah, i

 

michelle golden river 

think it’s, it’s about two things, mindset and skill set. so with regard to mindset, just having an open mind that, and this is so hard, it’s really easy to stimulate in one day somebody to have an open mind the day of training, or whatever. and david can speak to this, but after that day of training, helping to keep them in that mindset that they’ve they got to in that day, which is amazing that it can be achieved in a day, but not letting them kind of default back into out of out of fear or being uncomfortable with something new, back into the old mindset, which is, you know, we’ll just count our hours and that’ll be fine. so opening the mind to what’s possible and why it’s so much better than status quo, it’s just my favorite thing to do. and then the skill set, the main skills that are needed, that need attention and growth. sometimes they exist a little, very seldom do they exist more than a little bit. are really effective listening and the discovery process a kind of a deeper, richer discovery process, where you’re, you’re just more you’re you’re not thinking with your your your service, you’re not like, going in, like, i’m going to sell my tax services. i’m going to go sell my audit. you’re really thinking about, tell me about your business, and you’re just shutting up and listening and just taking copious notes about what you’re hearing, everything you’re hearing, hearing about, yeah, how hard it is for them to find this kind of team member. or, you know, how much turn, how much change has been in their industry, etc, etc, and just really listening to all of that. because in the moment, you’re sitting there, like your tool is a hammer, and you’re like, waiting for them to say the thing that triggers your service, and we’re not listening for all that other stuff. so listening and then getting a better handle on, on, and i’ll, i don’t know what word is going to resonate the most, but really scope, it’s defining our project thoroughly, carefully, so that we really know what we’re offering. because when you can really think about breaking down your project into kind of different levels and well, if i do that one more thing for them, oh, i could make that a higher option. i could put that one thing that that doesn’t need to be done. but a lot of people like, i could make that the middle or the high option, if i give three options. so breaking down your project is so it seems so easy, but what i find in the reality of it is that people have a really hard time seeing what they do every single day from a new perspective. and so that is something i would say, you know, create a little brainstorm process where people go in and learn how to kind of deconstruct their project, to look at it with fresh eyes. bring somebody who doesn’t know anything about that kind of service to help look at it that way for creativity, but then the last part of it is you really have to define the project in order to sufficiently manage the project. we don’t really have project management skills, and i think it’s because we haven’t needed them. when we can just count our hours, when you don’t count your hours for your amount, you suddenly become quite interested in managing your project to the scope that it should be. and so, you know, defining the project is key, but it doesn’t end there. we have to manage to the scope that we sold and got agreement from the client to pay for. and it’s really easy to do if your project. project is well defined, so i think that’s pretty important. so just to say, pricing in advance is one thing, and it’s great, and it’s a wonderful client experience, and it’s feels good for you, and it makes everything easier, because, like david said, you can send your bills on the predetermined schedule. you don’t have to spend all that time and whip it’s it’s liberating, truly, but you have to protect your scope. when you price up front, you have to be able to safeguard it, because pricing in advance is one thing, but profitability is another. it’s totally doable. and i’d love if david has thoughts to share on, you know, anything, anything you’ve observed about, you know, can we still make money when we give a price up front? are we still making some money when we you know, i think that that’s a really important consideration, because there is a fear factor about committing to a price up front,

 

david yeghiaian 

right? absolutely, yeah, just if i can add on that. i mean, yeah, correct. it is. and i think we still see it, certainly more with our cpas, because they’re not used to it, you know, it’s again, it’s, it’s always the worst case. hey, i had that one client years ago who always called, you know, and again, it couldn’t go, we don’t, we don’t want to do these things for the worst case. we want them for our, you know, our best clients here and, you know, and we had this, i just had somebody come in here yesterday. it’s, it’s, you know, they’re, they’re newer to apm, you know. and she came in and she said, my gosh, she goes, i think we’re losing our butt on this client. but it’s, it hits. what michelle said is, she hasn’t done a good job of managing the project. so there were staff that were investing more hours. there were, you know, and i said, you know what? it’s a learning experience. it’s okay, you know. let’s, let’s figure, let’s talk about what didn’t go well. so the next time you do one, and fortunately, in this person’s instance, she wasn’t saying, my gosh, i don’t ever want to do this again. it was this one didn’t go well. let’s talk about what we need to do better next time, because clearly i didn’t do something well. but yeah, absolutely, i would tell you we definitely we’ve seen realization increase. i would again, and this, probably michelle, is something you see, is we still where we see it low are some of the people who just are incessantly perfectionists, i would say, might be a nice word to say that. and i don’t mean of we’re doing sloppy work. it’s just simply, of, you know, i mean, it goes back to what we talked about earlier, of, if we’re delivering what the client asks for, does it matter? i mean, i do executive coaching, and i do, i might schedule an x number of sessions for an hour, and if the person i’m coaching wants to be done in 30 minutes and has nothing more to talk about, and they know they can still call me. they’re not saying, oh my gosh, you owe me 30 minutes of time. they’re absolutely happy with the 30 minutes that we spent together. so that’s that’s that’s still just a mentality change in a lot of these instances, to get us to the value pricing

 

 

jean caragher

david, over the course of this episode, you have mentioned very different results that kerberos has experienced with advanced pricing methods. you know better. proposals really talking to the client, cross selling more. are there any other results that you’d be willing to share with us, as you’ve been over three years?

 

david yeghiaian 

absolutely. i’ll maybe go in reverse order of interest, i’ll say we absolutely have gotten more client testimonials out of this. and what i mean by that is not that that was our goal, but it’s because apm causes us to have a deeper client relationship, so they’re more apt to talk about our services. so that has certainly helped, just from a marketing a pr standpoint, and again, clients, when we ask our clients to do that, they’re like, absolutely, i would love to, love to do that for you. i would say the number of proposals from year one to year two increase 60% in our firm so that, and this year we’ll probably see, i mean, you’re one of your two, obviously a high percentage. i think we’re probably still going to see a about a 20% increase this year. i mean, we’re only halfway through the year, obviously, and then probably the biggest and most important one that everybody that everybody would want to know is if we compare our average client bill from a non apm client to an apm, there is a 12 100% difference in the in the billing, and that’s 1200% and i’m not a c i’m not a cpa. but i did check my math a few times on that number. it is, it is a it is a very large ao, and that’s one that we have just started talking about more, because obviously we needed a couple years of data to talk about that when, again, going back to we’ve been with our shareholders and our managers, who are still on the fence. about this to simply say, this is look at the difference in the billing. i think we obviously have our wip numbers to go with that, and a realization to demonstrate that. but that one, i would tell you, certainly is open some eyes

 

 

jean caragher

michelle, what a line. that’s an awesome reaction. i just thought it was priceless. okay, so i’ve got one last question. if we could do this just a little bit quickly, if a practitioner could take just one action based upon this pricing discussion we’ve had today, what should it be david? i’ll let you go first.

 

david yeghiaian 

sure if you’re not currently doing it, i, and this is going to sound weird, i would honestly, i would call michelle. i really would get her in, talk to her, and have her start to educate you. if you’re already doing it, i would probably say, make sure you continue to educate your people and train them and listen to listen to their concerns and be able to adapt.

 

michelle golden river 

i it’s funny because, i mean, i know that people are like, i’m doing so many new things every single day, every single year, so i’m gonna say, and you’re gonna laugh at me, but my new action is to stop doing something, um, i would suggest stop thinking. and david alluded to it and overtly said it, stop thinking you need to propose on every single opportunity that comes your way and price low to win them. stop you have more clients than you need, or that you can serve properly. you have tons of work that you don’t even propose on within your current client base today, because you really wish you could help people more than you do because you’re so strapped for time. so please don’t bring one more client into the firm that is not the right kind of client for your firm, that is at the right price, that you feel excited about going the extra mile for them and the right client, as david described, should be willing to collaborate with you to create the package that they’re excited about. and what david described about the test, and we didn’t talk before this, about this discussion today, but the testimonials and that that you said that the apm is causing you to have a deeper relationship. anybody you bring into the firm, henceforth, you want to bring in that kind of relationship, because that kind of relationship is not transactional. that kind of relationship is so much better and so much more for everyone in the firm, and they’re going to be really sticky, and apparently they’re going to buy at a much higher, much higher level, all of your services. so kudos. really, just have to say, kudos to david for leading this effort in his firm. he was the spear head and and really, you know, obviously supportive of the owners of the rest of the owners of the firm, but it takes, it takes somebody sometimes to really drive change than he has. so thanks.

 

jean caragher 

thank you. well, i think that is the perfect space for us to end. and i told you at the beginning that i was excited about recording this episode, and the two of you did not disappoint me, michelle and david, thank you so much again for participating in gear up for growth.

 

posted on october 4, 2024