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TaxCoach Briefs: April 29, 2010
Volume 5, Number 17
===================================================== PRICING LESSONS, REVISITED Keith here. We're pretty busy this week, getting everything ready for the 2010 "SuperTable" next week in New Orleans. So for the Marketing Lesson this week, we'd like to reprise a couple of classics from the Briefs archives. This accomplishes a couple of things: first, it gives us an opportunity to revisit some timeless advice. And second, being that they are both pricing discussions, it sets the stage for the topics we'll be covering at the SuperTable. See, the entire focus of Day 1 is how to price your services to maximize your net. We've asked attendees at every RoundTable what their favorite topic was, and what they'd like to see more of in future gatherings. And the number one most popular response is always pricing. So enjoy a spin back through these blasts from the past, and brush up on The Method. Especially if you're newer to TaxCoach and haven't seen them before, you definitely don't want to skip them. This is TaxCoach Philosophy 101 — the core of Lucror Vestri Dignitas: "Charge What You're Worth!" And get ready for a great discussion in New Orleans next week, with Ed, me, Dominique Molina of the AICTC, and a few dozen of your peers from across the country. These are people like you — tax folks who are ready to do something about building their dream business. And — they're not your competitors! Not registered yet? Hurry, there're still a few seats left — but Jacques the caterer is getting pissed every time we add to our "final" count! Click here: Jacques, plus d'étouffée, s'il vous plait! See you in the "Big 1040EZ!" ===================================================== PRICING DON'TS FROM WALMART I've recently spoken with a couple of subscribers who aren't charging what they're worth. In the words of comedian Dennis Miller, 'I don't want to go on a rant here.' But I hate to see you leave money on the table when it's so easy to prove how valuable your tax planning service is. You're free to charge whatever you like for your TaxCoach plans and services. I typically charge from $600 to $1,200, and on one particularly successful afternoon, I sold three plans for $2,500 each. I know I could net more, on fewer sales, at that price. But the lower price opens more doors, which leads to more referrals and more business. I'll charge more for complicated cases, or clients who I know I can save more. My top clients pay as much as $5,000 for comprehensive planning, including ongoing service and hand-holding. My first advice is that you never charge an hourly fee, for TaxCoach tax planning or any other service. Hourly fees stink for four reasons:
Once you've decided how to price your service, you'll have to decide how much to charge. Don't be afraid to charge what you're really worth! I don't compete on price, and you shouldn't either. We're not Wal-Mart, and we shouldn't charge Wal-Mart fees for a service as valuable as tax coaching. My tax-prep software provider maintains an Internet message board for users, and fees are naturally a hot topic. I can't believe how many of them say 'I start by guessing what H&R Block would charge, then adjust down.' Adjust down?!?!? I just want to strangle them! Don't you position yourself as a better alternative? Then have the confidence to charge more! Here are four reasons to make price-cutting your last strategy for generating business:
I know what you're thinking. 'What about Walmart?' Yes, Walmart made billions by cutting prices. But Walmart has the clout to extract (extort?) concessions from vendors that nobody else has. Walmart makes far less profit, per employees, than any of its competitors. And there's only one Walmart. We'll never be Walmart, so why should we follow their model? ===================================================== LESSONS FROM A $90 BOTTLE OF WINE Researchers at Stanford Graduate School of Business have finally proven what most of us suspected long ago. Expensive wine tastes better! Researchers used MRIs to study Caltech grad students' brains as they swallowed five red wines priced at $5, $10, $35, $45, and $90 per bottle. They found that as the price of the wine rose, so did the activity in the subjects' medial orbitofrontal cortexes. (Apparently, that's the part of the brain that experiences pleasure -- but just reading about it gives me a headache.) The "catch," of course, is that the subjects didn't drink five different wines -- they drank three. The $45 wine was really the $5 wine -- and the $10 wine was really the $90 wine. So why did the subjects like the $5 wine more when they thought it was $45? And why did the $90 wine taste like swill when they thought it cost $10? Researchers concluded that the perceived price of the wine actually affected real quality -- at least, "real" as interpreted by the medial orbito . . . er, brain. People are willing to believe pretty much anything you tell them with a straight face. My family and I live one of those "Desperate Housewives" subdivisions where everyone has two big dogs -- usually Labradors or Golden Retrievers. So we're oddballs with just one dog -- and a 7-pound Chihuahua at that. His name is Agador. He's a cute little guy. He's pretty smart, considering his brain is the size of a cranberry. And pound for pound he can keep up with any neighborhood dog. But I'm still embarrassed to tell people we have a Chihuahua. So I call him a Guatemalan weiner dog. You'd be amazed at how many people hear that and nod knowingly, like they've loved Guatemalan weiner dogs all their lives! So what's the lesson? (If you answered "you can fool some of the people some of the time," well, you're right -- but that's not what I'm looking for.) The real lesson is that the price you charge for your service affects the value your clients see in it. If you're offering a $90 bottle of wine -- and you want your clients to value it at $90 -- don't pour it into a cardboard box with a $10 price tag! Do you give your clients more value than your competitors down the street? Are you charging what you're worth? Or are you pouring $90 wine into a $10 cardboard box? (Hey, if you really are cheap, embrace it. Remember those old Paul Masson TV commercials with Orson Welles saying "We will sell no wine before its time"? Betcha didn't know that Paul stomped on the grapes himself at 9AM -- and by 3:30 it was in the freezer at your 7-11!) Clients will pay more for your service if they see you give them more. The Stanford study proves they'll even feel better paying more! Right now, in the middle of "the season," it can be tempting to discount your prices to attract or keep clients. But competing on price is a losing proposition unless you offer the lowest price of all. And how many of you started your practice to be the WalMart of tax prep? It's better to compete on value. Give your clients a reason to do business with you, not your competition. Give them a reason to pay more. And they will. Really, they will. Tax planning is just the tool you need. AICPA surveys show clients are dying for proactive concepts and strategies from their accountants.Give them the tax savings they want and they'll give you the premium fees you want! Are you nervous about charging higher fees? Don't be. The key is showing confidence in your value -- and when you do that, you sell yourself, not your price. You should find it much easier selling yourself than your fee. ===================================================== ALMOST DONE WITH THE SKEWED SCHEDULE Just another week or two and we'll be back on the most-Wednesdays-at-1-Eastern protocol.
TaxCoach members, you should already be registed for the calls, or see connection instructions on the Contact Us page within TaxCoach.
Talk to you on May 3rd.
===================================================== We can answer questions on using TaxCoach system features anytime.
(Save marketing and tax strategy questions for Member Call-Ins.) For best
response, email support@taxcoachsoftware.com. Regards, Keith VandeStadt http://www.taxcoachsoftware.com/ (513)
321-2820
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