Pricing Pressure - Part 2
NEW episode of the Life First Accounting Firm podcast this week:
S1E3 Starting Stories: Building a Firm During Maternity Leave w. Savannah Reynolds
Check out episodes on Apple Podcasts, Spotify, YouTube, or anywhere else you listen to podcasts!
Free CPE Now Available on Earmark!
Admittedly, I was really nervous when I hit ‘Send’ on last week’s newsletter.
Maybe I was totally off base. Maybe it was just me.
…And then you flooded my inbox with replies.
It feels good to not be alone, but I’m also sorry we’re all navigating this.
This is what we signed up for in entrepreneurship though, right?? Uncertainty? Trading risk for reward? It’s kind of a package deal.
Let’s talk in real numbers.
At the ground level, in the trenches of my specific firm / niche / pricing / service offerings (everyone is unique), here are where my prices were landing (and selling) pre-2025:
A Quick History
These prices were based on market research for premium CFO & CAS services I had done in 2021-2022. Tactically, I went to CFO firm websites, reviewed their pricing, and compared that to what I planned to offer.
A couple items of note here: (1) There was no AI in 2022. I had to actually Google keywords and scroll through websites myself ::gasps…clutches pearls:: and (2) There were very few CFO firm websites listing their pricing at that time. I mostly anchored these prices around what Summit CPA Group (later sold to Anders) had listed on their website at the time.
Now, there are so many more accounting & CFO firms listing their prices…in large part because there are so many more accounting & CFO firms 🙃
For years, the prices above sold.
Enter: Q4 2024
As clients’ cashflows tighten, here’s what it seems like pricing has done in the same niche / marketing / positioning / service offering:
Here’s an actual example that happened to me last month: I got a qualified referral for a fractional CFO role for a $30M top line company. I came highly recommended and the CEO was ready to hire me.
What in the world….? Never in my 8 years of firm ownership has a company above $5M in revenue batted an eye towards me. And they shouldn’t have. I don’t position my marketing towards them. They are not my ideal client.
With current clients, I’m seeing businesses that were paying $4,500/mo now only feel like they can afford $2,400/mo.
Quick side note on this > A lot of people will say something like “If the value is there, clients will pay higher rates! You just need to show your value” (Usually it’s marketing consultants saying this) Maybe. If their cashflow is solid and they feel confident about their own sales pipeline. I think if business / the economy feels rocky, they might wish they can pay for a higher value of service, but unfortunately, they just can’t at the moment.
So what do you do?
Using the example above, if you have a $2M revenue client that is currently paying $4,500/mo and now needs to cut back to $2,400/mo, you have a few options…
Let them walk - there’s no shame in it. You may no longer be a good fit for them. It may open up your capacity for better clients. It may open up your capacity for more free time, if you don’t need to replace the revenue from that client. You can disengage with kindness and grace on good terms.
Offer their new price for a lower level of service - when someone needs to save money, they’re going to find a way to save money with or without you. If you want to keep them as a client, be ready with one or two options for how you can continue working together at a lower scope. “I can’t keep my current level of service for $2,400/mo, but I can pull back scope and get you to that rate. Are you open to that?” Switching accountants is HARD. They may love you even more for being able to stay together at a different level of scope.
Do the same work for the lower price - I don’t like this option. Not even a little. I’m open to offering a 3-month discount to see if the client can get through a tough cashflow cycle (again, they’d love you), but after 3 months, the price reverts back up or they downgrade to a lower level of service.
Any of the above options will leave your firm with lower total revenue. That’s just how the math works.
So the next questions then become marketing and positioning questions:
Are your current rates still driving new business?
Do you need to adjust your positioning to target bigger clients to keep the same rates?
Do you need to adjust your pricing downward to target the same clients in a new economy?
Is there a one-time service or new offering you can offer your target clients that would genuinely help them in this season of economic and cashflow uncertainty?
Every firm and every firm owner is unique.
So only you know the answers to these questions for your business and your life.
Rooting for us,
Erica
What’s Happening in Aligned
Recently Added to the Video Library:
Office Hours with Erica [3.24.26] (referral strategies, Fathom, cybersecurity, etc)
Financial Cents: Demo + Discussion [4.9.26] (practice management & close software)
Engagement Letter Template > JUST ADDED HERE
Swipe it, customize it for your Fractional CFO and Bookkeeping engagements
Speed Networking for Side Hustlers
Tue, Apr 28th - 6pm MT > RSVP Here
Building a firm while working your W2? Meet others in the same boat!
Roundtable: Emergency / Succession Planning for Solo Firm Owners
Tue, May 12th - MT > RSVP Here
Discussing plans if you become incapacitated or need to step away for a family emergency
Question of the Week > Do you prefer receiving announcements about Aligned Accountants inside Aligned (i.e. Mighty Networks) or via email?
Current Discussions On > advice on a big opportunity to launch, PA bookkeeping & payroll referral, pricing advice on a restaurant lead, technical tax question on business vehicle, Claude tokens, securely sending docs, and more!
Join the discussion with 170+ like-minded, non-scaling accountants / really cool humans in the link below. $75/mo, no commitment - come and go as you please :o)
Money back guarantee, if you get in there and don’t see the value. No questions asked.
More details in the link above.