Tailored Solutions For A Niched Industry
Melissa Honan, the founder and CEO of Bookkeeping For Painters, has mastered the art of delivering tailored solutions for painters. Understanding the unique needs and challenges of her niche, Melissa has found success in charging higher rates while consistently delivering top-notch results. With a comprehensive service offering that includes bookkeeping, advisory, tax (soon to be CPA certified), and sales automation, Melissa's approach has proven effective, serving 165 clients and grossing over $2M in revenue annually.
How the “Big Bad Billing Melissa” Approaches Price Increases
Communicating a price increase to your clients can feel awkward, but it's a necessary step for growth and sustainability. When it comes to difficult conversations, Melissa chooses to personally handle the conversation rather than delegating to her account managers. Following a tactic known as ‘Appealing to higher authority,’ Melissa believes that her account managers should always play the good cop. “I do not want my account manager's relationship with our clients to be spoiled by the talk of money.” That said, Melissa still understands the fear and anxiety that comes with increasing rates, but when she follows her own best practices she’s able to navigate the tricky terrain with ease.
If you would like to watch a recording of Melissa’s talk, click here.
Knowing Your Numbers
Central to Melissa's strategy is a deep understanding of both her own firm and clients’ metrics. By tracking her team's hours, production rates, and gross profit by client – she makes informed decisions when it comes to notifying clients of pricing changes. For Melissa, an increase in prices doesn't necessarily mean losing clients; instead, it often attracts higher quality clients willing to pay for the enhanced services.
Setting Expectations Early
Melissa emphasizes the importance of setting clear expectations from the beginning. Her contracts include a price increase clause, accounting for factors like initial underpricing, scope changes, and inflation. This proactive approach prepares clients for potential adjustments, establishing a foundation for a successful and transparent business relationship.
- Be Transparent: Clearly explain the reasons behind the price increase, such as rising costs or increased service value.
- Provide Ample Notice: Give clients sufficient notice of upcoming changes to allow them time to adjust their budgets.
- Offer Alternatives: Consider providing different service packages or options to accommodate different budget levels.
- Highlight the Value: Emphasize the value and benefits clients receive from your services to help them understand the worth of the price increase.
Reviewing and adjusting rates at least annually is a good rule of thumb. Melissa performs semi-annual reviews of her pricing. She takes into consideration factors like scope of work, value proposition and general market changes. By segmenting clients based on their needs, complexity of work, and the value they receive, Melissa tailors pricing, ensuring fairness and reflecting the value provided.
The Meeting That Could Have Been an Email
Recently, Melissa has shifted her approach, starting her pricing reviews as early as October for a phased increase. This proactive approach is especially relevant for clients who have already exceeded their annual revenue expectations by that time.
Melissa learns best from her mistakes and cautions that notifying your clients too close to the date of their price increase (even a month out), can make some clients feel alarmed and undervalued.
By creating pre-made email templates and including clauses in her engagement letters, Melissa saves a significant amount in opportunity costs, estimated at $25,000 per year, by choosing to communicate price increases early and via email. This method not only conserves her time (priced at $500 per hour),but also respects her clients' time. By avoiding unnecessary meetings, Melissa efficiently manages her large client base, only scheduling calls when absolutely necessary.
Other Lines of Communication
Sending emails does not mean that Melissa dismisses the need for a one-on-one conversation. In fact, Melissa recognizes the importance of these calls, especially with long standing clients or when additional discussion is necessary.
A Thoughtful Approach to Client Onboarding
Melissa does not stop at only existing clients, she also includes her new clients in her regular pricing evaluations. This helps ensure they are aligned with her firm’s standards and creates a trusted and transparent relationship right from the start. That way, new clients are not surprised when they receive their first price increase notification. Melissa’s upfront approach makes it a quick and painless process.
The Tax Island
In Melissa's business model, tax pricing stands apart from bookkeeping and advisory services. This clear separation, referred to as the "Tax Island," ensures that clients receive tailored pricing for each service. This method reflects the unique demands and expertise required for each division, reinforcing the value of specialized services
Teaching Success Strategies
Beyond pricing, Melissa is dedicated to educating industry peers on broader topics like managing expectations, handling objections, and efficiently communicating changes.
Overall, Melissa’s methods in handling price increases and client communication in her specialized bookkeeping business for painters demonstrate a thoughtful, efficient, and client-centric approach. Her strategies in setting clear expectations, separating service pricing, and efficiently managing her time and communication serve as valuable lessons for any service-based business owner.
Earn More In Your Firm
Effective pricing isn't just about covering costs and securing a profit margin; it's about conveying value, competitive differentiation, and customer satisfaction. When done strategically, pricing can maximize revenue, create client loyalty, position your firm, and differentiate your services.
By incorporating a tool like Keeper into her workflow, Melissa and her team add a new dimension of professionalism, organization, and precision to their bookkeeping review process. This enhanced efficiency not only reinforces the value they provide to clients but makes conveying price increases that much easier.
Want To Learn More
Checkout how Keeper can streamline your month-end close. Schedule some time with our team: Keeper Walkthrough
For more on how Melissa helps bookkeepers and accountants determine when and how to prepare for price increases and the pre-made templates she uses at her own firm, check her out here!