Pricing - Part One: Principles
Webinar Description
Pricing is all about signaling the economic value you are delivering to your customers. Pricing is one of the most strategic parts of leading a successful service-based business. Join Jason Blumer and Bill.com for a fresh new look at the ecosystem of pricing your clients. You'll be challenged to look at your pricing in a whole new way in this 2-part series.
This series is both strategic as well as very practical so that you can make immediate changes to your business and make pricing a stronger part of your firm's health and growth.
Objectives:
For professional firm owners to understand the full breadth of the ecosystem they are operating within when they price their clients
To learn the key competencies a firm owner needs to price and deliver their services successfully
To learn practical next steps and changes any firm owner can make in deploying their new key competencies to the ecosystem of the pricing in their firms
Speaker(s): Jason Blumer - CEO, Thriveal CPA Network and CEO, Blumer CPAs
Webinar Transcript
Vonne Smith:
Hello, everyone, and welcome to another great webinar from cpaacademy.org. My name is Vonne Smith. I'll be your moderator for today's webinar on Pricing - Part 1: Principles. We are so glad you guys have taken time out of your busy schedule to spend the next hour with us. We have some great information from a fantastic presenter. We really appreciate you all being here with us today. And I also would like to take time to thank our sponsor Bill.com for bringing this great content to our platform. We really appreciate all of their efforts with CPA Academy.
Vonne Smith:
And no, that's not me on the screen. That would be Jason. That is our presenter. I'm just the gal behind him, helping out making sure everything is okay on this end. And so, I'd like to actually to take the time to ask you to help me out. Let me know if things are working. You can say so in the questions panel. You can go and expand that out. Tell me, "Hello." Tell me where you're tuning in from, so I know things are working and I can say hello to you all as well.
Vonne Smith:
So, it looks like we've got... oh, wow. It is going pretty, pretty quickly already. Let me pick some out. That's Terry Haught. I think it's Haught, Indiana. We've got Sacramento, California. We've got Virginia. We've got Miami, Florida. We've got Aurora, Colorado, Washington, DC. Wow. Thank you guys so much for letting me know things are working A-okay. And if it's not, at any time, please go ahead and let me know here in this questions panel if you're having any technical difficulties. I'll do my best to answer you as quickly as possible. There are quite a few of you in here today, so it might take me just a moment, but I'll get to you as quickly as I can.
Vonne Smith:
You can also type in questions for our presenter right here in this question panel, so please feel free to do so at any time. We will try to address as many questions as we can during our sessions. But if we don't get to all of them, I send them over a full report of all the questions, so they can see any items that may have been missed. This session qualifies for one CPE credit. You need to remain logged in for 15 minutes and answer our polling questions that will come up along the way. Make sure you hit that "Submit" button, so it registers for your CPE credit.
Vonne Smith:
You have handouts to download and follow along with in the handouts panel. You can also find handouts in your CPA Academy account. You'll also find a recording of this session and your issued CPE credit in about 24 hours. I believe I have covered everything that I need on my end for housekeeping. So, let's go ahead and bring up Diana Tucci from Bill.com. It's all yours.
Diana Tucci:
Hi, I'm Diana, event marketing manager at Bill.com. I'm pleased to welcome you to today's webinar, Pricing - Part 1: Principles with Jason Blumer.
Diana Tucci:
For those who aren't familiar with Bill.com, we're a leading provider of Cloud-based software that simplifies, digitizes and automates complex back office financial operations for small and midsized businesses. Our customers use AI-enabled platform to manage their end to end workflows, process payments, manage cash flows, and create connections between their businesses and their suppliers and clients. We've partnered with several of the largest US financial institutions, including the majority of the top US accounting firms, and we integrate with leading accounting software providers.
Diana Tucci:
No matter what success looks like to your firm, technology and automation have become a necessary part of the equation, so we created the Automating Success Masterclass Program to introduce you to thought leaders who have adapted and thrived to walk you through what it takes to redefine your business for today's world.
Diana Tucci:
I'm excited to introduce today's speaker, Jason Blumer. Jason founded Thriveal in 2010 as a way for firm owners to connect. Together with his partner, Julie Shipp and their team, they support firms in reaching their goals through live events, monthly podcast, written content, webinars, coaching, consulting and more. The heartbeat of Thriveal is an online community where firm owners gather to ask questions and share ideas. Please join me in welcoming back to the series Jason Blumer, CEO of Thriveal Networks and Blumer CPAs.
Jason Blumer:
Very cool. Thanks, Diana. Thank you guys for having me. We are pretty pumped to do this. Actually, I'm going to switch back to this series just to say the Automating Success Webinar Series, it's been a lot of fun to participate in. So, we're pumped to do that with Bill.com. We've been using Bill.com in our firm for eight or nine years, like a long time. So, it's a bread and butter program that we pumped through almost every one of our client, so we're pumped to do that.
Jason Blumer:
And I love that we get to talk about some great content. So, this is a pricing series of webinars. This one is a principle-based webinar. So, it is where we're going to be talking about theoretical things about pricing. I want to just teach a lot of the ecosystems in the context of pricing that you're going to run through. And then there's going to be a Part 2, which we'll mention later. So, let's kind of mention some of the agenda we're going to be talking about today.
Jason Blumer:
So, in a minute, I'll show you a screen about Klein, Rowe, & Co., so this is a case study firm that Bill.com has come up with, which ties into all of these automating success webinars. And you're going to see a lot of things we teach here how this Klein, Rowe, & Co. didn't do some of those right in terms of their pricing. So, we'll dive into that in a minute.
Jason Blumer:
And then a big part of this is the Ecosystem of Pricing Professional Services, so that's a whole screen where we're going to really teach you the ecosystem of pricing. Because what I want you to understand is, when you're pricing, it really is not just a singular event. There's so much being tied to it, so it's a huge ecosystem to that. And then we'll start getting a little more practical after we hit that ecosystem talking about how to capture and deliver value and how those are related. We're going to talk a lot about value. Value as a misunderstood concept, I think, but it's the key to pricing appropriately, so we'll do that.
Jason Blumer:
We'll get more practical about managing your client's desires. You'll understand why I put desires on there in a minute, and why client's desires are important for you to manage. And then we're going to just have two pages of pricing principles. These will be a lot of summaries of the slides we've gone through, those three preceding slides. There'll be tons of just really principles, just theoretical truths that are true, so you can understand things. So, this is a higher level webinar, meaning, it's just theoretical. So, we're trying to teach the concept of pricing, so just be patient with us.
Jason Blumer:
Part 2 is a very practical approach to pricing where we'll touch on some of the principles that we have here. And I hope you'll have Q&A, I mean, questions for us because I want to leave room for about 10, 12 minutes of questions at the end. So please, as we're going through this, ask a lot of questions. We're going to parse through those and try to answer those on the webinar today.
Jason Blumer:
So, this is the case study, and you can get a copy of this. I would say if you're going through this Automating Success Webinar Series with Bill.com, make sure you read this case study. It's a really great case study. Really, it's pretty long, so it's really well written and it walks through this historical journey of Klein, Rowe, & Co. And especially read it after you go through this webinar, because you're going to be able to identify in the case study firm the problems where they didn't address pricing appropriately. And that's really important to help you see and pick those things out, so you can apply it to your own firm.
Jason Blumer:
And so, I think Diana is going to put this link in the chat, so make sure you click that chat and check out that case study later, especially after we go through this webinar. So, I'm going to have Vonne come back. And let's kick it off with a poll question number one, and then we'll keep going from there.
Vonne Smith:
Okay. Sounds like a plan. Let's go ahead and bring poll number one up on your screens. You should be able to see that now. What is your experience with pricing? This is our first of five polls that we will have throughout this webinar today. (silence) I don't know. It looks like you guys are voting quickly on this first one, so thank you everybody for your responses. Give you guys another 15 seconds to get any last minute votes in.
Vonne Smith:
Okay, we're going to go ahead and get ready to close this poll down in three, two, and one. Closing that down now. We're going to go ahead and share the results, so you can see. And Jason, do you see that on your screen?
Jason Blumer:
Let's see. I'd see those popping up now here. I'm waiting on those to pop up. Give it a minute. All right. I see them.
Vonne Smith:
Perfect.
Jason Blumer:
All right. Okay, so yeah, on this question, we're just trying to figure out where do you all you reside. About 20% are good at pricing, about 20% at the end don't want to do pricing, so that's 40. And then we got about 60% in between and really, you guys are ready to figure out pricing. It's tricky. You're trying it out. So, this webinar and the next one are going to be real important for you guys to come to. So that 60%, if you answered in between there.
Jason Blumer:
Make sure you come to both webinars that's really important. They're going to tie together. And so, I just want to keep saying that. This is a two series. And one of them is principles, one of them is practices, so they go together. And Bill.com and I have done a lot of work to make sure they stand alone in value, but they're really going to be powerful and impactful if you do both of those webinars together, so make sure you do that. So let's dive in.
Jason Blumer:
And here's our first screen on the ecosystem of pricing. And there's my slide, it's a big red dot. So, no, this is going to grow as we go through it, what that dot is, is pricing. And that's what you're doing when we're talking about pricing. Pricing is not billing. So billing, we're not talking about billing. Now, I do plan in the practices, the second webinar, to kind of show this ecosystem in terms of billing, because billing and pricing are completely different. I hope you're going to see that when we're done. So, pricing is in the middle here, because there's things that come before pricing and things that come after and that's why it's an ecosystem. Well, we're going to talk about how that affects your client's journey as they understand that.
Jason Blumer:
So, what comes before pricing? Well, the first thing you do to help somebody be priced is you prepare them to be priced. That's really important, so pricing is a very emotional thing. I'm going to show you why that is in a minute. But what comes before you price somebody is a way to prepare them. We're going to even tell you how we prepare our clients to be priced. It's really important. It's why we've been able to become an advisory firm and sell those $50,000 to $80,000 engagements over a year, it's because of all the preparation it takes to price them.
Jason Blumer:
Now, there's something of course that comes before preparation and you guys, I think you understand what that is. It is the leads. Leads are an important part, and how you filter those, how you bring those into your firm, that really is the initial part of the ecosystem. And so, when we say it's an ecosystem, what we're saying is, these are tied together. So when you're pricing, you're not just doing pricing as a standalone event, you actually, preparation is part of the pricing. And the leads, the ones you choose and filter out through your firms, so that they will go into a stage of preparation is important when you get to the pricing function.
Jason Blumer:
Now, there's also things tied to pricing that people forget and it comes after pricing and so, project management. That is a huge part of managing a firm. And so, what you price is always delivered, when it comes into the firm and that's a really serious point that we want to make. So, delivery is a big part of this ecosystem. So this is part of the ecosystem of pricing. And so, there are things that come before it and there are things that come after it.
Jason Blumer:
Now, project management is a term that a lot of professional firms don't think about or use. We're going to talk a lot more about it in just a minute. But project management is a key, it is a key to delivering the value you promised in a price, so that's a really big deal. So, pricing is it is not just "Give me some money." There is so much tied to it for the human that you serve. The way you deliver the services that you promised in pricing are really important and you know this is a really important order.
Jason Blumer:
And so, billing is really not this order, but in pricing, pricing comes before the work is done. That's a big key component to pricing. And a billing is it's the opposite. So, work is done and then a bill is sent. And this webinar is going to be talking about why that's not the best and most appropriate way to do it. You can run a firm and make money hourly billing, so it's not evil or bad or anything. But pricing is a whole different function, so just make sure you keep that in mind.
Jason Blumer:
Now, one thing I want to point out is that everything before pricing in your client's journey is their desire to work with you and that's a big understanding. So, what basically you're asking a client to do is have faith, right? And that's a really hard part of pricing. And it's something I really want you to understand. A human that walks to a professional firm, especially an advisory firm that makes really large promises and offers a lot of high value, basically that client walks up to you. And they have to have faith basically that you're going to deliver the things you say you're going to deliver, right?
Jason Blumer:
Because look at this ecosystem, they are actually going to exchange money, which is what a price is. A price is money, which signifies value, and they're going to give you that and agree to it before you have even given them anything. And that is a huge deal that you would ask a human to do that. And so, what is right in the middle here is pricing is that transition point that really signals the value that's created and the value captured. Y'all, this is huge.
Jason Blumer:
Basically what we're doing is, the top part of this ecosystem is it is the journey of the firm and this bottom part is the journey of your client. And if you don't recognize what your client is going through and the struggles they're facing, then you won't understand the ecosystem up here. So, as you walk a client through this need for them to have faith, that's why preparation is so important. Because you're saying, "Give me money." Sometimes, let's say an advisor, "Give me an $80,000 contract, agree to pay that to me, before I've even done anything for you."
Jason Blumer:
And so, it's really important to understand that for humans, the value of something they don't have is always higher than the value of something they do have. And so, once they get into your firm, the value changes for them, they may change their view of how they feel about the value. Especially if you don't project manage and deliver the things you promised in an appropriate way, they're going to find out that, "Wait. I'm getting stiffed, right? This price is not a reflection of the value."
Jason Blumer:
Now, the client doesn't know, but the price was a reflection of the value that they wanted before they came to your firm. It may not be the value of what they've received after coming into your firm. Y'all, that's a huge thing and it is a switch clients go through when you go through pricing. Now, we're going to get into a little bit more about how that may look. But let's dive into a poll question two. And this will be the last one that we show the results for. We won't show that on the remaining. So, Vonne, I'll let you do that now.
Vonne Smith:
Let's launch poll number two on your screen, so you should see that. (silence) And because I have a problem with complete silence on a webinar, I have to talk. All right, so we've got about 30 seconds into our poll. And we have somebody coming on, the question saying, "Can I pick all of the above?"
Jason Blumer:
Yeah. Yeah, I know, we run a firm, too and this stuff is hard.
Vonne Smith:
All right. We're getting close to our 60 seconds. So, let's go ahead and count down to close this poll in 3, 2, and 1. And so, you guys can see on your screens.
Jason Blumer:
It's coming up for me now.
Vonne Smith:
All righty. Got it on there. Jason.
Jason Blumer:
It was, okay, it's pulled up. Sorry about that. This thing, it takes a long time to pull those questions up on my screen, so. Okay, so we got just over 70, where you guys are saying in the ecosystem is everything before the pricing, which is difficult, and everything after is not as hard. And I hope to show you that that probably is not fully true. The things that come with project management and delivery are more difficult than we think. So, Vonne, thank you for showing us those things.
Jason Blumer:
So, let's dive into what I'm going to do now is just remember the last... actually, I want to switch to this last ecosystem, because I want you to see it. Now there in the practices part, there are some things, there's whitespaces on this ecosystem that's not filled out yet. And so, in the practices part, Part 2 of this webinar, we're going to fully build out this ecosystem, so there is more to this. I'm going to give you a little hint to it in a minute. But what I want you to see is how this works out, actually, when value comes through, you know what and how these are related.
Jason Blumer:
So, what we have is, we have the same arrows down below, which is the faith and value determined and then the reality and the value proven. There's a little marker point in between those, that's the pricing point. And I kind of want to show you how these work really just with an example. I want to walk through an example. And then basically what this is, is the price of the value. So, you see on the right hand screen, I just have some money on there, maybe that's a monthly price or something like that, but the price of the value, so that. And that phrase, I want to just let you know that that is written in a very particular way.
Jason Blumer:
So, value is, let's just say this real quick, it is an emotional subjective thing to a human. Okay? So, in your client's journey, value determined is something they make up by the way that they feel. Okay? So, there's not a lot of fairness and reality to value. So, I want to say that up front. Now, the price is the practical trigger. It's the transition point, what a price does is it signals the value.
Jason Blumer:
So, a human, a client comes into your firm, they don't even realize what they value, sometimes. The subjective nature of value is just so hard to nail down, you help them as a firm owner when you price your services or the delivery, or the feature promise of something you're going to deliver to them. And I'm going to walk you through an example. So, value has a price, value must have a price, right? Value is so emotionally driven, and it is so subjective you can't fall down on "That's not fair," because everybody has a different perspective on value. What you can do is you can agree to a price.
Jason Blumer:
So, pricing is an economic term you use to signal the fact that pricing is being, that value is being exchanged. I just wanted to say, setting a price to something is extremely important and it is something you do as a firm. It's not something your clients can do. They cannot price themselves. And if you don't get good at a selling process, you will be burdened with your client's poor buying process, right? Their buying process stinks, by the way. It stinks. They have no idea how to buy professional advisory services. They have no clue. You have to educate them and walk them through that process, so you're responsible for pricing your services.
Jason Blumer:
So, let's kind of talk about this. And remember, these colors kind of match our past ecosystem. So, the lead client comes in with a context filter, a value they expect in the services they need you to deliver. So, what is a context filter? So basically, a client comes to you and their boyfriends, girlfriends, brother's mom told them what they paid their accountant, right? So, they're gaining some context as to what they should pay you. Twitter told them what they should pay for a tax return. So, your clients always come with some level of context when they walk into your company.
Jason Blumer:
They understand basically that if you charge them a million dollars for tax return, they know you're crazy, right? So, they have context as to what they should be paying. So just understand, you're in a sense battling with a context filter. So basically, what that is, so let's say this 1000 bucks is what the price the client expects, right? So, they have some context. Now, probably not exactly, but I'm just making this very specific. They have some specific context as to what they think it should be.
Jason Blumer:
Now, we're going into the preparation phase. This is kind of this matches the ecosystem coloring that you saw a minute ago. So, in the first stage of price of preparation, the firm owner is going to creatively solve more of the client's issues in more creative ways than the client ever asked them to solve. And that's really important in pricing. You're always trying to sell them something they need that they don't know to ask you to buy from you. And that's pretty important. Clients have a context filter, but it's wrong. Your client's, their context filter is not fully orbed and it is, it always is inaccurate. It is not fully understood, because they don't understand the inner workings of an advisory firm or an accounting firm or a tax firm. You're the one that assigns the price of what you know they're going to get.
Jason Blumer:
Now, what you can do is in preparation is you can increase the value because they need more than what they know to ask for, right? Because a client asks for their needs to be met, right? That's their client. That's their context filter. They're going to say, "Meet my needs." Well, how do they know their needs? Their filter of a market says, "You need a tax return, you need accounting." These are things they know.
Jason Blumer:
What they don't know is how to fulfill their wants, right? And so, through preparation, you can help that client understand what is it they want. And one way to unlock their wants is to ask them future questions when you first meet them in the preparation and say, "Why can't you perform this on your own? Why do you need us? Why do you need us now? Why now? What will you become in two years?"
Jason Blumer:
These things unlock the brain of that potential human, that client and they start letting the things they want to become. The wants are really what they want you to sell them. Those are the things they want you to put a price on, and they don't know to tell you what they are. So, strong firms are the ones that can walk that client through that. So, what you've done is you've gotten creative. You actually have asked some questions. You're leading a client down the road of what you know is truly valuable. So now, you have a price the firm's offered.
Jason Blumer:
So look, you're trying to add $1,000 of value, that's what you're doing. Again, the client may subjectively not think that's an additional $1,000, but you do, because you're good at pricing. And so, you have put another 1000 bucks on it, so. And again, you don't price based upon the client's budget, right? That's only a piece of information. You're pricing based upon what the true value is.
Jason Blumer:
So, the second part of the preparation is the firm and the client come to a final understanding, now, how do you go from preparation point A to point B is in the middle there, you have to pitch options to them. And we would always say, "Pitch three options. Always pitch three options - a high, middle, low. Lead with a high." That's the fullest weight of the value you think you can offer them. And then you'll kind of come to a collaborative a lot of times fourth option. And that fourth option is where you guys will settle, basically, in this middle area, right? It's the price that's actually agreed to. That is the determiner of the value.
Jason Blumer:
Now, notice what you did as a firm owner, because you're creative, you care about your client, you slow down to prepare them, you walk them through the process of seeing that. The context filter of 1000 bucks is not really what they need, there's more that they want. And so, at this point, you've captured the value, and the client is ready to pay. Now notice, we're right here in this orange area, right? So that is, the client has not yet gotten anything from you. It's only the hope and the promise of some future.
Jason Blumer:
So, let's look and see what happen. Additional value was created by the creativity of the firm trying to create, trying to broaden what you know that client actually needs and then the additional value captured is just over what the client thought. And so, maybe we could say the price of the value at $1000 is really just kind of covering your costs and some basic, a little bit of profit, not much. But as a creative firm owner that price is your job is to do the preparation of going back and forth collaboratively, pitching prices, talking about what is valuable, what is not.
Jason Blumer:
So, right here in the middle, again, everything that human is going through that your pricing is in a belief stage, they're just hoping. They're hoping you're going to be the thing that the last firm was not, right? So, they have this big dream of hope. It's always going to be different when they get into the firm. So, this next part is the delivery. And it is true, right? There is a price to value that you're going to get paid, but subjectively, the value is always going to be different than what you sold them, right?
Jason Blumer:
So here, what we've done is in the middle at preparation, B, we've said, "We're going to price that client at $1,500, maybe per month." The delivery of the value is just under that, right? So basically, what could have happened in delivery? You could have delivered a lower value than was captured, right? You captured 1500 bucks, but let's say you delivered actually $1,200 of value. Now, in this delivery stage, you don't know. That's the problem. You don't know if the delivery of your value is lower than what you captured in the form of a price.
Jason Blumer:
Now, but you know what, your client will feel it, so you have to be careful. They will feel. They can feel the subjective nature of value. And if you walk them through a pricing process, and they go, "Oh, my God. You're all going to be awesome. I'll pay you tons of money," and then when you get into it and you sucked at delivery, and you sucked at project management, which is a huge part to pulling off a big contract of this thing called project management, then they can really get upset because they don't feel that the value is what they originally purchased from you.
Jason Blumer:
So, this is kind of what you're going through and how the capturing that value and delivering it are so key. And what we do in our firm is on the back end that is after the price has been determined and the contract signed, and we never work without a contract. You should never do that. What we teach our team, we teach them to force the realization of value. So, we have just ways to always signal to the client that, "This is very valuable."
Jason Blumer:
So, for example, just a couple ways we may do that is we'll go into meetings, and we always lead with an agenda, that's a valuable thing that we do. That means we're in charge, we lead. A firm that leads is a more valuable firm than one that lets the client lead, so that's just something you can signal your value. And you can lead in a lot of ways. We lead with an agenda. We teach our team to be in control during that meeting.
Jason Blumer:
And at the end of the meeting, a lot of times we'll say, "What are some new things that you didn't know before our meeting," right? We may be presenting financial statements in a financial presentation tool or something like that. And the client will they typically have to list some things that they've learned. But what that's doing is it's forcing upon them that what they need to do is state out loud that they just received the value that we promised and price and that they paid us for. And so, we're always teaching our team to force the realization of value, kind of churn through this contract that we're always valuable.
Jason Blumer:
Some other ways to do that in very large advisory contract is when purchase an advisory contract, they're typically not purchasing services, they're purchasing a relationship. And so, you've got to put yourself into a relationship that's really important. They'll feel the weight of your value if you make them come to a recurring meeting every single week. That's really important. And you place that burden on them, that responsibility, they will be forced to see and feel and hear the weight of the value they've purchased every single Tuesday at 2:00 PM, Eastern. And those are the things that are really important to apply to a lot of your contracts, when you're pricing and especially when you're pricing high.
Jason Blumer:
Okay, so I want to keep showing you this, this desire, this client journey, where there's a point at which they desire things. There's a point at which they have the things and their value is subjective in one part of it than the other. And again, this pricing is the transition point, so what are some practical ways you can do it. And let me just tell you, these are how we do it. So, there is something we do called onboarding and then there's something we do called feedback loops in our firm. These are really two key practical ways that you can bring these two value pieces together that is onboarding is a preparation thing and then feedback loops are an after the fact service type thing we do with our clients.
Jason Blumer:
So, let's walk through practically what these are. So, onboarding, basically, gives the human the opportunity to extend their faith, right? You're asking them to have faith, you want to give them a safe place to do that. Onboarding is this methodology that lets them do it and it has a few steps. So, here's kind of what we have a client go through to prep them.
Jason Blumer:
We say fill out our online form to request permission to work with our firm and you can go to blumercpas.com. And you can find our new client form and you can see some of the questions we ask. Some of them say, "I can afford you. I don't have a lot of broken things in my firm." We make them click buttons that sometimes they're scared to click, right? We're forcing them to believe and have faith in us or don't click the button, which signals they may not have faith in us. So, it tells us something about them, so we're preparing them.
Jason Blumer:
And then what we'll do is we'll send out a what we believe document, which is basically saying, "We believe things in our firm. We want you to assent to the same belief?" Right? We're prepping them with faith to believe in us, so that they can trust us, that's what we need. And then we meet to have an appointment with a value conversation. And this is basically where we just talk about them. We don't talk about accounting tax, payroll, any services.
Jason Blumer:
We say, "Who are you? What do you need? What's the feature that you feel you can do? Why can't you do this on your own? Why do you think we're the ones that can do it?" We're having kind of a philosophical conversation with them about value. "What do you value?" You can't even ask a client, "What do you value?" They don't know the answer to that.
Jason Blumer:
What they'll do is they'll answer in the context filter of, "I can tell you what I need," but they can't tell you truly what they want. And you want to price their wants if you can. Then we always set up a time, it's an additional time to show them three options a high, middle, and low and then we agree to a price and a payment schedule. The way we do it is we ask them to always enter into a 12-month contract where we draft our prices on the first of each month. We don't work with any client unless we're drafting prices.
Jason Blumer:
And then we always have them sign a contract. A contract signifies the scope and that's important, right? Value subjective is very fluffy and when we say, "Here's the price." And when we make a pitch to them and they really like it, they're like, "You're a great firm." We lock it all down in a really tightly written-scoped contract that says, "This is exactly what you're going to get." And you always work from a scope. And then what we do is a kickoff meeting.
Jason Blumer:
And this process could take a month to two months, it just depends. And we kick off. We say, "We're excited. You made it through onboarding there." The client is just so happy at this time. They're like, "This is an amazing firm. We're ready to work with you." But we understand, they're just feeling the happy feelings of the desire to get all the hopes and dreams they think they're going to get.
Jason Blumer:
Now, we could completely screw that up, right? And we don't always get that right. So, we implement something called feedback loops, where we've got to come back and hear that client again, because we've got to figure out if the value perceived, if the value is being perceived, not delivered. So that's important, right? Because when we scope something, we can fully deliver it as a firm and the client can still feel subjectively emotionally that they're not perceiving the value, when in fact we believe they are. There's a difference between perceived and delivered value and you're always dealing with that.
Jason Blumer:
Feedback loops close some of that. You're trying to close perception and delivery of value. And so, here's how we do that. Three months after we work with a client, we set up a meeting. And it is, it's a systematized time. It's at least three months after, maybe sooner, maybe later for you. And the owners will have a meeting and we'll try to connect that perceived and delivered scope, which we mentioned.
Jason Blumer:
And here's three questions we want to ask in this feedback loop. We say, "What did you expect before you came to work with us? What actually happened." Right? We're trying to marry up the differences in the mind of the client. We're leading them through that. "And what can we do now to enhance your value?" And a lot of times the feedback loop might be, "You guys are killing it." And we're like, "Cool." All right, our delivery and perception are accurate, that's really cool.
Jason Blumer:
We get to keep earning our money and after this meeting, this feedback loop meeting, this client, they don't get to complain, because they just said everything's going well. And then what we do is we let the team know the outcome of the meeting, and how they continue to force the realization of value. Like my partner, and I might say, "Hey, there's one part they're really struggling with. They thought they were going to get this and they're not, and we think we are giving it to them."
Jason Blumer:
So, we need to force a realization of value, a little bit more than the metrics we told them, they're going to start seeing. If we gave that to them and they're not feeling it, and they forgot about it, they not feeling the weight of it. So, we tell the team, "That's an area where you got to force more realization. Be open about having that client speak back to you that it is valuable for them." And then we tweak any processes or add and subtract services.
Jason Blumer:
And sometimes we can reprice the contract at this time. We can add more services after the feedback loop meeting. But this is really important because if you price, especially if you price high, the higher you price, the more value the client is perceiving, right? Whatever their subjective perception is and so, you've got to make sure your delivery is on point. And so, that feedback loop has to come back and check back in with that client and go, "Subjectively, do you still believe you're getting the value we promised you?" So, that's a really important point.
Jason Blumer:
So, before we get to another poll question, I just want to throw back up this part of the ecosystem before we get into some of the just written principles. And I know I'm talking fast, but there's so much stuff in here, I want to get to questions, so make sure you ask some questions. So, before we do that, this is the ecosystem in a format, a written format. And so, I've given you a little peek to Part 2 of the webinar, some of the other key competencies and practical applications that you haven't seen on the ecosystem yet, so I grade those out, so I could help you perceive the value in Part 2. So, I want to make sure you come.
Jason Blumer:
But the pricing principles we're about to go through now are going to follow these main principal components, these five things we went through, and then the value determinations of faith and reality. We're going to write these down, so you'll want to take screenshots of these next couple of screens or we'll give you the deck when we're done. So, let's hit a poll question three, and then we'll keep trucking.
Vonne Smith:
Got my microphone on. Yes. The poll is up on your screen. Now, this is poll number three. Does your firm provide, bill, pay for your clients? We would like to know. (silence) And this is again, poll number three. We have two more after this for credit. (silence) And Jason, we did have a few people in the questions asking about your particular URL, so if you don't mind repeating that for everybody, I think, I would appreciate that.
Jason Blumer:
Yeah, for sure.
Vonne Smith:
Well, I'll go ahead and close this poll down now in 3, 2, and 1. Thank you, everyone. Back to you, Jason.
Jason Blumer:
Thank you, Vonne. So, there's a couple ways you can find the things we do. So, go to Blumer CPAs and that's www.blumercpas.com. That's the firm that my partner and I have been running for 20 years. And then Thriveal is our CPA community. We're going to talk about that in a minute, too. And that's T, that's the word thrive, T-H-R-I-V-E and then add A-L.com on the end. And that's where we teach a lot. We teach groups and a lot of live events through Thriveal, so we'd love to have you join our community, too. So, we'll talk about that in a minute.
Jason Blumer:
All right. Pricing Principles, so let's dive into this and this is just a list of a bunch of principles we've already learned about. So, all clients come with a context filter by which they analyze your firm's services and prices. So just understand that any human coming to you, they are pre-prepared in themselves and by their own market to understand what they think they need and what they think they should be purchasing from you. And clients are wrong. They do not know what they should be, excuse me.
Jason Blumer:
They do not know what they should be paying for. You're the one that's meant to help them do that and you do that through education, basically. So, leads come with a perceived expectation of what to pay. And they will apply to you what they understood from their friends or last firm their market, so just understand, you have a context filter, you've got to surmount. They have some context to who you are. And so and again, pricing, this is a tool where you're not trying to be the lowest build firm, right? If you want to play price games, you can be as low as you want, right? And you don't have to do any of this ecosystem crap. Don't even worry about it if you just don't care.
Jason Blumer:
But if you're trying to accurately identify value and price it, we're telling you in the ecosystem, there's more work you have to do. And it's fun work, it's good work. It's actually really good work for your client to give them the comfort, and the clarity of preparing them enough to receive and accept the price. You just have to understand they come with a need and a context to be educated. And that's something you have to commit to them.
Jason Blumer:
And so your marketing may have done its work to attract the leads, but you still have the power to influence that lead. Correct misconception, so then again, I keep mentioning education, that's a huge part of pricing. You slow down. Take the time to re-correct their misconceptions, right? To influence some of their emotional beliefs about pricing. Pricing is very intimate.
Jason Blumer:
You can actually go to jasonblumer.com and you can find there's a link to some E-books I wrote. One of them is actually, some of our onboarding process, right? And it's called the Intimacy of Pricing Your Client. So, you can even go buy that E-book. I think it's 15 bucks or something like that. And that's a pretty long book that walks through the process that we actually take people through in our own firm. So, it's just a really important intimate thing that you do with a client.
Jason Blumer:
Pricing, not billing means you have to prepare a client to be priced, that you can't just like haul them into your firm and just throw prices at them, especially if it's a high price. The higher the price, the higher the feeling, the subjective nature of the value. And so, you got to prove it and the higher the price you go, you got to give them that time to understand and be prepared. That's really important for them to educate, for them to trust you as educate them
Jason Blumer:
Education means that's the means by which you influence and convince and you need a place to do that. So, we slow them down and we say, "Here's a belief statement." We use the word belief, important on purpose, because we want them to assent to the beliefs that we have or we want them to assent to the beliefs we don't have. We want them to go, "That document is stupid. We don't want to read that kind of crap. We've got a tax notice that we're about to get. We're scared of our tax notice." We're like, "We're not your firm."} You got to go through a process of education and care with us. We're not going to just throw stuff into our firm.
Jason Blumer:
That's how you can do billing, not that everybody does it that way. But billing lets you just pitch work into the firm with no preparation because you can bill it later, right? You don't have. So, what pricing does is it puts up walls. There are barriers to get into a firm. You got to believe things. Talk about things. Educate. And some of this may sound really slow, but it doesn't have to be, right? If you're selling tax returns, corporate returns for 1000, 1500 bucks or whatever, you can just have a quicker onboarding process, maybe one or two steps. It's just important to stop and have a space where you can do that education, that's important.
Jason Blumer:
And pricing is an art, right? It is the art of assigning a dollar amount to a perceived subjective value. Who knows what the heck that is right? Only the firm can price and your price is going to be different than the next firm's price. Now, I will say this, a high price, it'd just go for a high price, that's one way to differentiate your firm. So, clients can come in and say to us, "Why are you asking us to pay monthly for what you're going to sell us for the thing we paid annually for in the last firm?"
Jason Blumer:
And we can always say, "Well, you're leaving the last firm and talking to us, so there's some reason that you don't like what you've been getting. It may be that you didn't know the price for what you've wanted," right? So, and clients don't know that stuff, right? They just think the last firm is crap. What the last firm didn't do is signal a price to them to help them give them what they truly want. We're a firm that wants to try to do that. And so, it doesn't mean the client is going to like it. We understand that.
Jason Blumer:
So, let's continue with our pricing principles. Since clients are agreeing to purchase your service before the value is proven, you're asking them to have faith in your firm. We talked about that. And you can influence faith and offset that context filter, right? You can offset it by maintaining strong, consistent brands and website. That's important. You want to have a strong brand and website that signals, "Hey, you're walking into a firm that has some weighty value to it." That's part of the preparation of influencing the faith or the belief you want that person to have, so that they can give you money before. Before they've ever received a service.
Jason Blumer:
Sometimes, when we do a price, we'll say, "Hey, this is 2500 bucks a month." We'll say, "Or you can pay the whole thing up front now and we'll knock off a little bit of money." And they're like, "Okay." And it's rare, but don't pay the whole thing up front. Because the faith has been so strong, they haven't gotten anything from us yet. They've just gone through a process where they're beginning to trust us, so.
Jason Blumer:
And project management, that's the act of managing the scope of your services, which is a huge part to pricing. And I think a lot of people misunderstand that. Scoping is where it's a detailed written understanding and game plan of what you're going to do for the money they're going to pay you. And I think a lot of times people don't understand exactly how hard it is to manage the scope, manage the processes, manage the team.
Jason Blumer:
We actually carve that out to its own role, so for a team of eight to 10, you could start to consider having your own project manager. And we're going to talk more about that in Part 2, the practical. But a project manager it is solidifying the delivery of the value promised in the pricing before the price was ever given. And that's the role you can do things like that project manager can do contracting, the workflow, practice management system, the process maintenance, but even teaching the team to be efficient, because in bigger firms, eight to 15, 10 to 15 people, you're going to find teams become very inefficient, which does affect profitability of a firm, so that's really important.
Jason Blumer:
And this is the key to matching up the value delivered with what was promised and captured. And the delivery of the services, so the project manager is helping people deliver, then the technical team is in the delivery and that is the proof of the value. So, teaching those technical team to actually deliver those services is really key. And since that proof of value is subjective and is a feeling, you have to remind the client and force the realization of value.
Jason Blumer:
And delivery is meant to be an exact match to scope, right? So again, you prepare a client, you price them, you scope it in a contract, whatever you deliver is not going to be identical to what you promised, right? It's just never emotionally going to be accurate. There's a perception of value and there's an actuality to what's being delivered. And the client and you, as the firm, may have different beliefs on that, but it's meant to scope. So make sure you're not delivering more than was scoped, right? That's serving above and beyond and that's actually foolish.
Jason Blumer:
You're meant to create a scope for price and deliver that scope that scope exactly. It doesn't always work that way. Sometimes, we'll go above and beyond, but if you do it consistently, it will make you unprofitable, basically, is what that does. And if you offer less than scoped then you're under serving that client and you do begin to erode your trust with that client, so you can't do that either. So, make sure you know what your scope is, never operate without a written contract, and then serve basically to that contract. Always come back to the contract. If the client complains, it's like, "All right. Did we agree to that? Did we not fulfill it or are you just wanting to feel something different than what we actually did do?"
Jason Blumer:
So, let's do poll, question number four, and we're headed towards Q&A, too.
Vonne Smith:
Okay, we have poll number four on your screens now. Does your firm plan to offer client advisory services? Like Jason said, we'll have one more poll after this. I do have to say Jason, you had a shout out in the comments, "You got to kind of Matthew McConaughey vibe going on."
Jason Blumer:
Come on. Listen, I'm down with that. I don't believe that. That's a lie, but okay, I'll take it. I'll take it.
Vonne Smith:
I was like, "Yeah. I feel it, too." There you go.
Jason Blumer:
Come on, it's my flower shirt. It's my flower shirt. It's got to be.
Vonne Smith:
I do like that shirt. So, all right, I'm going to give you guys about another five seconds. And then we'll go ahead and close this poll down in 3, 2, and 1. All right, all right, all right. Back to you.
Jason Blumer:
Okay, very cool. All right. Now, one thing we want to mention, if you're ready to implement pricing strategy in your firm, we want to let you know that my partner and I do teach an Incubator Program. It's a three-day program and it's a confidential program. And what we've done is we've held just a few seats open for Bill.com people. And this thing fills up all the time. We do two incubator sessions per year, and it is very transformative. It's like an MBA. It is a nine- to 10-hour event per day, so you are worn out when you come out of this.
Jason Blumer:
We run this out of a virtual studio. We have producers that run this, and we put you through the wringer and run you through eight modules. And we do strategy pricing. The pricing module is like I think, I don't know. If Julie was here, I would ask her, but it's like four to six hours. Case study building and we go over it. And of course, there's only a handful of people that can come to the Incubator, so Julie and I are spending time with everybody. We're threw in a lot of Q&A. So, a lot of fun to do this Incubator, everybody's pretty worn out when we do it.
Jason Blumer:
So, come to thriveal.com/incubator if you want to go. You have to register fast. It's like, it's kind of full already, actually. We've carved out a couple of seats for Bill.com. So, I think we could put four more in there, probably. But you got to register by October 12th. So, let's do a poll question and then we're going to do freaking Q&A. That'd be fun.
Vonne Smith:
All right. We've got our fifth and final poll on your screens now. I'd like to know if you'd like to be contacted about Thriveal's Incubator and/or the survival education programs, educational programs. Can we get, yes, it's about another 20 or so seconds on your poll. We appreciate you answering. (silence) We're going to get to about another five seconds. All right. Close the poll down in 3, 2, and 1. Okay, back to you all.
Jason Blumer:
we're back. Okay, before we wrap this up. I just want to remind you guys, there's always another Automating Success Webinar coming up in the series. And next is Lee Fredrickson, Marketing Your Reimagined Firm, How to Sell Clients on your Value. So that's going to have a lot to do with things we talked about now. I'm not sure if Diana or the team from Bill.com wants to mention that webinar or if Diana will send out a link to that webinar to register.
Diana Tucci:
Yeah. We will share a link out. And we will help walk you through how to position and present new values and how to overcome some of the marketing challenges that arises in the different stages of the sales and marketing funnel. So, this is also going to be a great webinar, so please be sure to register for it.
Jason Blumer:
Very cool. Okay, so let's do some Q&A. The Bill.com team, if there's some questions, maybe we can tackle a few. I know it's later than I thought, but I want to spend some time on Q&A if we can. So, is that cool, Diana? Is this a good time for Q&A?
Diana Tucci:
Yes, of course. Thanks, Jason. Yes, we have a few great questions for you. The first is, "Many of my clients have no idea what their needs really are. How do I help guide them so that we can provide the right level of service and the right pricing?"
Jason Blumer:
Yeah, yeah, that's a good one. So, we do that in that value conversation. Part of the onboarding steps, we go through a value conversation is after they fill out a form, we send them a what we believe document. The value conversation is where we really start probing that client's brain. And we ask them questions about the future if we can. Those are the best questions to really have a client tell you what they want to become.
Jason Blumer:
So, we'll say what do you want to become in two years or why have you not been able to achieve that on your own yet or why do you think we're the partner that you should be choosing to try to become that thing in the future? Asking them these questions may even annoy some of your clients. They're like, "I want you to just do my tax return." And then you get to say, "Well, you're not my client." And so, if a client won't always let you walk them down the road of probing for the things that they value, but you do have to have a conversation to figure out what they want. So, it's in a value conversation that we have.
Diana Tucci:
Awesome. Thanks, Jason. Next one, what happens when you have a client that does not give you the information when you need it? So, you have to keep going back and familiarizing yourself with where you left off. Therefore, take more time to deliver.
Jason Blumer:
Yeah, yeah, I think you saw the ecosystem. A lot of delivery problems are handled early in the preparation stages, right? So, what you'll find is that's probably a wrong client fit for your firm. If you're a firm that wants to provide high value quickly, do your work quickly and they won't participate. The preparation phase is where you will have found that out. And even the leads phase, once you filter them out of a lead, you're going to find out who wants to participate in the value that you want to deliver. And so we always try to play some kind of requirement on a client, just to see if they'll do what we say.
Jason Blumer:
And so, fill out a form or respond and tell us you believe what we believe. We're trying to give them things to do and if they reply and do what we say, we know, they're going to be a collaborative participatory client. And then if we start feeling they won't, or they're pushing back, we're feeling they're a wrong client. So, if you have problems in delivery, that's probably really a wrong client fit. And you could remove that client or replace them with another client or you could just put up with it and raise the price if you want. That's hard.
Diana Tucci:
All right. Next one. I am not sure how an agenda forces a client to tell you what they have learned. Do you have an example of an agenda that does this? And is the agenda set to the client prior to the meeting?
Jason Blumer:
Yeah, those are great questions. So, the agenda may not, it's just a point on the agenda. So basically, what an agenda does is, if we have a higher level valued meeting, we'll require the client to participate in a weekly meeting. And we always bring the agenda. And typically, our team will always share their screen. And so, what we're doing is we're saying we're in control of Zoom. We share our screen. The agenda you're looking at is our agenda. It's just making nonverbal communication that we're the leader of this relationship, not you, client. We're the provider of the services.
Jason Blumer:
And so, the agenda is just a point. It might be talking about cash flow, bill pay, and then a financial presentation. But we may just end, basically, the last point on the agenda may be, "Hey, is there anything you learned today? When we went through your financials, what's one thing that you know now better that you didn't know before you came into this meeting?" And it can be a scary question to ask, right? Because if the client says nothing, then you feel like a fool. But a lot of times, they will feel the weight of having to say, "Well, I do know now that what you said this time that really, stuck with me."
Jason Blumer:
And so, it's just really one of the last points of the agenda is just a reminder that we always ask them, "What value are you getting out of our services?" And we don't ask it that way. Because a client can't ask that question. You have to ask a question they can't answer, which are more specific questions. So, if you want to pull value out of a client or force the realization of value, you want to use very specific questions to do that. What one thing did you learn that you didn't know before you came into the meeting really does a lot to force, the weight of that value.
Diana Tucci:
Awesome. Thanks. And we have a few more questions. I think we're getting close on time, so we'll try to address the questions we can, but maybe-
Jason Blumer:
Sure, let's do a couple more, maybe, I think.
Diana Tucci:
All right. Are there any other pricing methods besides project based and hourly rate pricing?
Jason Blumer:
Yeah, so value pricing, that is value pricing is that is the prices that you set before you begin any work. Hourly billing is billing, which is based upon hours that passed. Time that passes that you send a bill after the work is complete. And there are things that are similar to those two, like fixed pricing is similar. Fixed pricing is going to be it's not value pricing because value pricing is always is, it's firm to one client, right? So, you're always pricing a human.
Jason Blumer:
Fixed pricing is pricing the world. It's saying the price is set, so it is a price. And it's a price because offered before the service is delivered, but it's fixed, in that it applies to every single client that comes into your firm. Whereas value pricing is, there are no prices. You can go to our website and there are no prices on our website anywhere. And that's a signaling that prices don't exist except between the firm and one client.
Jason Blumer:
Fixed pricing is a faster model to price and is sometimes more appropriate to help you scale more quickly. Fixed pricing is really good for non-advisory type services and value pricing is good to price for advisory type related services. So, there's not a lot of forms. Project pricing is just a type of pricing, but you can still value price a project or you can hourly bill, a project. A project is just a link of a thing you're doing for a client. When we price a relationship, we're saying come into a relationship for a 12-month period is basically what we do. So, I hope that helps.
Diana Tucci:
Yes, that does. And then, do you want to take one more question?
Jason Blumer:
Yeah, let's do one more. That'd be great.
Diana Tucci:
Okay. How do we move clients from hourly to value pricing? Is there a good process?
Jason Blumer:
Oh, yeah, it's a long process. So when you value price, if you want to do that, you always value price new clients. Those are easier to price than current clients, because your current clients are already trained to be hourly build. When we did it, it took us a couple of years, so we basically started saying, "Hey, this upcoming tax season or next year, you're all going to have to pick a package. We're going to have to roll you into a package." And some clients don't want that. And then you let some opt in and some don't opt in. And then the end of the next year, you say, it's going to be a requirement. "Now next year, every client is going to be forced into a package."
Jason Blumer:
And what's going to happen is you're going to lose clients along the way if you truly want to transition fully to an hourly billing firm to a value pricing firm. So just know that's going to be slow and you're going to lose clients, which means you're going to lose some money, too. So, you may want to, what we'd like to do, excuse me, is to start with clients that you trust and that trust you. Start with a handful five to six and say, "Hey, we've been working through this value pricing thing. We think it's going to allow us to commit a lot more value to you, so we want to talk to you about it."
Jason Blumer:
And then walk that client, if they say, "That sounds good. You've always billed me by the hour. Let's try to go down this route of pricing me upfront." And you can say, "It's a way for us to explore more of what you want. And it's a way we can really allocate our resources more to really change your life and transform you a lot more." And so, just try it with five or six clients that trust you, and just test your skills on how it goes and then just kind of follow, some of the onboarding processes that we listed in the webinar deck. So, I hope that helps.
Jason Blumer:
Okay, Diana. And I know Vonne, you probably have some last minute things to say, but everybody's probably splitting now. So, anything else?
Vonne Smith:
All right. Well, actually, I just want to say thank you so much. We really appreciate all of your time and your expertise that you're sharing with our audiences. Thank you so much, Jason. And of course, thank you to Bill.com, of course, for sponsoring. We're very happy to have all of you with us. And thank you out there. I can see some thank yous coming through on that questions panel.
Jason Blumer:
Thank you.
Vonne Smith:
So, if you don't mind, jump on over to your inbox. We have an evaluation form waiting there for you to go ahead and put in these great comments that are coming through in that form because, of course, we welcome and appreciate all your feedback. We'll be processing your CPE credit. We'll get that available to you in your CPA Academy account in 24 hours with the handouts and the recording.
Vonne Smith:
And I think, that's it. So, we're going to say thank you for attending. Check out our website for our schedule because I hope to see y'all on some future webinars very soon. So, all right, bye, everyone.
Jason Blumer:
Okay.
Vonne Smith:
I'm waving, but you guys can't see me, but.
Jason Blumer:
I'll wave. I'll wave.
Vonne Smith:
I'll see you guys next time. Bye.
Jason Blumer:
Bye, guys. See you. Bye.
