I'm not sure it will be an academic question. I've been hearing for decades how compliance work will be free, but it hasn't happened. We know firms that charge an enormous price premium for compliance, partly by bundling other things with it, such as unlimited access (phone calls and meetings), a service/price guarantee, tax planning, payment terms, etc. We see minimum prices as high as $5,000 for compliance work.

This is driven by purpose and strategy, not just a pricing strategy. A firm is defined by the customers it doesn't have. It's up to you to decide what type and at what price you want those customers. I don't think the answer lies in systemization. I think the answer lies in adding more value.

Apologies for not keeping up my end of the conversation – I did not know it was going on, as I had neglected to add accmanpro.com to my safe senders list !

We did consider a completely separate brand for the commodity work but decided against it from a marketing point of view. I think we all have examples of a "Coach" customer referring "1st Class" customers (and vice versa). Plus, of course, pretending to be two businesses when in reality you are one is a recipe for confusion in the marketplace.

Ultimately, I believe that the argument will become academic – because compliance work will be a free (or effectively free) service within 10 (5?) years. We will continue to do the work in order to capture the profitable financial services and tax planning work in the future.

The reality seems to me that customers paying to be in 1st Class actually want to take up 2 seats (i.e. are much more demanding of "partner" time) and are therefore no more valuable than 2 Coach customers.

So the challenge will be to systemise all compliance work, regardless of the fare being paid by the customer, and then ensure that the extras (tax and financial planning) are exceptionally well sold by the "Trolley Dollies".

As I said, I went through this and it was tough.

Point is, human nature is what it is, needing very careful management.

Yes, you are correct. This is a long-term strategy, and you might even lose money in the first year or so. But profits come from risk, not making a return on every single thing.

Nevertheless, there are other strategies to do what he wants, simply by offering a menu pricing options to customers and let them select where in the plane they want to sit.

Great discussion!

There's really no secret formula to this (unless Dennis knows something I don't, which he might).

I can share with you one strategy to "fence" different classes of customers. Set up a low-end firm, with a lower minimum price and service offerings. Ideally, this firm would be in a separate location, different name, etc.

The higher-end firm can then specialize in customers who want and need more services than the basics. This is just one way of achieving what you are asking. There are more.

At our firm we are wrestling with how to split our offering into two internally ring-fenced operations – one for the commodity stuff and one for the customers who want the high value-added service. For example we are now converting some customers from £1,500 per for year end accounts and tax to £1,500 per month for a full service.

We want to ring-fence the £1,500 per year guys into a well-oiled "sausage machine". Can you let us in on the secrets of your sole practitioner's machine?

Adrian

You are correct, scoping (and project management) are incredibly important. And I would argue those skills are critical no matter how you price, even by the hour.

For a blog post on scoping projects, see:
http://www.verasage.com/index.php/community/comme…

For alternative Key Predictive Indicators rather than hours, see my book, Measure What Matters to Customers: Using Key Predictive Indicators:
http://www.wiley.com/WileyCDA/WileyTitle/productC…

For a shorter version of the book above, which you can download for free in pdf, go here:
http://www.verasage.com/downloads/Trashing%20the%…

There are also many other posts on getting rid of timesheets on our blog and in our Trailblazers section at http://www.verasage.com. You can search "timesheets" and get even more posts and examples.

I hope that helps answer your questions.
Regards,
Ron Baker, Founder
VeraSage Institute

Of course, with a professional offering, it's interesting to consider the scenario of, "we will offer you this service, assuming your needs are XYZ."

Suddenly ASDF and PQRS creep into the scope. Pretty important to keep the scope well defined when you're going to do that.

And that's where the pricing fun no doubt creeps in, when "XYZ" and "ASDF" are standard services, but "PQRS" is a freakish new thing that's only dealt with rarely. What would you do? Fall back to some kind of hours-based model? Try to calculate the 'value' of dealing with the non-standard freakish scenario?

I know there are many possibilities, but I'd be curious to hear your ideas on suggestions of what are good alternative metrics other than just hours.