Business Strategy | Leadership / Management | Organizational Development

The value debate: Ask and you shall receive

You've got a problem, CPAs.

It's about value, and it can be boiled down to six words:

You don't know what you're worth.

Before you start arguing, let me clue you in on something: Hourly rates don't count. That's what you think you're worth. It's not what your clients are willing to pay. Those numbers are often wildly divergent -- and not in your favor.

Bottom line: You're leaving money -- lots of money -- on the table by not knowing the true value of your services. And Ed Kless says there's only one way to find out:

Ask your clients.

"Our biggest challenge is that we're 'solutionists' -- we love finding solutions without considering what they're worth," said Kless, senior director of partner development and strategy at Sage.

And without knowing what they're worth, Kless says, those solutions are meaningless.

Here's how a typical transaction occurs:

  • Client: "I need this. Can you do it?"
  • CPA: "Of course."

That's prescription before diagnosis, Kless says, and it just doesn't work. Here's why: We don't know why the client wants that service.

Ask a few probing questions, though, and you'll find the answer. Along the way, you might discover that the client doesn't actually need what he or she asked for -- that they need something else instead. Finding the real nature of the problem helps reveal the true value of your services, and that allows you to charge accordingly.

Here's an example, lifted verbatim from Kless's Sage Summit slides:

Client asks: "Our CIO has mandated that we improve our information flow in our ERP / CRM / HR system and we are looking for some help."

CPA responds: "We would glad to offer our assistance. However, at this point it would presumptive of me to offer a solution. Can you tell me what your CIO's definition of 'improved flow of information' is?"

See what happened there? The CPA didn't just jump in with a ready-made solution. Instead, a few well-placed questions reveal the true nature of the client's problem -- and the value that the client places on a real solution.

Doing this stuff isn't easy. It requires us to resist the temptation to immediately solve problems, and for many CPAs, that's a hard thing to do.

It's also absolutely necessary.

"Being solution providers is an expensive habit," Kless said. "It leads to lots of value being given away."

Put another way, Kless says: "You don't get to the Presidential Suite by working for free."

And if you think this is leading to yet another discussion of value pricing vs. billable hours … well, you're right. As Michelle Golden said in a separate Sage Summit session, "If you're not value-pricing, you're charging peanuts for services your clients find valuable."

Moreover, Kless added, billable hours are woefully inefficient. The more efficient CPAs become, the fewer hours they bill -- and the less money they make.

A better solution, he says, is to charge by the value you provide, not by the number of hours you work. It's a true service to your clients -- and to yourself.

Which side of the billing debate do you fall on?

While you're thinking, check out these related programs from the Business Learning Institute:


Bill Sheridan