don’t just anticipate questions, plan for them.
by august j. aquila
price it right
once your partners are sold on a new pricing philosophy, you will need to communicate it to your clients.
more: how to get partners to accept a new pricing philosophy | preparing to change pricing philosophy | ethical issues in pricing | how utility and value affect pricing | understanding the product pricing life cycle
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there are five ways to get clients to understand and accept the new pricing methods. each of these methods is discussed below.
- believe that clients will accept a new pricing method. if you don’t believe it, you can be sure that your clients won’t either. it is not unusual for physicians, stock brokers and attorneys to change billing methods. actually, most of your clients will understand what you are doing if you clearly communicate with them. there is a truism that good client relationships are based on trust. the clients trust that you will do the right thing for them. if they lack this trust, no matter what pricing method you employ, you will have problems with your client.
- start new clients on the new method first. realize that it will be easier to start a new pricing method with new clients because you can set their pricing expectations right from the start. many of your existing clients have their pricing expectations set in stone. the important thing to remember is that you are starting a process. it does not have to be completed in a day or a week.
- take advantage of the moment of truth. the current way that we communicate with clients in general and our existing pricing policies, which frequently surprise clients, often hurts the client-advisor relationship. jan carlzon, the former president of scandinavian airlines, coined the term “moment of truth.” this term has come to be used to define that moment when a client has some form of contact with the service provider or some aspect of the company and develops an impression of the quality of the company’s service. whenever these moments of truth take place within the accounting profession, one of three things can happen to the client-accountant relationship:
- it can be a positive experience.
- it can be a negative experience.
- it can be a neutral experience.
too often, the moment when the bill is sent or presented to the client turns out to be negative. the client may be surprised by the amount of the bill or may feel that the amount has no relation to the value he received. be aware of “moments of truth” and learn how to use them so that they become positive encounters rather than negative ones.
- communicate, communicate and communicate some more with clients. you can never overcommunicate with clients. here are some basic steps you will need to consider in order to ensure that the new pricing process is understood and accepted by new and existing clients. all of these methods require improved and effective communication with your clients and your staff.
- put it in writing. from the start, inform clients in writing what your pricing method will be for the particular engagement and then put it in writing. many firms that use a fixed-fee approach often have their fees in a billing philosophy trifold brochure that outlines their charges and how they determine them. the pricing philosophy can discuss fees, out-of-pocket expenses and other charges, direct service costs and terms of payment and interest changes on late payments. once the prospect becomes a client or if you are entering a new engagement with an existing client, the billing arrangement should be clearly stated in the engagement letter.
if you decide to make a change in your pricing methods, a letter to your existing clients should go out informing them of the changes that will be made. depending on the size of the firm, this letter can be sent from the managing partner or each individual engagement partner. you should encourage the client to let you know if they have any concerns with the new billing method. when clients are dissatisfied with something that we do, most of them just walk away rather than complain. if you give them a vehicle to voice their concerns you will handle this moment of truth to your best benefit. the letter should also inform the client of the benefits that they will receive under this new method such as improved service or lower fees for some services.
- have face-to-face meetings. be prepared to have several one-on-one conversations with your clients, especially your more important clients. in face-to-face discussions with a client, you may want to suggest to the client that he or she perform additional tasks in order to reduce costs. the client may well decline to take on these added responsibilities, but at least you have given them the opportunity to make the decision. they will certainly appreciate this.
- train your professional and support staff in the new philosophy. perhaps the worst thing that could happen would be that a client calls to get further explanation about your new pricing methods and the person who answers the phone does not know the answers. you will want to spend time educating your staff about the pricing changes. let them come up with questions or objections that they think clients will raise. make sure that everyone provides clients with the same answer to the questions and objections. also make sure that they are totally comfortable with your new approach. remember, they too have to believe in it.
- reassure your clients that your pricing policy is fair. at the end of the day, the fee charged has to be fair for you and also to your client. if either party feels cheated, it will not bode for a long-term, successful relationship. it’s important to have ongoing communication with your clients so that you understand how they value certain work and that they know you are a highly skilled professional who adds value to their business.