Earmark Podcast | Earn Free Accounting CPE

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Ryan Embree: [00:00:00] Ultimately, as your clients want to see you as the expert. So them knowing that you know so much about this topic, you know so much about their industry. Um, you know, people's willingness to pay is is infinite for that, that piece of mind.

Blake Oliver: [00:00:14] So are you an accountant with a continuing education requirement? You can earn free Nasba approved CPE for listening to this episode. Just visit earmarked in your web browser, take a short quiz and get your certificate. Welcome everyone to the earmark podcast. I'm Blake Oliver. We're coming to you from Los Angeles on the Advisory Amplified tour, recording in front of a live studio audience. Our topic today is something that can make or break your accounting firm pricing. If you've ever felt your fees don't fully reflect your value. This episode is for you. I'm joined by Marie Greene, CPA, founder and CEO of Connected Accounting, and Ryan Embree, Director of Partnerships at Ignition, where he helps firms modernize client engagement and automate billing. In this episode, we'll talk about how to spot underpricing, how to have the repricing conversation, and what you can do this week to start charging what you're worth. Ryan, thanks for being here.

Ryan Embree: [00:01:19] Hey, Blake. Thanks for having me.

Blake Oliver: [00:01:21] And Marie, thank you so much for joining me.

Marie Greene, CPA: [00:01:23] Very grateful to be here with you in LA.

Blake Oliver: [00:01:26] Marie. I'm going to start with you. You have described in the past a moment when you realized that your pricing did not reflect your true value for yourself and for your firm. Can you take us back to that moment? Describe it for us. What was that like?

Marie Greene, CPA: [00:01:43] Yes, I used to be, um, say yes all the time to anything for anyone. And when we got to a point where I was spending ten, 12, 15, 20 plus hours on a client that I was charging a whole $12 because it made me seem more expensive. I literally cried, but I didn't know it was so bad. My pricing was so bad until we started tracking time. Even though we're not a firm that bills by the hour, we had no concept of our pricing of whether or not it was feasible doable, like profitable. And so that was like the aha moment when I finally had a way to figure out this is a nightmare.

Blake Oliver: [00:02:27] So you started out with fixed fees or were you doing hourly billing to begin with? How did you how did when you started your firm, what were you doing?

Marie Greene, CPA: [00:02:35] It's always been fixed fees. We've never had hourly um I did I do some hourly for out of scope, but everything else is fixed fees. The way I used to do it was more like trying to figure out the number of hours it was going to take me and multiply it by my estimated hourly rate. But now we actually found a way. Over the years, with all of the knowledge we've gathered, from knowing how much time it kind of takes. We have pure fixed fee, no longer like just a multiplier.

Blake Oliver: [00:03:04] So it was working for you when you started, when you were just doing it yourself. So then it was what? Why did it not continue to work for you? Like what was what was was it when you hired? Was it you had other people doing the work? Like, how did you get into this situation, I guess.

Marie Greene, CPA: [00:03:24] Yeah, I was it was multiple folds. The biggest moment is when I realized that I was pricing, what, two clients the same amount of money for the same services, but then required. So one required so much more of my time than the other one did. And that's when I realized you can't just price the deliverable, which is a PNL. At the end of each month, you have to also price the number of touch points. You have to price how often they have ad hoc random questions that are not part of the scope and all of these things. So that's that was number one. And when I started having, um, a more junior person below me, which he was my first hire at Connected Accounting, I realized that I'm super mega efficient. Not everybody is as crazy as I am, and I can do so much work in so little hours. And so when it takes someone a normal amount of time, I was destroying my budgets and I couldn't delegate fast enough. And then I was just buried in work.

Blake Oliver: [00:04:28] It's easy to fall victim to that, um, when you're the firm owner and you're super efficient and you price based on what you can the time you can do it in. You have to really you have to really, like, estimate a lot more for like just everything else that comes up. Yeah. We tend to be optimistic I suppose. Right. That's why we get into owning a firm. You don't you don't start a business because you're a pessimist.

Marie Greene, CPA: [00:04:53] And that's why the managers and supervisors in my firms were like, we got to take over the pricing sheet for a moment. Let's tell you, you cannot sell this. You have to stop selling that. Nobody's trying to do X. Stop saying yes to everything without first do like training. Um, so now, six years in, we have it a lot more, you know, figured out. But that was that was tough.

Blake Oliver: [00:05:17] Okay. So you basically stopped being as optimistic with your pricing. You got more realistic with it, and you started to track the time not to do the billing, but in order to at least understand which clients you were spending a lot of time on, and particularly it sounds like your own time. That's what it.

Marie Greene, CPA: [00:05:33] Was.

Blake Oliver: [00:05:34] Yeah. Ryan. So you have the benefit of working with hundreds of firms on pricing across those firms. Where do you see Underpricing hiding? Where in other words, where could firm owners look if they think that they're leaving money on the table?

Ryan Embree: [00:05:58] Yeah, I think most commonly we see in the compliance services that firms kind of fall in the trap of charging the same as last year, or the client's used to paying this amount. And it's kind of this problem compounds year over year. So I think just looking at the year over year and if you aren't looking at price increases, price increases are normal. They're a part of part of business. I think sometimes, especially around Covid, I think a lot of firms, um, when their clients were struggling, they were hesitant to address, uh, pricing with them as well. But I think now kind of looking back and if you aren't doing those price increases year over year, if you originally quoted someone X amount of dollars seven years ago and they're still paying that fee, I think that is the biggest opportunity is just within the existing client base. Uh, and looking at where there are those opportunities for price increases, um, as well as ability to upsell or cross-sell new services. So earlier we were talking a little bit about that. And, and knowing all the different service offerings you have in your firm and making sure your clients are aware of those as well. So a client might not know that you could do additional services for them. So that's another really good way for you to to increase the amount of fees that they're paying you over time.

Blake Oliver: [00:07:12] That's a really good point about the, um, the annual reengagement and not raising prices. Marie. You're smiling. It sounds like you're guilty of this as well. Like, I mean, I know that I have this tendency we want to be nice to our clients. We don't want to raise their fees. We want to keep it the same. But we should know this as accountants that if we do that, we are economically losing value, right? Inflation happens. If you haven't raised rates to keep up with it, you are losing money.

Marie Greene, CPA: [00:07:42] I think that's also where one of the ways software is helping us do it is in the past, we used to have to send a new engagement letter, collect the signature before we did any work, and we would, you know, come to March. We would still be waiting on clients to sign their new year like engagement letters to start the work. So now, one of the things that we've decided to change is a little bit of the wording in our engagement letter to say that every year in December, for us, we're going to send you a notice saying, hey, you have 30 days to cancel your services. But just so you know, effective Jan one, all of your, um, the pricing across the firm is going up 3% or whatever it is. And that's only we can only start doing that now. We weren't Ignition. And so now it's possible to do it. And that is going to remove a lot of the frictions. Um, I think for us, instead of waiting for that signature, we can just auto do it.

Blake Oliver: [00:08:40] Making it an opt out. Yeah. You can stop working with us if you would like to not accept the price increase, but otherwise you are. You're agreeing to it. Yeah, I love that. I mean, think about all the things in your life where the price increases just happen. Like if you're an Amazon Prime customer, which probably, you know, 80% of the people in this room are probably using that. That fee just goes up every year. And, you know, we get the email and we look at it and we either like it or we don't. And but we accept it, right? We just keep going. And why can't we do that with our firms too?

Marie Greene, CPA: [00:09:15] If we look at the email.

Blake Oliver: [00:09:16] If we look that email.

Marie Greene, CPA: [00:09:17] How many clients don't look at their emails? Am I completely miss that email and not even blink?

Blake Oliver: [00:09:23] So, Ryan, you also mentioned, uh, cross-selling. Clients don't know about all of the different services that we do. And so we're leaving money on the table because here we are going out and trying to get new clients to bring in revenue when we could just be doing more for our existing clients. So do you have any recommendations for firms as to practice leaders, firm owners as to how they can make clients aware of everything the firm does, and make sure that the clients are getting everything they could be getting?

Ryan Embree: [00:09:56] Yeah, I think, uh, like it ultimately just first starts at looking at your client list and looking at which clients take up which service and at which level. And I think there's really kind of natural ways that you could look at of like, show me all of my bookkeeping clients that I don't offer payroll to or that we don't offer tax services to. And you start to drill into those different segments and you start to realize probably those different opportunities. Maria, I'm curious in your firm, is there anything you guys do to actively cross-sell your services?

Marie Greene, CPA: [00:10:27] Yes. I think what you said is like really important. It took us several years to even get to a point where I had a list of what client used, what services and what apps. And the moment we finally got that information, I was like, oh, we only have six accrual clients, or we only have three that use X. So then we like started in meetings with clients saying, hey, by the way, we notice you do this. Who does your payroll? We're not saying we sell payroll and you should buy it, but it was just planting a seed. Like who does your payroll? How long does it take? Is that a headache for you? What are your concerns around it? Um, if you could, you know, get rid of it. Like, would that be something you'd be interested in? And so, like, yeah, clients were like, absolutely. I didn't know you did it.

Ryan Embree: [00:11:16] Well, one more point on that one, I think, uh, yeah. Really kind of actionable way is, um, you know, setting up, if you're not already using anything for an email newsletter, like just setting up a really basic campaign around that. So, um, you know, potentially have a landing page that explains the service and the benefits. You put that out in your newsletter. You can have an opt in. Um, so I think sometimes firms might get overwhelmed by like, how do I run a campaign? What does that mean? But I think ultimately just being able to get that information in the hands of your clients and allow that decision making process really easy, maybe the call to action is booking a meeting, uh, to learn more. But I think the more you can kind of run those targeted campaigns at those segments, uh, the more successful that will be.

Blake Oliver: [00:12:00] In one of the firms that I was a part of. We had a campaign internally to reward account managers or bookkeepers or anyone who worked with the client who was able to identify something that they needed, that they weren't getting. And then to to introduce them to the sales team to, you know, add on that service. We had a very nice bonus program like incentives like that work. And it gets the team thinking about, you know, how how can I help the firm grow our clients.

Marie Greene, CPA: [00:12:33] And I think it goes back as well to when you reengage or whenever you have a touchpoint, the add ons that we saw earlier. So not just, you know, you offer what they what you discussed, but just letting them know we have these add ons you can select from. We sometimes clients surprise us. It's and it's not always the ones that have the most cash flow that select those. Sometimes it's the ones that really need it. And we can help them get there to the next level. Um, so I think that's also like let them choose.

Blake Oliver: [00:13:04] So adding services is one way to increase prices. But I think we need to focus on something that's a real problem in the profession, which is we just aren't charging enough for what we're doing now. Often that's the case, right? And Ryan Ignition has done a lot of work studying this issue. And it's it's pretty common when firms raise prices for what they are doing now. Are they losing clients?

Ryan Embree: [00:13:33] No.

Blake Oliver: [00:13:34] Right. The answer is no. Right.

Ryan Embree: [00:13:37] The short answer is no. Yes. Um, I think a lot of firms, actually, who want to cut clients, think that raising fees is the way to cut clients. And the short answer is no, they actually still stick around and they'll actually the worst. I've actually heard from firms that those worst clients are actually, you know, they're so price insensitive that whatever the fee is, you can't actually price them out. So if you're looking to lose clients, I wouldn't say the best strategy is to to raise your fees.

Blake Oliver: [00:14:04] Because then you just have the same clients that are more unhappy, right? So. So, Marie, what's your experience?

Marie Greene, CPA: [00:14:12] I think the only struggle I've had where my fear of if I raise it, I can lose a client was legit. Was the client already was in trouble? Um, so by the end of the year, when we sent the new proposal, they were like, you know what? We need to have a conversation. We don't know if we're going to be able to still be here six months from now. And you would think the team would alert us or. No, but sometimes it's hard. It's a little bit more of a gray area. Um, and we've lost a few clients where that final like it's a touch point where we you have to sign it again. That's when we lost them because we asked them for time to reconsider our pricing instead of just the basic increase.

Blake Oliver: [00:14:57] Tell me more about that. Like what? What was it?

Marie Greene, CPA: [00:14:59] There's two, two different scenarios that we've seen. One is, um, on our larger, higher dollar clients. Um, it's it's made them realize, you know what? We're coming up on the year end. We just got connected. Accounting's new engagement letter for next year. It's time to have that discussion in-house. Before we sign this as a do we need to hire in-house? So we've had clients leave because our pricing versus hiring someone got so close that it made sense for them. The second one was, um, they were short on cash. We were sending them the renewal, maybe five, and they were already struggling. And so that made them realize, like, we need to go to market and try to find a cheaper accountant because we don't have enough money. Or some of them were like, we're actually going to close our doors. But I don't know if that conversation would have occurred right then. It might have been delayed by a few months.

Blake Oliver: [00:15:53] So assuming that the client doesn't have those cash flow problems right, and you've it's.

Marie Greene, CPA: [00:15:59] Not an issue then.

Blake Oliver: [00:16:00] Right. So but how do you have that conversation without damaging the relationship? Because that's the part I would always get nervous about, is.

Marie Greene, CPA: [00:16:08] I think it's pretty easy when you know your clients. So we would we've always been very clear up front that we grow with you. So as you grow, as you add employees, as you add bank accounts, as your transaction volume increases, our fees increase. We don't worry about it. We look at it annually, except if it's dramatically like crazy over a period of three months. But they know that this is our process and they're excited. They've grown. And often at that point we're also like, by the way, I think you could benefit from A, B, C, D. And we're so excited. Like we're always like happy that the client is growing. So it makes those conversations easier. And they also know we priced that way.

Ryan Embree: [00:16:53] I think that's a really good point too, as far as the way you line up your services and having limitations to those services. So it doesn't actually just feel like an annual price increase. It actually, you know, they they know they're growing. They know they've exceeded scope. So they know they're just kind of leveling up to a new level of service. Um, as their business grows.

Blake Oliver: [00:17:14] And I'm thinking of the metrics that we use at our firm, it was headcount. That was a good one, right? If an employee or if, if a if a client has more headcount, they're bigger. They've got more needs. Um, we used, like you said, bank accounts. Right. Are there any others that that come to mind.

Marie Greene, CPA: [00:17:34] So we use, um, bank accounts, transaction volume, because you can have a client that has 17 credit cards like we do or one that has one bank account, but maybe the one with one bank account is like over a thousand transactions. So we look at both. We kind of do a bundle of both number of bills, number of invoices we have to issue every single month. We look at um, touch points. So are we doing weekly touch points or monthly touch points? How many meetings are meetings monthly or quarterly? So all of at the end of the day, it ends up being like a fair amount of drivers. But because we're able to say we're not increasing, we're just expanding the scope.

Blake Oliver: [00:18:17] So do you want to try a little like repricing role play.

Marie Greene, CPA: [00:18:21] Go for it.

Blake Oliver: [00:18:22] Okay. So Ryan you're going to be the client.

Ryan Embree: [00:18:24] All right.

Blake Oliver: [00:18:25] Ryan's a client connected a connected accounting. And Marie this is a real challenge. Uh, you have to have this conversation with Ryan. Okay. So so let's say that the zoom meeting has started. You're done with the small talk, right? And now it's time to have that difficult repricing conversation. How do you start, Marie? What do you say?

Marie Greene, CPA: [00:18:45] Hey, Ryan, how excited are you about next year? Like, what are you looking forward to doing with the business?

Ryan Embree: [00:18:51] Yeah, we're, uh, we're in growth mode heading into next year. We're looking to add a few new employees for some new roles at the beginning of the year. Uh, and we've got some aggressive growth goals on the sales and marketing side. So we think 2026 is going to be a really good year for the business.

Marie Greene, CPA: [00:19:07] That's awesome. And with the growth, like what are some of the things that keep you up at night.

Ryan Embree: [00:19:12] Yeah, I think ultimately, um, you know, a lot of the team management issues, um, there's some cost concerns as well that come with that growth. I know our profitability is going to take a hit next year with that increased costs. But, um, you know, I think I'm optimistic on the future of where we could get to.

Marie Greene, CPA: [00:19:31] Would you be interested if we can find a way to help you lower some of your costs by not having to hire one more admin, and we can take on some of the grunt work?

Ryan Embree: [00:19:40] That would be interesting. What what type of work do you think you guys would be be taking on?

Marie Greene, CPA: [00:19:45] Well, there's a few. The first thing when I reviewed your books, I realized that you're now at like 25 employees. And last year when we chatted, you were at 12. So what we were thinking is, like, we can help you add more. Also create maybe more processes for you. There's a few other apps that we could also consider, so I would love to talk to you about that because that could really save you on the admin you're considering hiring. Um, and then separately we help with like benefits renewal. I don't know if you knew we did that. We can also help, um, identify other ways you can retain talent because that's always costly to lose people. So I think maybe we should have a separate conversation around the people strategy here. And I can show you some of the things we can do.

Ryan Embree: [00:20:31] Yeah, that would be amazing. I know it came up in our leadership meeting around revisiting our benefits, and we know we want to kind of take that up. So yeah, we'd love to hear what you and the team could help out with.

Marie Greene, CPA: [00:20:42] Awesome.

Blake Oliver: [00:20:43] I love that conversation. A round of applause for our play actors here. Yes. Uh, I love what you did there, Marie, because you started off with the positive growth, right? The excitement about what's coming in the next year and then framed it around metrics. This is this is how much you've grown in terms of headcount. And you cross you did some cross selling there, right? You added like you you helped Ryan become aware of, uh, of this, you know, ability to do HR, a little bit HR advisory work, um, all all in a very short amount of time. That was great.

Marie Greene, CPA: [00:21:20] Thank you.

Blake Oliver: [00:21:21] You clearly have some practice at this.

Marie Greene, CPA: [00:21:23] Well, one of the things I've learned is that it's really about and I'm still struggling with that at times. Like it's really about figuring out like what are their pain points, where can we help? And usually I step back after that conversation. I then prepare a three tier proposal that I bring back to the table. And then the cool thing is that for our clients like Ryan, like he could see that, okay, this is today's pricing, but this is like if you add all the things that we could do for you, we could help you so much more. And it's not a big jump. And then often by then, like the idea of relief, the idea that, um, if we leverage the existing tools, like we use gusto for a lot of our clients, for instance, that already has a lot of the benefits in it. So for us to say, let's go through it, let's give you some advice on what other clients do. Um, it's not a huge lift, but we can help them even more. And then it makes the conversation way easier than me saying, I'm going to increase your price.

Blake Oliver: [00:22:23] So, Ryan, uh, Marie mentioned the three tiered pricing proposal. Ignition helps firms operationalize all of this. What do you how do you recommend that firms roll out a new pricing model across their clients?

Ryan Embree: [00:22:42] Yeah, I think it's it's definitely not like an overnight transition. So I think what I've seen in firms that have been most successful in this is kind of run it in various different stages. So, um, testing it out on some new or existing clients to begin with to get that initial feedback and learnings. Uh, and then I think ultimately tying it to the renewal cycle, uh, I think as Marie mentioned earlier, uh, the ability to show them what they're getting today as a baseline package and actually giving them the peace of mind that, hey, I could actually still say on this base level of service, uh, but then also showing all the other services that are possible and the additional benefits that come with those. So the price increase just, just doesn't feel like, uh, you know, that that fee increase coming, coming in. It's double or triple overnight.

Blake Oliver: [00:23:34] Marie, was there a, uh, a mindset shift that happened for you to get comfortable having these pricing conversations? I remember being very uncomfortable at the beginning. I don't know if I've ever quite gotten comfortable at right.

Marie Greene, CPA: [00:23:50] 100%. I don't think that I've still gotten comfortable. I always get a little nervous before I get on those calls. Um, I think I always was so fearful of the idea that I don't know how to do sales, and I'm not a salesperson, and then I try to read a lot about it because that's how I tackled problems. But it's not by reading that I learned it was more by doing, and at the end of the day, it became about ask questions, figure out what they want, do three tiers they choose. And that was the relief. I was no longer trying to force a single price. I showed three and then they could choose. And even I think like they see how excited I get. I think they know I'm a huge nerd, I love technology, I love accounting, and so they get that vibe when they when they see me. And so they eventually they're like, okay, cool. She sounds like a fun to work with. And it's the personal that also wins the deal. Um, it's practicing and let and remember that, like you're offering three options. That to me was relief.

Blake Oliver: [00:24:55] You're offering options. It's the client that is choosing, you're not having to force them into anything. I like that.

Ryan Embree: [00:25:02] No, I think that that last point that Marie made was was really, really great because, uh, you know, ultimately, as your clients want to see you as the expert. So them knowing that you know so much about this topic, you know so much about their industry, um, you know, people's willingness to pay is is infinite for that, that piece of mind. So, uh, to know that you have an expert in your corner that has done this with other clients and knows everything about you and your business and industry and tech, um, you know, people will pay anything for that.

Marie Greene, CPA: [00:25:33] And honestly, like, I was shocked by one thing was we had a client leave us to go to, um, pilot. And I said, you're gonna have to sign a 12 month contract if it doesn't go well, when you're done with the 12 month come back. And they were getting this deal. Um, by the time the 12 months increased and the copilot team realized how much work this client was, and he was at his new, higher level pricing. He was so much higher than my initial pricing. And when he came back, first of all, I kept that high pricing. But second of all, it was like, everybody thinks their stuff is simple, but they're going to go to each of us and maybe they'll get three different prices. But at the end of the day, like as long as we're all pricing fairly, and I think that's where the Ignition analysis is going to help to make sure nobody's completely underpricing. I also remind them, like the cheapest option is like QuickBooks Live or something like that, and they start a 300 or $400 a month, like, I can't be $500 a month. My, you know, you get US based accountants, you don't get offshore. So it's that was I think levels the playground more.

Blake Oliver: [00:26:44] Well, Marie Ryan, thank you so much for sharing your insights today. It's been great having you on the show.