Track 1: How to raise your rates without losing clients

Up to 57% of firm owners undercharge their clients. You worry that if you raise your prices, you'll lose business. Raising your rates increases your profit margin, without working additional hours. Join this session to discover the proven system to seamlessly transition clients to your new rates - including legacy clients? The keys to earning more without working more are counter-intuitive. We'll map out the exact steps to boost your income without feeling like a slave to your firm!

Transcription:

Loren Foglemen (00:11):

Hi everybody. Day three, you are here. I'm here. I so appreciate you. And what I just want to say right off the bat is acknowledging you for being here because there are many other firm owners that could have been here and they decided that they had too much work to step away from their business and you made the priority to step away from working in your business, servicing your clients, the things that keep you operational, to work on your business, getting those insights, those advanced moves to be a firm of the future and remain relevant as things continue to change in this industry because this industry is going through a disruption. And I see it similar to travel agents when Priceline first came on in 1981 and it changed everything. Now are there travel agents? Yes, but the majority of people have just taken out that middleman because they can now do it themselves.

(01:18)

And the ones that did remain had to be able to reinvent themselves in a different way. And that's what I see going on with the accounting industry as well is it's a period of innovation and having to reinvent yourself because how things had always been is different than where we're going at this point in the future. So once again, just want to acknowledge you for being here and working on your business. My intention is from today to get one actionable tip that you can immediately implement to start to move your firm forward in a specific direction that you know is important for you and it's going to make a difference not just for your clients, but for you. Because as accounting professionals, tax professionals, you work really, really hard and you deserve to have a business that supports your life instead of one that sucks the life out of you.

(02:12)

And as you can see, the topic today is critical steps to raise your rates without losing clients. Let's see if I'm getting my quicker right. There we go. Oh, okay. Right off the bat, Steve's going to help me out. I wanted to pass around some bags, put your business card in it or some way of giving me your information and you can get, I'm going to give away a copy of my book as we wrap up. So if you have business cards or you want to put your name on paper, feel free, would love to be able to pass that forward.

(02:49)

What I have seen about accounting and tax professionals is the work you do makes such a difference for your clients. It really, really matters to me. That was so evident, especially during COVID when everything changed in just a moment and what you had to do to help your clients remain operational and you gave your first line responders so many of you gave so much more than what you got compensated for. It was a lot of goodwill that was given away. And because of that, what I also see is that your rates don't reflect the value of the difference that you make for your clients. And that's my mission is to really have you understand the value of what you offer and have your rates reflect that because you deserve to be well paid for that difference that you make in other people's lives.

(03:48)

If you find that you have that initial consultation and you end up giving away so much free information, they thank your hand, they shake your hand, they thank you, and then they leave you and move on never to be heard from again. Or possibly you ended up quoting a price too soon and you realize that you undercharged for that service. It was so much more complex than what you initially saw or possibly legacy clients, they're at the old rates, you don't want to rock the boat and you need to get them up to your new rates. If any of those things are part of you, then you are absolutely in the right place.

(04:32)

Just a little bit about me is sports psychologist, term business coach, and I come from a family of CPAs, but what I also saw is that there was so many things where it was a lot of work, especially during tax season is a grind and it took a toll on people's lives and that I knew that there would be a better way because when I was doing sports psychology, I heavily studied neuroscience and how the top one percenters approach things differently than everybody else and they look at failure differently than most people do. You with athletes, you have to be willing to fail in order to succeed and there is no other competition except for within. It's about always wanting to better yourself. And I think that's true for every single person sitting here. You are here because you want to be better than what you currently are. To take something away to make that difference even greater. And that is really where I applaud you for wanting to do that. And as you can see, I've been named as one of the top 22 business coaches by HubSpot from 2018 to 2022. And once again, the book that I plan to be giving away is the Success Solution. It's an Amazon number one bestseller.

(06:07)

Education. When I went to school, they trained me to be an employee, not an employer. Because of that, when I went out on my own, which didn't take very long, I found I'm not very employable, was that I needed to figure out three things, how to be able to communicate what I do so I stand out instead of blend in. I don't want to sound like everybody else. I want the right people to be wanting to reach out to me knowing more. The second thing is how to be able to price my services when I didn't want to connect my fees to time. I don't want to charge an hourly rate. I'm results driven. I wanted to be recognized for the results I made as opposed to how much time it took. And then the third thing is they do not teach sales in school. Business school has an entire marketing department, but typically not one class in sales.

(07:08)

However, statistically 75% of business majors end up selling in one way or another. And I think that that's a disservice to any industry when you end up having people in sales and they have no sales training. So you're winging it. And there's different ways to approach sales depending on your personality type. Introverts can do just as well as extroverts. Sometimes they do better and I think that that needs to be altered as well where people actually learn how to do sell sales because you need clients in order to have a business. And that selling is more about really everything else you do in your firm. If you approach it where it's client centered and coming from what's in the best interest of the other person instead of you, then that is showing right off the bat how you are set up as an advisor looking out for their best interest instead of your best interest. And it comes through consistently from the very beginning all the way to the very end.

(08:17)

What we're going to cover today is the number one profit solution. Then we're going to go into the formula and we're going to wrap up with how do you get your existing clients up to your new rates. I will absolutely give you as much as I possibly can in our short period of time together. And if you're interested in knowing more, I will show you how to do that. As we wrap up as well, this is the five steps that I focus on and I teach my clients I, it's the main topics that I talk about that I'm very passionate about and one after the other. When you piece them all together allows you to really have that firm of the future where you are able to really have a service that is of value. You're taking care of your clients in a future focused way, helping them get results and you are lifting them up as you are lifting yourself up as well.

(09:09)

And I'll just briefly go through them. The very first step is high value clients because in the beginning you're saying yes to everybody that breathes and is willing to pay your rates. And that means that down the road you realize that some clients are a joy to work with and some clients, as soon as you get an communication from them, it throws off your entire day. And what we want to do is be more strategic about having those right clients in your firm because that puts you on the path to having a dream firm. And then that goes right into number two. So once you understand who your high value clients are, then we understand what is the words that will attract them to you that will grab their attention and want them to know more. And actually when you use the words and say the things that appeal to the higher value clients, it actually also takes away the ones who just want champagne services for beer prices.

(10:06)

And I'm not talking about I p a beer. So we all have those clients at some point or another and I believe that clients are long-term commitments similar to being in a long-term personal relationship. You want to be selective about who you're spending your time with. You deserve to have people that are a joy to work with instead of ones that are energy vampires. So you want to know how to communicate your value after that. Number three is packaging your services. I'll give you some examples of my clients and what their packages look like, but that's when I go to your website, I look at the services page and I see this long list of a la carte things that you offer. And that is actually a disservice to you because when you just have that long list of services, it actually positions you as a technician and it undermines your expertise.

(11:05)

So what we want to do is start to bundle things together into packages that are outcome or results driven because then it's the first step to start separating your fees from time. And that goes right into number four, value pricing, which is what we're taking a deep dive into today. This is where you are shifting away from time and cost-based pricing, whether you do an hourly rate or a fixed fee, moving towards value pricing. And value pricing is a paradigm shift because instead of focusing on what's important to you, which is your time, your fees and maybe a little bit of profit margin, we're actually pricing the client based on the value to them. It's a different way of looking at that, but when you do that, you can actually earn two to three times more without any additional time spent working. And don't take my word for it.

(12:00)

I'll show you some examples later on. And then once again, the last one is consultation mastery. This is if you don't like the sales part, you feel salesy, especially when it comes to the close and that's where you fumble and the objections feel like pushback and they're confrontational. So you close down the conversation. Consultation mastery is where you're having what I call a value conversation. This is where you're focusing on what's important to your client instead of having to pitch your services. So those are the five steps of the raise your rates formula. They are all things that will help your firm to move forward into the future and really focus on the value of what you do instead of simply the tasks and the workload and how much time it takes to do something.

(12:51)

Well, we're going to go right into the profit solution. So something to think about you for yourself is rate your price and confidence. Are you highly satisfied, afraid to raise your rates, paid a little work a lot. So just think about that for yourself and where you are. And also I like to let you know that I'm very engaging. If you have questions along the way, want to be able to make sure that I answer them because it's important to me that you are able to take something away from today and implement. I don't want to just be up here talking, I don't need to do that. I'm here because I want to give to you. Okay? The very first thing is ourselves, we are the bottleneck to our own success because we overthink things we get in the way. So I'm curious for you, what is something that maybe has kept you from raising your rates or possibly letting go of that headache client? Anybody want to share? What comes up for you in the back?

Audience Member 1 (13:59):

Yes. Not knowing how I compare against my competitors.

Loren Foglemen (14:03):

Okay. Not knowing how, okay, you know what? Your competitors, they don't really know how to charge for their services anyway, so don't worry about it because most people don't understand pricing, especially when you come from first being a W two, working for someone else where your fees were always connected to time, whether you've got a salary or an hourly rate, then you do the same model in your firm. So it's an old model that cannot account for technology. So that means the more efficient you become, the less you make even though you're giving better quality services. So don't worry about them. Go ahead.

Audience Member 2 (14:41):

I think for me it's the lack of truly understanding of the perspective of my client that they see the value.

Loren Foglemen (14:50):

So it might be that it's just a tweak with the questions that you are ans asking in order for them to see the value. Otherwise they're going to say, why should I pay you more when you are already doing all that for me? And a lot of times what comes up is if you're going to raise your fees, if they're going to expect more from you. Is that part of what you're saying?

Audience Member 2 (15:10):

Typically? Yeah.

Loren Foglemen (15:12):

Excellent. So that is one of the things that holds people back also. But think about it, you just spent three days here getting educated. Is this something that's going to add value to your clients? Absolutely. Don't need to justify it. Anybody else have any thoughts about what's holding it back from raising their rates? Steven.

Audience Member 3(Steven) (15:35):

Always one of the biggest experiences is loss of revenue. How are we going to replace those clients if they were to leave, right? Let's say how we rephrase that.

Loren Foglemen (15:50):

A lot of times the money's already in your business, you just don't have the capacity to do these higher things. The other thing is statistically if you raise your rates, the ones that leave where the headache low value clients anyway, so it's act a cost correction and I'll go into some of the statistics of what happens later on down the road, but I think that is probably the number one fear is that all my clients are price sensitive, they'll all leave and it's going to act, I'm end up with lower revenues. But actually what happens is the opposite where you will have some clients leave and then you actually are making more because the clients that remain are paying you a higher fee and they become better quality clients.

(16:40)

There's three ways to increase revenues as well as profits. One is looking at more clients and when you have more clients you do have more costs. The other one is cutting costs becoming leaner, but that means that some things might take more time than they did. So now there's a time, money, cost. And the third one is looking at raising your rates. Raising your rates is pretty much pure profits. So three ways to be able to increase your profits. You can go with the more clients, you can go with leaner, cutting back on some things or you can go with raising your rates and I will always choose door number three.

(17:27)

As I said in the beginning, you're accepting everybody that breeds and won't want to pay your fees. As a result, you find yourself with a wide range of clients from low value to high value. There's some you wish would go away and you try raising your rates and they go ahead and stay anyway. And it's like you justify it by now saying, well, they're paying me good money. I can tolerate that, but it's not worth it because it, there's a cost to tolerating those non-ideal clients as far as your wellbeing, the frustration, you are overwhelmed enough, you don't need to have them adding to it. So I just am curious, what is maybe one quality of a low value client from your experience? Low value clients. Come on. What do you hate about them? What do you find? Go ahead. Rude. Okay, they're rude and sometimes they're respectful to you and then they're rude to your staff and your staff to me is more important than your clients. They are harder to replace, so they're rude. Anybody else? Go ahead.

Audience Member 4(Rosie) (18:29):

We're finding them to be more needy like after hours knowing us.

Loren Foglemen (18:33):

Oh, okay. So I had one client tell me that may, maybe it was you, rod, were you the one that told me about someone texted you like on a Sunday night and then you didn't answer can share that.

Audience Member 1 (18:48):

It was five in the morning. This client routinely text me five in the morning and for a while I would answer those texts because it was a very important client and I had to reestablish the ground rules and say's, no way you're, I'm not going to do this anymore. I'm not going to answer your phone. You want to call me on Sunday? That's fine, I'll call you on Monday.

Loren Foglemen (19:07):

Excellent. And I charge

Audience Member 4(Rosie) (19:08):

Them all.

Loren Foglemen (19:11):

Okay, so clients expecting you to stop what you're doing, getting back and if they're not, they continue to harass you.

Audience Member 5 (19:21):

Feel creep. No, don't matter how many times that you've set the boundaries, they continue to push on what the engagement is really about.

Loren Foglemen (19:29):

So they have expectations and they want you adapt to them instead of them adapting to your workflow.

Audience Member 1 (19:37):

They're the ones who keep asking, can I pick your.

Loren Foglemen (19:41):

Okay, they want to get row rates but high level service and they expect information for free.

Audience Member 4(Rosie) (19:50):

They're not appreciative.

Loren Foglemen (19:52):

They are not appreciative. They see you more as a extension of their employees or that they just take it for granted and they're demanding as opposed to respectful. Okay, let's go at the other end of the spectrum. Those dream clients, you know that you're doing work for them or you're meeting with them and it just lifts you up. They are a pleasure to work with. What are some of the qualities of those clients? Rosie?

Audience Member 4(Rosie) (20:17):

They give you referrals.

Loren Foglemen (20:18):

They give referrals. Okay. They give referrals of like-minded clients. So think about that. If you're getting referrals from your low value clients get to, they're sending to you because they hang out with similar type of people. So the high value clients give referrals of other quality clients.

Audience Member 4(Rosie) (20:34):

They respond giving.

Loren Foglemen (20:38):

Isn't that like the biggest thing is that you can send out a communication and some people you just never hear from low value clients and then others, they are quick to respond to you and get the information back to you. Anything else? Yeah, they followed your direction. I was just thinking of that. We were on the same place. They implement your suggestions, they really do value what you have to say and they respect that and they want to really get the best results and know that you are there on their team helping them. So once again, big gap between low value and high value. We want to be very strategic about having more of those high value clients in your firm because it just makes it so much easier. And this is just another way of looking at it is that low value clients to me means that it's going to be low rates.

(21:28)

You have the factory firm where you need a lot of clients in order to be able to meet your revenue needs. And then the other end of the spectrum is when you have high value clients, then they're paying you more. They're paying you premium prices, which allows you to then do more of the advisory part and work more closely with them on things that are important and matter deeply to them. So you might be somewhere in that whole spectrum from low value to high value. The more that we can strategically get you towards those high value clients, where you can then bring in the advisory services is what's going to differentiate you from somebody that's always wanting do it cheaper or somebody that is offshore and they're just going directly offshore now instead of going through somebody else because they're seeing what you do as the technical side of it. They're not interested in the advisory part of it because they don't appreciate it or they don't feel that that matters to them. So we want to be able to get rid of those cheap clients and really have more of those premium clients where you can go ahead and do the high level services with them because now you have the bandwidth to do that.

(22:45)

Another way to look at this is easy math. Look at how much you want to bring in revenues for the year and then just average out what do your clients on average pay? You do the math and are you happy with that final number? And if you are, great, but if you realize, oh my gosh, I need too many clients to meet my revenue goals, then we need to look at how to be able to get your rates up to where they ought to be. The other thing to consider as you're doing this is that sometimes your highest paying client is not your most profitable client. They bring in really good money, but when you really look at the profitability, there's more complications with them, there's more exceptions with them. And as a result of that, it has the potential to really dig into the profit margin of that particular client.

(23:40)

So you want some premium clients that are really more complex, a couple of them, but I would say only aim for maybe about 10% of those types of clients in your firm because they require so much more than everybody else and it's not as efficient as when you're able to do things a little bit more streamlined and productized. Some of the benefits of raising rates and working with a higher premium client is that you get to now focus more on having a relationship with someone as opposed to it being transactional. It's not about doing a thousand tax returns during tax season or cranking out 10 90 nines in January. It's really that you understand what it is that they want to achieve and they see you as the person that can give them the insights into the numbers in order to be able to achieve that result.

(24:37)

The next thing is the results focus. You are now on board with them with something that deeply matters and I will let you know that what's focusing on today and what they're focusing on the future, the future focus goals are where the sweet spot is. If you can help them get to something that is meaningful to them at some point in the future, that is going to really be the way to differentiate yourself from every other firm that might be seen as an alternative. I don't really want to use the word competitor because we all use things differently and it's really about being able to differentiate yourself and competing with somebody else. When we get into the competition type of focus, then it comes from a place of scarcity that there's not enough. And I've been hearing over and over and over the last three days here, there is more than enough.

(25:31)

We just want to be selective about who we allow in to our firm. The third thing is when you're offering more advisory services, you're able to raise your rates. That makes me very happy because I know then that you're able to get well compensated for the difference that you're making for your clients. You are reducing turnover, there's less churn. People will actually stay with you longer because they see you as someone that's taken them in the future to where they want to go as opposed to just doing after the fact compliance work. And the last one is by doing all these things, it revs up the lifetime value of your clients. Rod, can you just share a little bit about how you've been able to raise the client's fees from 4,000 to 7,500?

Rod Couts (26:20):

Okay, so I've been in large program for two years now and I had clients who were even less than that and I've taken a 10 and what it falls down to is I listen to my clients now. I used to telling them what I could do and now I sit back and then I develop a program that goes to them that says I can look for the keywords and then I tell them how I can address those things that they're trying to do. And when they realize that I listened to them and then I tell them, here's what it's going to take for us to get to that point, I get very little. I get no pushback at this point. If they do push back, I say, great, they're not a fit and I understand, I understand, but it's about explaining to the client what it is that they need that I understand and they're willing to pay for me to help them get to where they want to be.

Loren Foglemen (27:17):

Thank you Rod. I appreciate that. And this is an example of the packages that Rod offers his clients. As you can see, it's more of what you would look at if you went to a SaaS product and saw the different things that they have. This is proprietary to Rod, so please use it as inspiration or a model. Don't just copy it. But as you can see, he has three different options, essentials, advantage, accelerator and that based on where his client's needs are, he can help guide them as to what package might be a best fit. But the other thing of having packages is it also allows him to very naturally educate them about what else he might be able to do for them as their business continues to grow and their needs evolve as well. The next thing is we're going to move into the formula and how do you charge a clients and I just want to check in, does anybody have any questions at this point?

(28:20)

Great. Basically the essence of value pricing is the client needs to believe that what they have to gain from engaging your services is greater than the fees that they're paying you. That is the simplified version of value pricing. We're talking about it for three days and it can be a very abstract concept and this is really simplified. So when you're meeting with someone, they need to realize that working with you, they're going to gain so much more than the fees that they're paying. You have to show them how it's going to be a great ROI and the ROI is different things for different people. For some people it's less stress, other and peace of mind. So tax and peace of mind is very, very valuable. The other part of it, some people maybe just want their time back, they want things to be better and maybe they want to be able to add on staff and you might be able to help them show how to be able to do that in order to get some things off of their plate and onto somebody else.

(29:27)

And then the other one is how to be able to not just increase their revenues because everybody thinks about the top line, but what about the bottom line and how does the bottom line get affected when you have a company that's in a fast growth mode? So that's be different than companies that are maybe more mature in their process. So those are some of the things that you want to be able to show them is possibly peace of mind, how it is going to maybe give them time back or possibly the profit margin as well as the top line. And this is right from science direct, if they have shown done research that if you do a 5% increase in rates, there ought to be a 22% difference in profitability. However, I'm going to just let you know if you do 5% every year, stop doing that because you're still undercharging. You could probably do 20 to 30% without pushback. And I just want you to think about that 5% is like trying to sneak in a little bit more, but that's not even keeping up with the change in the economy. But I'm going to aim for 20 to 30%. That would be the low end of what I'm aiming for. There are some clients, probably your legacy clients that probably need to be raised closer to 50% if not more because their needs have changed. Go ahead.

Audience Member 6 (30:57):

Are you saying that you at 20 to 30% increase every year?

Loren Foglemen (31:02):

I think that that's something that you need to decide regarding your clients. Some people do it on a yearly basis, they want to increase because they're continuing to add value and they're working more deeply with their clients. But when you go into packages, what you actually look at doing is a 12 month engagement and then you're doing a yearly review to decide whether the scope has changed or not or whether you need to adjust your fees. So there's no right or wrong. I think it depends on the individual and you would make that decision internally, but this way it gets away from the scope creep happening where you're continuing to do more work because their needs have expanded but your rates remain flat. And I just wanted to give you some math to let you know that it's not going to, it's not as difficult as you think it is when you start increasing your fees and you ought to be doing it on a regular basis.

(31:59)

Having this just be part of your workflows and your SAPs just like what you would do to be able to get someone's month ends done to be able to keep their books up to date. So I want you to think about how do you make this part of your regular process with your clients instead of all of a sudden something that's be avoided when people are concerning working with you, whether it's a potentially new client or someone that you're looking at having the scary raise your rates conversation with. They're considering three things and I will be upfront and transparent with you. One of the things that does happen when you're talking with current clients about raising fees is they have to reevaluate whether they're going to stay with you or move on. And that's a big reason why a lot of firm owners do avoid that and I totally get it, but there's a process to be able to move them through that and we'll go deeper into that in the next section.

(32:53)

But when people are considering either staying with you or coming on board, they're looking at three things. They're looking at basically the quality service and then cost. The quality is the relationship. If you are a client centered firm and that is coming through on your website from when they first reach out to you, that initial consultation and you're able to show how you're really able to make a difference for them, that is going to be something that matters. How you communicate with them, how quickly you respond. Those are all things that add to the quality because we've all had bad customer service, we know what that's like. We've been on the receiving end. If you've ever had a call to IRS, think about that. That is something that feels more like a grind and it disrupts flow as opposed to making it easier for you.

(33:49)

So we want to be able to show them right from the get go how you are client centered. The next thing is looking at service. Service is that they need to trust. You have the tools as well as the skillset and that you'll deliver in the time that you've agreed to deliver the end product. So that's the service delivery. And then the third is cost. Everybody wants the very best that they could possibly afford. We all want that. The only, but as you can see in the equation, the price is the third thing. If you can show them that you are client-centered and that you have the insights to be able to take them to where they want to go, then the cost is actually a third consideration. It's not number one. The only time it's number one is when you're working with a price sensitive client that wants as much as possible from you for as little as possible. So that's the only time that it's flipped is when you're working with someone who's price sensitive, they're looking at price first. All they want to know is your hourly rate. How much is this going to cost them? They won't give up until they get that from you. And then with everybody else, we all care about the experience of what it's like to work with you.

(35:09)

What you want to do is have, as I mentioned before, a value conversation instead of sales conversational or pitch. And the way that you want to consider it is you want to first understand their challenges, what's going on with them, what's important to them, where do they want to go? What are their concerns that might keep them from getting there and maybe even understand what are some things that they might be missing as they're moving that direction because you're looking at it differently than they have. The next thing is instead of selling them or pitching them about why you're so great, you want to educate them. If you don't like the sales part than come from a place of educating because you're a giver, it doesn't mean that you, they're going to pick your brain. I'd rather nobody pick your brain on a sales conversation or your initial consultation.

(36:00)

This is an information gathering to determine if they're a right fit for you and if you're a right fit for them. That's the main consideration for that initial consultation is to see if you're a fit for working together and moving forward because I want to protect you from ending up with those headache clients and this is a way to do that. So you want to educate them about solutions that you can be able to help them with or show them or resolve those problems. And as a result of that, they see the value of working with you instead of moving with some other firm that might've just wanted to know about transactions, how many bank accounts and other things. As far as reporting goes, if you've been thinking about moving in the direction of value pricing, but you're currently at fixed or hourly rates, I'm going to give you the formula right now to start to move in that direction.

(36:52)

This is similar to if you're first learning how to ride a bicycle and you are on those training wheels and a little bit shaky, I call this good bed at best pricing. And what you want to do is SO'S coming to you, come up with that initial flat fee you would've charged them and then you want to go ahead and multiply it by one x. This is going to be your new good rate. I want you to enroll three people at your new good rate, which is 1.5 times higher than what you would initially would've charged. This gives you the insights that people aren't quite as price sensitive as you thought they were, and it also allows the price sensitive clients to just naturally move on. You don't have to say no to them, they just are saying no to the price, which is great.

(37:39)

We are starting to protect you. And then after you enroll three people into new good rates, we're going to go up to tier two, which is your better rates. Once again, people are coming to you and want you to come up with that initial flat fee. You would've charged them and we're going to now multiply it by two x. This means that you're now getting paid double what you originally would have no additional time spent working. That's a beautiful thing. You're getting better at having the initial consultation with the questions that they're going to be asking and helping navigate through that so that they see the value of working with you. After you roll three people at your better rate, we're going to move up to the top tier, which is best. I'm going to let you know that this takes courage, not confidence. The confidence comes later, but what we're going to do once again, come up with that initial flat fee, we're going to multiply it by three x as a result, people will be saying yes to you.

(38:33)

I know it sounds mind boggling right now, but they will be saying yes to you. You'll be working with a higher premium client, which means that you don't need as many clients to be able to meet your revenue needs. You'll now have the capacity to be able to work more closely with them in that advisory level like you've been wanting to. So, and at some point we're going to need to recalibrate all over again. But this is just a very simplified way of starting to move away from our of fixed rates at a time-based into value-based pricing. And this is Susan who does not like sales. She had the factory firm, lots of clients working seven days a week, 70 hours a week. I know some of you just got off of that churn as well. She was burned out. It's not sustainable. And because she's an accounting professional, she keeps everything on an Excel spreadsheet.

(39:28)

And I want to bring your attention to cleanup. Number one, where someone came to her, she would've initially charged 1500 based on her time, her hourly rate, she undercharged 100% of the time on these projects and we had a brief conversation as to the value from the client's point of view. We went ahead and repriced it at $7,900. I gave her the questions to ask during that consultation. She just followed it. She was shaking in her boots doing this, but they said yes. And because she was following this process, they actually paid her in full before she ever started the process. So that gave her insight that clients weren't as price sensitive as she thought that they were. Over nine months she bought an additional 56,000 in revenue. But the other thing that happened is that instead of the seven days, 70 hours, she went down to three days, 20 hours a week, she got back her life and she raised her bank account so that that was something that really gave her insights. And she never could have done this on her own because she knew what she wanted. She just didn't know the steps of how to get there.

(40:39)

And we are going to go into the third part of exist, convert existing clients. So think about this for yourself. How often you raise rates more than once a year, annually less than once a year. And I have notes for this particular section. If you want to just go ahead and scan the QR code, it'll pop up with the link. You can automatically go ahead grab the worksheet that goes with this and it'll help you to apply this in the future as well beyond today.

(41:22)

Okay, I am stuck on that one. There we go. Okay, we were talking about the concerns about raising rates. This is where it pays off to be a client centered firm. If you have invested in the relationship with your client, they are sticky. They're not going to move on as quickly as you fear. So this answers your question, Steven, about the raising rates. It has been shown statistically that if you invest in the relationship, they have trust in you we're talking about people's money, people have stuff around money. They don't want everybody to know about that. A lot of your clients have financial shame because even if they have a seven figure business, they probably winged it and didn't consider the numbers as they were moving forward and they don't really understand how the numbers work in their business the way that you do. So they do trust you as that advisor.

(42:15)

That means that they have the royalty. If you go ahead and raise your rates, then you can expect about 82%. And I've actually seen as high as the 100% move forward with you without any pushback. And this is the five steps I'm going to go through on how to be able to do that. The very first thing is you want to communicate with them, whether it's email, snail mail, whichever way you typically send letters and information out to your clients that you're making a change in your business model, do not go with the temptation to justify it that you've had higher fees due the economy because that's true for every single one of us. We want it to be. Once again, everything is client centered. So even this letter we want to have being client centered, that you're making some changes in your business model in order to better serve your clients.

(43:08)

Then you want to be able to get something on the calendar. If you have someone on your staff that can reach out and schedule appointments for your clients to meet with you and have these conversations, that's best. If you are more of a smaller solo firm, then you'll be the one. But you want to get something on the calendar to be able to have those conversations with them about what some of the changes are and how the impact will and what the impact will be and how you can be able to help them. So we'll get something on the calendar after that. We want to have that value conversation. This is where you want to find out their needs, their wants and desires. Those are three different things. The needs are the essentials. The wants are things that they know they ought to have in place, but either they don't have the time or the insight on how to be able to apply those things.

(43:59)

And the desires are future focused and the more that you can connect with that future focus desire, that is where your value is hands down. You want to ask some things about what is it that you want to achieve in the next 12 months? Why does this matter? What are some concerns you have about being able to achieve those things? What will you be able to do that you can't do? Now, those are some of the things you might want to be asking because now we're talking all about them and how you can help them as opposed to and why you're raising their rates.

(44:36)

Okay, objections. This is where usually you hear something and then you cave in or you're like, yeah, it's good enough. I've been doing it anyway. We'll just leave things where they are. And I want you to think about the top objections like five. I have three. What's another objection that you think might come up that's not here already? Anybody have any thoughts about that? I have to talk to my partner or meditate on it or sweep on it or consult with another person or maybe price shop it. So that's something else is they need to think about it or consult with another person. So you didn't talk with all the decision makers, you just talked with one, but the top one's always going to be price. The next one might be what's difference, and then they need to think about it. There's like I said, there might be a couple others that would be something for you to think about that might be unique to your firm, but this is what I want you to do.

(45:40)

I want you to come up with five of the top five objections. Then I want you to go ahead and write out a script of how you want to respond to it. That way when it comes up more or less what you want to say, you're prepared for this to happen. You're not shutting down the conversation after that. Okay? The advanced movement nobody likes. I want you to actually then practice saying it out loud, whether in front of your mirror with one of your fur babies with a associate that you have, but say it out loud because how you write things down and how you actually say it out loud are two different things. I don't want you to sound scripted when somebody's pushing you back on the price. I want it to sound more conversational and natural where you're getting curious. So this is where you want to get curious about what's behind the objection instead of just taking it as a no and shutting down the conversation because it feels confrontational.

(46:38)

And then the last one is payments. Be have the courage to discuss what are the new fees we're moving forward, how does this work? The other thing is how we are going to be able to accept the payment. If you have been invoicing and you want to get away from that into prepayment, this is the ideal time to make that switch from invoice and a prepayment. So you're no longer chasing money and getting paid after the fact because your highest value as far as your service comes is before you do the service instead of afterwards. It's like buying a brand new car. As soon as you accept the keys and drive it off the lot, it depreciates 20 to 30%. That's true when you're getting paid in arrears as well, is the work that you just did is not as valuable. So there could be pushback.

(47:31)

What did it take so long? What if you charge me so much? Oh my gosh, I had an unexpected tax bill come up that I paid and I can't pay you this month. Can we set up some terms? And this keeps you from having that happen. And I'm just going to say, prepayment is a beautiful thing. It changes your cash flow. You are not chasing money, and it just is a better way of working with clients where everything's transparent and upfront. And then the last thing is Reanna. When we first met, she was a journalist working with everybody, which meant that she'd be putting her kids to bed, going back to her computer, doing some additional client work because she had all these different types of clients with all different needs. They were in all different industries, but she had 20 years of working in restaurant at a corporate level.

(48:22)

So she decided go ahead and niche in the restaurant and focus on their needs, which was seasonality, cash, business. So they're really at risk for fraud and inventory management and other things that she could be helping them with that were specific to them. Employee retention, think about the turnover in restaurants. So we went ahead and created her packages, silver, gold, and platinum. And that way she was able to be more productized in what she was able to offer, more efficient. And because she now specialized in the needs of restaurants and spoke their language and they felt understood, they were willing to pay a higher prices, she got better clients and she also got her life back. So just think about how those things would work for you. Once again, proprietary to Reanna. Use this for inspiration and modeling, but please do not copy it. And Steve, did you get the bag back with the business cards? Steven, if you can just pull out a card.

Audience Member 3(Steven) (49:27):

Absolutely. Brenda Wilson.

Loren Foglemen (49:36):

Brenda, and you know what, Steven? I have a second book there. Pull out one more please.

Audience Member 3(Steven) (49:55):

Sue Watson.

Loren Foglemen (49:58):

Hoo. Excellent. Thank you so much.

Audience Member 3(Steven) (50:02):

Show you'll autograph it for them.

Loren Foglemen (50:03):

Absolutely.

(50:06)

Anyway, we covered the number one profit solution, the formula convert existing clients. If you feel that you want to have a further conversation, we'd like to be able to finally raise your rates up to where they want to be and get this implemented in your firm. You can scan the QR code, it has a link to my calendar, set something up that works with both of us or just let me know and I am here. I want to be able to answer your questions. Please let me know what's coming up. Does anybody have a question? I think I have time for one or two.

Audience Member 7 (50:44):

Evaluating our current to see if the engagement is profitable or not. We're looking away from kind of billing. We're at value pricing. What is that? Like? How many hours putting in, how much time does this client take? We still will waste on hours.

Loren Foglemen (51:14):

I believe that as you're moving that to direction, there's benefits to knowing how much time something takes because then you're able to look at your staff and see if they're actually taking too much time and maybe they need some training to be able to be more efficient as well. It's also positive that your clients are doing scope creep without your awareness. And this lets you then have better supervision with your team so that they're more aligned with the direction that you're going with. However, because we're pricing the clients, the bottom line is I want you to be excited about the rates that you are receiving and that they're excited about the work that you are providing them and that it is highly profitable for you. That way, if there is an exception, a request, you have enough profit margin built in that you don't have to think about it and feel like you're nickel and diming them.

(52:17)

So the bottom line is really you have to feel really great about what you're charging and that there's room for extra and that it's all calculated. The other thing is that so many firm owners give away services for free and they never ever charge for them. Moving to the packages allows you to actually get compensated for some things that you're doing for free. I mean, think about how long do you sit on hold for customer support with Intuit, also, not just the IRS. And you're doing these things for your clients, and those are things that you ought to be compensated for also. So the packages actually do that as well. Yes.

Audience Member 7 (52:54):

When you transition from a time going one day, and do you continue keeping some clients, obviously as you're transitioning, do you end up with generally all client life services or you have a mix?

Loren Foglemen (53:11):

My feeling is that by having a mix overall, you're having two different business models and it's not very efficient for you and not very effective. My intention is to get everybody over, but it's not like, oh, June 1st, everybody's going to be there. This is a gradual process. Rod, do you mind answering that a little bit as to how it, because you're still kind of in the process, right?

Rod Couts (53:36):

Yeah. I thought about shut off and everybody's going to be switched and I'm going to lose half my business. And I was horrified about that. And that's just not the way I went through, said, picked out the clients that this relationship really made sense for, and those were the folks that I went to first. And so it gave me an immediate revenue gain by focusing on those folks who I knew pay or more importantly service. So it's that once you do the first one, it's very confidence in yourself to know that you can do it and realize that you're not going to get no. And I'll tell you, you're not going to get as much no as much as why should I do this? And that's the question you have to be able to answer.

Loren Foglemen (54:28):

Thank you. It is a process and you want to be able to realize that it's going to take time. This is not. You flip the switch and it happens. And partly it's a process because of you as an individual and a human being, you care about your clients. And I also believe that you need to get better at having the conversation. So we need to just start somewhere. And sometimes you don't know how to explain the value to the client. And that's part of what I like to help my clients with also is well, we'll at their client list and talk about, okay, what is it that we need to focus on so that they can see the value of moving forward with you and saying yes anyway. Yeah. One last question, then I'm going to wrap up. Yeah.

Audience Member 4(Rosie) (55:13):

We switched to value-based pricing a few years ago and we did, and we increased prices at that time as well. And despite the fears, it ended up in very positive results. But one of the things that I still struggle with in the offerings is that the lower and most people engage in the middle, which is I think strategically that's the marketing, but for those that do pick the lowest package, it tends to be more transactional based than relationship based. And I struggle with presenting the value in that transactional based package.

Audience Member 4(Rosie) (55:50):

When it comes to a renewal or a price increase even on that.

Loren Foglemen (55:55):

So tell me what your question is so I know how to answer it.

Audience Member 4(Rosie) (55:59):

Just how would you overcome value?

Loren Foglemen (56:00):

Okay, so first of all, if you're going to offer packages, do you have three packages? Okay. What you want to do as far as metrics go is 20% of your clients will be in the silver, 70 in the gold, and then 10% in the diamond. And when you are with those silver clients, they are the ones that have been most price and they just need the bay essentials. And to recognize that's package is set up actually to capture them. So they might only need those bay essentials because that's their business model and where they're at. But the thing is that they're still choosing to work with you and pay higher than if they want to some other, because they see some value of working with you. So what you might see as value might be different than how they see the value of working with you. Maybe they feel that they're already getting the value because they're paying higher fees than somebody else would be. Does that make sense?

Audience Member 4(Rosie) (56:57):

Yeah. Yeah. I still struggle with the conversation.

Loren Foglemen (56:59):

With the conversation. I think the conversation is really focusing on what is it that they want to achieve? What is this matter and how can you help them achieve that? Are you doing any advisory services with your low? So that's where the value is helping them with that.

Audience Member 4(Rosie) (57:18):

Not on the low package.

Loren Foglemen (57:19):

That's where, I think it's important to have advisory services built into all your packages. And even if it's once or twice a year, then I will that make a difference right there. Yeah, absolutely. Okay. So you see how this is not a long drawn out process and less than one minute, how long you been thinking about this?

Audience Member 4(Rosie) (57:41):

Well, we've been in value based for about three years. About two last two. I'm like, because at renewal, okay, that's always a constant conversation.

Loren Foglemen (57:48):

Okay. So right there, this has been on your mind for two years. People will think about raising their rates for years and years. Also, I would say Ed, and one, maybe two advisory sessions during the year. That will be the value right there. So anyway, thank you so much. I appreciate you joining me today, and I hope you got something to walk away with.