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Bill What You're Worth, 3rd Edition

Bill What You're Worth, 3rd Edition

  • Author:
  • Publisher: John Wiley & Sons_
  • ISBN: 9781941651193
  • Published In: November 2016
  • Format: Paperback , 240 pages
  • Jurisdiction: U.S. ? Disclaimer:
    Countri(es) stated herein are used as reference only
HKD 750.00
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  • Description 
  • Contents 
  • Author 
  • Details

    Pricing your services and billing for them is one of the most important skills of the successful accountant. Unfortunately, formal education and training courses seldom discuss pricing or billing and firms rarely discuss pricing in an organized manner, making it all too easy to adopt bad habits and policies that impede profitability.

    David Cottle’s Bill What You’re Worth walks you through the most common pricing methods and methodologies, teaches you how to discuss pricing with clients, and offers advice on how to motivate employees to bill what they’re worth.

    This edition includes a new discussion on gauging client satisfaction and the key performance indicators to monitor to ensure you are offering top-notch client service.

    Earn what you’re really worth! Learn how to demonstrate your true value to clients.

    By following the advice in this book you will be able to:

    • Use tools to implement specific value pricing scenarios
    • Charge more for those engagements that justify a higher price
    • Avoid price disputes and handle misunderstandings in an agreeable manner
    • Upgrade your marginal clients’ profitability
    • Raise your standard chargeout rates if needed
  • Introduction 1

    Once Upon a Time in Ukraine 2

    Why Some Accountants Earn Much More Than Others 4

    Three Top Reasons Accountants Do Not Earn Enough 5

    A Word About Terminology 5

    Chapter 1: Pricing Methods in the CPA Profession 7

    Types of CPA Firm Services 8

    Specialist/Niche Services 8

    Extension and Advisory Services 9

    Compliance Services 9

    Expert 9

    Adviser 10

    Cost-Driven Prices Versus Value-Driven Prices 10

    Pricing and Risk 11

    Using Chargeout Rates as a Benchmark 12

    Investment Versus Value 13

    Chapter 2: How Much Do You Really Earn? 17

    The Problem with Partnership GAAP 22

    The Ratio of Employees to Owners 22

    The Salaries of Owners 23

    Interest on Owners’ Capital 23

    Pricing Philosophy 24

    The Financial Analyst’s Dilemma: GAAP Versus Economics 24

    Step 1: Convert Owner’s Salaries to Fair Market Value 24

    Step 2: Convert Owner’s Capital to Financial Equivalents 29

    Step 3: Convert Net Sales to Standard Revenue 30

    Analyze the Profile Firm 31

    Analyze Firm Overhead 33

    Analyze Firm Write-Downs 33

    The Key to Improving Profitability 34

    When is the Top Line Not the Top Line? 36

    Unavailable Time 37

    Time Not Recorded or Not Delivered to the Firm 38

    Sales Variances, or Planned Write-Downs 40

    Chapter 3: The Pricing Myths 41

    Chapter 4: How to Be Worth More to Clients 49

    What Do Your Clients Really Need? 49

    A Clients 50

    B Clients 50

    C Clients 50

    D Clients 50

    X Clients 50

    How and With Whom Do You Spend Your Time? 51

    The Potential of Client Meetings—Going from Effect to Cause 51

    The Iceberg Value Principle 52

    What’s Missing? The Future!53

    The Rearview Mirror Perspective 54

    Our View as Accountants54

    Look Out the Windshield 55

    Iceberg Value Strategy 55

    “But My Clients Won’t Pay for the Extra Service”—The Rule of Price Flexibility 56

    Creating a High-Impact Relationship 56

    The Meeting Plan Campaign 57

    Lessons from a Mime—Transition Your Client From Compliance to Advisory Services 58

    How Not to Do It 58

    A Better Approach 59

    A Realistic Meeting Schedule 61

    Chapter 5: Client-Care Key Performance Indicators 63

    Client Surveys 63

    Other Ways to Measure Client-Care 65

    Time to Complete the Engagement 65

    Three Other KPIs 65

    Chapter 6: Pricing Strategies in a Troubled Market 67

    The Problem With Price Estimates 71

    How to Avoid Professional Panic 71

    Ask for a Deposit, but Don’t Expect It 72

    How to Handle Price Complaints 73

    Current Client Complaints 73

    Listen—Really Listen 73

    Price Objections from Prospects 74

    “Another Firm Will Do It Cheaper” 77

    Chapter 7: How to Set Prices 79

    Chargeable Time or Billable Time? 80

    Five Factors That Affect Your Prices 81

    When to Use Value Pricing 82

    The Value Gap 82

    Factors Affecting Value 84

    Arranging Payment With the Client 87

    When to Use Results Pricing 88

    When to Use Fixed-Price Agreements 89

    Packaging Your Services 90

    How to Adjust Prices Upward 94

    How to Make “Balanced” Changes 95

    “But My Fellow Owners Will Never Go Along With That Large a Rate Increase” 96

    Unleash the Power of Unconditional Service Guarantees 96

    Chapter 8: How to Discuss Prices With Clients 99

    Train Clients to Pay You Well and Promptly 100

    What “How Much Is This Going to Cost?” Really Means 101

    Turn a $438 Sale Into a $238 Sale Without Really Trying 103

    Don’t Make It Look Too Easy 105

    Your Pricing Communicates Your Value 106

    How to Use “Cottle’s Law” and “Cottle’s Corollary” 107

    The Problem With Price Estimates 109

    How to Avoid Professional Panic 109

    Ask for a Deposit 111

    Be Flexible 111

    The Preferred Client Approach 111

    Five Important Tools in Negotiating Prices 112

    How to Handle Price Objections 117

    How to Handle Procrastinators 118

    How to Handle Price Complaints 118

    Chapter 9: Build a Better Firm With Better Clients 121

    Why Are You in Business Anyway? 121

    How to Recognize a Good Client 123

    Evaluate Clients Realistically 125

    Pick Your Five Worst Clients and Fire Them or Upgrade Them 127

    Fire the Least Profitable Clients 139

    Increase Your Minimum Individual Income Tax Price 140

    Raise Prices on Aggravating Clients to $300 Above Standard 140

    Give Your “Widows and Orphans” to Another Accountant 140

    Chapter 10: Avoid the Seven Causes of Unplanned Write-Downs 143

    What Are Write-Downs, Really? 143

    Cause 1: Estimating the Engagement Incorrectly 144

    Cause 2: Not Specifying What Is Included in the Price Estimate and What is Not 152

    Client Planning Conference 152

    Team Planning Conference 154

    Cause 3: Inefficiency (Sometimes Laid at the Feet of the Employee’s Supervisor 155

    Cause 4: Bad Scheduling 156

    Assign the Right Person to the Job 156

    Avoid Wall-to-Wall Scheduling 156

    Cause 5: Bad Supervision 157

    Plan 158

    Budget 158

    Monitor 158

    Cause 6: Inadequate Skill in Managing the Client Relationship 159

    Cause 7: Unwillingness to Confront the Client 159

    Chapter 11: How to Set the Right Standard Chargeout Rates 161

    Why the Two-Percent Rule is Dead 163

    Three-Step Formula for Setting Standard Chargeout Rates 165

    Chapter 12: Motivating Your People to Bill What They Are Worth 169

    Define Chargeable and Nonchargeable Time 170

    Use the 50-Minute Hour 177

    Adopt Daily Time Reporting 182

    Round Up, Not Down 183

    Use Peer Pressure 184

    Require Second-Owner Approval on Substandard Invoices 184

    Invoice Promptly to Avoid “Toxic Lockup” 185

    Invoice Progressively 187

    Let Employees Draft Invoices 188

    Do Not Compromise on Prices 188

    Chapter 13: Get It in Writing 191

    Engagement Letters 191

    Include Realistic Payment Terms in the Engagement Letter 198

    Allow for Value Pricing in Your Engagement Letters 199

    Change Orders 200

    Use the Invoice to Increase Client Satisfaction 201

    Appearance of the Invoice 201

    Language of Invoices 201

    Details of Invoices 202

    How to Handle a Higher- Than-Expected Invoice 205

    Client Termination Letter 205

    Glossary 207

  • David W. Cottle, CPA, B.B.A., is a consultant  who works with firms to improve their profitability, growth, and management. His articles have appeared in publications ranging from The Journal of Accountancy, The Law Management Journal, The Practical Accountant, and The Practicing CPA, to Veterinary Economics and the Texas Bar Journal. He served on the Editorial Advisory Boards of the Journal of Accountancy, Quality Client Service newsletter, the CPA Managing Partner Report, and the Panel of Experts for CPA Partner Hotline newsletter.

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