Let’s start with a thought experiment. On your website, how much space do you dedicate to describing your payroll offering? One line of text, maybe two? Now think about all the time you and your team spend on payroll, including answering ad hoc questions from clients, setting up new hires, and monthly reconciliations.
If you’re like many accounting firms in the United States, you’re probably providing a lot more support around payroll than the line of copy on your website describes. And this mismatch probably means you’re giving away value. But you can start to capture that value by using three simple principles.
So how do you get started? Let’s dive into the three principles.
People Advisory? Tell Me More.
People Advisory is a consultative service in which accountants pair their financial expertise with people operations to guide clients on building a great place to work.
By putting people at the heart of your advice, you can help your clients and their teams with advice on payroll, benefits, and people operations that they need now.
Principle 1: You’re selling outcomes, not time
Clients hire you to produce outcomes, not bill time. Case in point: when firms use software to work more efficiently, it doesn’t mean your work is worth less just because it took less time. Usually, the opposite is true. Technology creates faster results with fewer mistakes—a much more valuable result.
This outcome-driven logic makes just as much sense for advisory work. The client is hiring you to make a recommendation about a complex issue. If you can make that recommendation in less time—given your experience, business judgment, and facility with technology—then your recommendation is probably worth more, not less.
Bottom line is that your advice has tremendous value. And that value is independent of the amount of time you spend giving it.
Principle 2: Estimating costs is not pricing
Let’s be clear: firms shouldn’t ignore costs. But knowing your costs isn’t the same as knowing what the price of your service should be.
Understanding inputs and outputs is critical to understanding if your services are profitable. However, when making a pricing decision, the cost that goes into a service is less important than the value your service creates.
Determining the value will depend on many factors. And of course, you may have to sacrifice some profit for expediency—for example, choosing a price that scales. But value is the smartest way to put a price on the service.
Principle 3: Understand the value you’re creating
What are your clients getting for the price they pay? One way to tell if your price is right is if the following conditions are present:
- You’re happy—perhaps ecstatic—with what you’re charging
- Your client feels like they’re getting a bargain
This indicates that you are capturing the desired monetary value for the services, and your client is delighted with the services and the price they’re paying. They may be so delighted, in fact, that they’ll never ask to pay you less. They might even be willing to pay you more as they grow accustomed to the value they are getting.
People Advisors in practice
Find out how your peers transitioned to pricing their services based on the value they provide.
Kenji Kuramoto, Acuity
Before Kenji completed the Accelerator program, Acuity bundled payroll with their bookkeeping packages. Pricing was based on the number of times payroll was processed and the number of employees a client had. Now, pricing of payroll services has changed. “The predefined tiered services Packages in Accelerator showed us what else we could do and charge for. We’re experimenting with pricing. The initial Package is $1,500 (5x more than what we’ve traditionally charged), going up to $4,500 at the top end”.
Josh Lance, Lance CPA Group
Payroll used to be a loss leader at Josh’s firm. Now, pricing reflects the tangible and valuable things they do for their clients. “We have priced the three tiers starting at $500 for Essential, which doesn’t include the Gusto software fee. $1,500 for the Advanced tier and $3,500 for the Premium. These are big numbers: 10-15x what we were charging previously. We’ve had no problem signing clients up to these prices, and we may be able to go higher in the future.”
Nikole Mackenzie, Momentum Accounting
Momentum has always taken a value-based approach to pricing, but Nikole’s firm wasn’t
capturing the value clients were getting from their payroll services. What’s happening now? “For one client, we charged a $6,000 onboarding fee and the bulk of that was for the People Advisory set up. And then there is a monthly ongoing fee. Another client is about to sign up for People Advisory Services for $2,500 per month.”
Michael Ly, Reconciled
Prior to Michael completing Accelerator, Reconciled was significantly under-pricing its payroll services. “We weren’t taking into account the amount of effort, time and complexity involved. We usually costed our payroll services around the platform: How many employees do you have and how often do you want us to go into the platform and administer payroll?” Fast forward to today and Reconciled now charges 2-3 times what they were charging before.
The Time Is Now
In a time of heightened awareness around physical, emotional, and mental wellbeing, small business employers need the help of a People Advisor to create a modern workplace that attracts and retains high performing talent. Through reimagining your payroll practice you have the opportunity to meet the needs of clients head-on while also realizing important opportunities for your own team and firm.
Gusto’s People Advisory Accelerator Program provides the training and tools needed for firm leaders to develop People Advisory packages, and to staff, price, and sell them so that you can drive recurring revenue at your firm. In addition to teaching best practices, the program provides 25+ turnkey tools and templates so that you can implement what you’re learning, immediately. You’ll even earn 4 CPE credits in the process.
You and your team can build your foundation on people operations best practices through becoming People Advisor Certified and earn 5 CPE credits. Learning the fundamentals of payroll, benefits, and people operations provides the knowledge and confidence to deliver a consistently high-value service.
By launching your People Advisory practice you’ll join a community of 2,000+ Certified People Advisors who are a part of the positive change the accounting profession and economy needs now.