The Ambitious Bookkeeper Podcast

11 ⎸ Pricing Your Bookkeeping Services w/ Lauren Caselli

August 25, 2021 Lauren Caselli Episode 11
The Ambitious Bookkeeper Podcast
11 ⎸ Pricing Your Bookkeeping Services w/ Lauren Caselli
Show Notes Transcript

In this interview episode, I talk with Lauren Caselli, about the different pricing strategies you can use in your bookkeeping business, from hourly to value based, package pricing to retainer pricing. This episode will help you understand the pros and cons of all the different pricing methods and hopefully help you in your pricing journey.

Sign up for The Bookkeeping Business Accelerator to get access to an in-depth workshop with Lauren on Raising Your Rates 

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Thanks for listening. For more information about the Ambitious Bookkeeper Podcast or interest in our programs or mentoring visit our resources below:

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Ep 11 - Pricing Your Bookkeeping Services with Lauren Caselli

[00:00:00] Serena Shoup: [00:00:00] Welcome back to the ambitious bookkeeper podcast. In this interview episode, I am talking with Lauren Caselli about the different pricing strategies that you can use in your bookkeeping business. We talk about hourly value based pricing. Uh, retainer pricing and package pricing. This episode is really going to help you understand all the pros, cons the risks rewards of all the different pricing methods, and hopefully help you on your pricing journey.

I call it a journey because pricing is, should be ever changing. It's a huge guests. Um, but hopefully this. Take some of the guesswork out of it for you. Uh, I also want to let you know that if you're listening to this, when this episode goes live, we are currently in an open registration period for the bookkeeping business accelerator, and you can get access to an in-depth workshop with Lauren Caselli on raising your rates.

And I'm not going to try to rerecord that you can hear my [00:01:00] child in the background, uh, any way. For without further ado. Let me introduce Lauren to you and we'll get right into the interview. Lauren helps people with big projects through well-thought-out proposals and pricing strategies. After years of working with tech companies and venture capital firms in their events, she realized that many of the most successful business owners she worked with had no idea how to manage their cash or how to use that cash wisely to support their lifestyle and grow their business.

 

Okay. 

Lauren Caselli: [00:01:32] All 

Serena Shoup: [00:01:32] right. So welcome Lauren. I wanted to, to bring you on today. and I'll give a little bit of a background of how we met, I guess, before we jump in.  But I brought Lauren in here today because she has some expertise around pricing and I know that's a huge, huge thing for, , everyone in every industry basically, but especially, um, my listeners in accounting.

So, , Lauren and I actually met inside of a [00:02:00] speaking program last, last summer, or was it spring? Yeah, it was the V we were the, the, um, coronavirus cohort or whatever of the speaking program. And, um, side note, I built a lot of amazing relationships out of that little group. So, um, thank you so much for coming on here.

So. I've already kind of given your background, but can you go a little deeper into how you got into, um, events and then how you made the shift to where you're at? 

Lauren Caselli: [00:02:36] Yeah. So in case anyone listening missed it, um, we have not been able to host live events pretty much for the last 18 months. Um, particularly on the corporate side.

And I was, was a corporate event planner, primarily focused on, um, working with clients in tech, um, VC venture capital and, um, like software as a service. So. 50 to 250, I was doing [00:03:00] maybe one event a month. Maybe once every other month we worked with about six to eight clients, um, and generally traveling to California, et cetera.

So it was, um, you know, I was growing the agency style model. Um, I've worked on sort of like, uh, I started when I started pricing the work that I was doing, I started with an hourly model. Then I went to, uh, like a packaged model. And then I started doing custom value based pricing, which we can talk about, um, and how I sort of escalated through those prices.

Um, and then when the pandemic hit, um, I had to lay off my team, um, like all of my contractors and it was a moment of me deciding if I wanted to rebuild an event business, or if I wanted to do something else and what I had been, um, focused on, um, Once I hit the level where I was hiring folks was more business operations.

How do I get my business to run? Which I know is really important for bookkeepers, especially bookkeepers and accountants as you grow, um, and adding capabilities and adding staff, um, your role changes. You're no longer doing as [00:04:00] much client service. Um, hopefully, um, you're sort of starting to, um, And focus more on the running of the business.

And I love that stuff. I love operations. I love, um, thinking about sort of overall business strategy, long-term goals, selling businesses. Um, I love, you know, helping folks kind of pick a goal and then working on the plan toward how to do that. But what I noticed that folks were really running into was how can I afford this?

Or how am I going to pay for this? Or, um, you know, what's, what's going on. You know, I want to make this big investment in team that, how am I, how do I know if I can afford this person and have the lead gen and the, the work to be able to employ them for, you know, three to six months? Um, and that's a real problem, right.

You know, because it's a lot of work to hire and grow team and grow a business. And so what I started doing is I started, um, working with folks, understanding their cashflow, um, Uh, which I always say, like, if you don't have a bookkeeper, don't call me because like, I can't, I can't help you [00:05:00] if your numbers are a mess.

Um, and so what I started helping folks do is understanding how their pricing was affecting kind of their ability to grow and kind of honed in on this niche of pricing and rate raising and understanding a lot of the tension. I wasn't, you know, I don't want to say 90% of the tension, but a lot of the tension in businesses when folks are like, I don't feel like I can go to this next level.

The first step I would say is like, okay, let's evaluate your pricing. Where are you in the market? How, you know, how often do you close things, close sales. Um, and a lot of times. You know, a raise of the rates, uh, redoing a pricing structure, a simplifying of services and pricing something higher, um, gives them the fuel to be able to grow a business, to hire folks and do all those things.

They never thought they could. 

Serena Shoup: [00:05:49] Yes. I want to go back to what you just said about. Adjusting your pricing structure and simplifying your services because you can't. I mean, a [00:06:00] lot of times, um, what I come across as people thinking that they need to add more complicated services or additional services and offer more.

And this is the trap I fell into at the beginning too. I was like, well, I want to charge clients. Twenty-five hundred a month or $3,000 a month. So I guess I'm just going to have to be their whole accounting department and that is not sustainable. Yeah. Yeah. So, and I'm actually more profitable now, even though I, yeah, I don't have those super duper high ticket clients anymore, but my services are more simplified.

So. I just wanted to bring that to the forefoot front too, because you can't really evaluate, it's all intertwined, right? Your services and your pricing are all intertwined 

Lauren Caselli: [00:06:46] and there, and there is a trade off, I think what happens, and this is very common and I do this and that most folks who start out, um, It's very common that whenever we are, new-ish newer starting distances, learning how to work with clients and being sort of the [00:07:00] sales engine of a business.

Um, we try to serve as many clients as we can. And sometimes I don't think that's a bad idea because what you are doing is you are getting paid to learn what you're the best at. And, but the opportunity costs for that are the sort of a hidden cost of. Having a sales call and then like creating a package out of thin air for someone, or, you know, deciding to go hourly and working with them on an hourly basis is that now you have tacked on, uh, an immense amount of, um, administrative work that you have to keep up with.

And if you have an agency where you have, you know, Three or four people on your team, and maybe you have like an account manager, a bookkeeper or something, your own bookkeeper or somebody, um, to manage, you know, time tracking and invoicing and things like that. You can outsource that to that person. But if it's just you, the opportunity cost of constantly.

Doing custom packages when you're new, um, makes it really challenging for you to just like run a good business. And so we always recommend, and I know [00:08:00] that you preach this as well, simplifying as much as you can in the beginning, and then growing, um, growing your product suite or growing what you offer folks sort of, as you grow your company, as you grow your, um, as you grow your presence, kind of in your.

Serena Shoup: [00:08:15] Yeah, absolutely. Um, yeah, that's a really good point. Um, to also make that th there's no shame in offering a bunch of different things at the beginning and working with lots of different people, because you will learn what you like the flip side to that is then having to have the conversations later on of letting go of clients that don't fit the model you want to move forward with, or, you know, um, all that stuff, which is just part of the growing pains.

And it's. Impossible to avoid. So if you're in that situation right now, it's okay. 

Lauren Caselli: [00:08:49] Yeah. Uh, I know, I feel like my life should be like business, a series of hard conversations. It's like all it is. Yes. Yes. You have a winner. 20, you know, [00:09:00] 20 minutes later you're like done, I've done a hard conversation. It's like, yeah.

It's two steps 

Serena Shoup: [00:09:03] forward, step back type of situation. Yeah. So let's get into the various ways that you can price. I think this is a really good topic inside my program. I'm kind of revamping some things around pricing and I used to teach all the options for pricing, but now I. Going to be focusing on like, just package pricing.

So in preparation for that, I would love to talk about the other options so that people can understand what else is out there. Um, in terms of like, you know, there's a lot of talk around value based pricing and subscription model and then retainer pricing. And then of course there's hourly. So can you break down?

Those different types of pricing structures and how people can fit them into their bookkeeping business. 

Lauren Caselli: [00:09:56] So generally the first one, um, this is probably the least related to bookkeeping, [00:10:00] but I want to talk about it because I think that it, it can be, um, as you are growing a team, it can be something that is, um, a model.

So there's costs. Which essentially is the cost, which I'm sure if you're a bookkeeper, you are familiar with it. It's basically the cost of goods and service. Um, and then you put a mark up on that. So for example, let's say we're selling cups, um, a cup costs 10 cents, and I sell it for a dollar. Um, knowing that like all the administrative, you know, operating overhead costs in there are maybe like 30.

Um, and so my profit is 60 cents. That's a cost plus model. You don't see that as much with service-based businesses. Um, but that is, you know, sometimes folks as they grew, their agencies move to somewhat of a cost plus model because they build their folks out hourly and then they kind of had, um, margin.

Yeah. 

Serena Shoup: [00:10:44] That's actually what I start with in helping people understand what their baseline should be like. Yeah. Especially if you're going to include the cost of your, you know, your software subscriptions. Like for me, I handle the zero subscription and hub dock and all the [00:11:00] tools that I require my clients to use.

I handle the subscriptions because I'm requiring them to hop onto my, my tech stack. So that is where I do formulate my base price. And I know I cannot go below this or else I will not be profit. 

Lauren Caselli: [00:11:13] Right. Yeah. So cost plus does have some applications, like you said, if you do have, you know, if your, um, clients are using your, um, your, uh, software and services, right.

Um, the next one is hourly. We're all familiar. Yeah. This is basically you have an hourly rate and you charge that. Um, Pros for hourly. And there are great situations where you can use hourly is if somebody wants to do a couple of consultations with you, and you're not sure if they're a great fit for a client, kind of long-term, you can do some hourly consultations with them, um, at sort of, you know, a hundred dollars, you know, whatever, um, the reward, the risk.

So every, every model has a risk, a room. The reward for hourly is that, um, it's kind of an easy, you don't have to do a lot of prep. It's easy in and out. Um, and you can generally charge more for a single hourly [00:12:00] session or a package of hourly sessions. Then you could theoretically for kind of like a, an all-in package dash, uh, like big package, um, hourly, I mean like the per hour cost, um, the, the risk of hourly for, um, service providers.

Somebody might only buy an hour and you're doing a lot of work for like onboarding a client for just a, you know, a one hour call or even, um, I mean, there's lots of risks. Like even if a client's like, but my problem is I want somebody to be with me for a year and you're trying to sell me on hourly. And, um, uh, you know, it doesn't, it you're sort of commodifying the service, um, and they don't understand the value of the work that you do if you're excellent at what you do compared to other folks who, um, Haven't not really fees.

Um, I don't dislike hourly. Uh, I think there's a lot of people that get real negative with it, but I think I don't, I don't dislike not really, uh, work. Um, particularly if you're in an industry where. Companies are used to working with [00:13:00] hourly work. Um, and I know accounting and bookkeeping is one of those.

Um, but there's other options. Um, I would say like, if you're, if you just right now want to like, get your feet under you, like hourly is totally fine. Um, to start with, um, as you are learning how to do the work. 

Serena Shoup: [00:13:17] Yeah. And it builds upon like that cost plus structure. You do need to know how long things are going to take you initially.

So if you're brand new, you kind of at least have to do one client as an hourly, right. Or be willing to eat the cost or not be profitable on one client, if you want to go package pricing. Totally. 

Lauren Caselli: [00:13:35] Totally. And I think I really also like, again, it's like, it lets you, it gives you the opportunity to sort of get paid, to learn how to, how to do it.

Um, which you went to business school, it would be the other way round. Um, so the next, uh, that's hourly, obviously hourly for your client has the reward for the client, is that, you know, they don't have to commit. There's no commitment. Um, the risk for them is that, like, if you're not checking in constantly [00:14:00] hourly with your hourly rates, they could spend more than they were planning on spending.

And so if you are going. In an hourly direction, you just have to be pretty transparent with your clients or write a contract that says that you don't have to be transparent or negotiate with them upfront and say, you know, I'll cap my hours. You know, 600 bucks or a thousand dollars, whatever. Yeah.

Serena Shoup: [00:14:21] There's so many ways that you can structure that too. And then the other thing that I know that people run into when I worked at the CPA firm, like we charged, we charged hourly and every month. My, the, you know, the managing partner would go through our hours and actually write down the bill and like give them a discount because you know, he felt bad.

So that's, that's a huge risk of discounting your own service, even though you legitimately spent those hours, it's like, well, I don't know. Client to freak out that I spent so much time. Cause it was so much more than the prior month. So, 

Lauren Caselli: [00:14:57] yeah. Um, okay. So the [00:15:00] third model is the fixed package model, which we've talked about.

Um, and that is the model that I sort of moved into. Once I had worked with enough clients where I sort of was like, oh, this is really repetitive. You know, the clients need all the same things. There's like a certain amount of buckets that they use me for. And with events, it was content. There was registration, there was.

Event planning and vendor management, and then there was onsite execution. And so I just fixed package, fixed priced each of those sort of pieces of the event. Um, and then allowed clients to sort of either get the whole package, which was everything or choose. Like, we only want you to do registration and event planning and onsite.

Um, and the benefit for I'll talk about the benefits for, um, for, uh, businesses, small businesses, um, the benefits of fixed package price as you removed. You basically come up with a framework it's the same for everybody. And you remove all of the administrative work that comes along with hourly or cost plus, which is like time tracking and invoicing monthly, et cetera.

[00:16:00] Um, because package pricing is sort of like, you know, if we're together first, you know, our engagement six months, this is what it's gonna look like. It's the same amount of money. It's a little bit more automated. Um, and so you decrease your administrative work significantly per client. Um, And sometimes you can charge more within sort of like the package, if you can prove the results.

Um, then I would say the less beneficial thing about fixed or package or package pricing, is that right? It doesn't differentiate between different styles of client. And almost always, you will have one client where you are definitely making a significant amount of profit in time on your fixed pricing, and then another client where you are not because they are overstepping boundaries.

They need a lot of help. They need more than you were prepared to give. Um, and so with fixed pricing, you are taking the risk that. Um, even though you're trying to sort of, I don't want to say commodify climates, but you're trying to sort of like, um, put clients into a, your [00:17:00] own framework. Um, different clients will act different ways.

And so some, some products are really profitable, some are not, and that's sort of the risk that you take. Um, so, and sometimes it's fine. And the more you work with clients, the more often you can. Seeing the red, see the flag, see the sentence of a client. Absolutely. And 

Serena Shoup: [00:17:18] be like better with each new client that you bring on about.

Communicating the scope and what's okay. And what's not right. Yeah. And 

Lauren Caselli: [00:17:26] that hasn't big. And that is a big sort of, um, issue, but like the better you are at communicating boundaries, the better that you are at training clients, how to work with you, the more fixed pricing will work for you. Yeah. Because what happens is, um, if you're not good at that, then you're doing a bunch of extra work without being able to sort of communicate the boundaries of the thing.

Serena Shoup: [00:17:46] Yes, this is definitely an issue for us people pleasers. Yeah. What also helps is really getting clear on like types of personalities that you work with work well with and that, you know, like you [00:18:00] can see how they operate in their business and you can, you know, like at least in this online world, you can get a taste of how people operate in their business by following them online.

So you can kind of be like, I'm pretty sure. Yeah. That's boundaries. If I say this is the scope, they're not gonna, you know, they're not going to take advantage of the unlimited communication option that I have. Right, right, 

Lauren Caselli: [00:18:22] right. Yeah. I think sometimes it's also like understanding your audience. Like often newer business owners need a lot more help because they know less.

Right. And so if you are targeting newer business owners, that's great. But also knowing that like, as you, as you onboard them, they might need more help than other folks and just make sure you price your package appropriately under the assumption. That you're going to be offering out of help for folks who, um, you know, who are newer and need a little more.

Yeah, you could 

Serena Shoup: [00:18:50] also have an onboarding fee. So that's something that you've, that you may be built into every new client or just the ones that, you know, are [00:19:00] newer in business or whatever, just to kind of protect yourself against that. But. 

Lauren Caselli: [00:19:06] Um, okay. Uh, and then the fourth, uh, we won't talk about this one at a time because it's mostly, so, um, one of the things, this is quite common actually in the coaching world.

Um, I found out I did not know this, um, but also in events, I guess. This model, um, and that's like a performance-based or commission-based model. And that is generally, um, I'll take like the example of someone who does launches since we're all in online business here. So like, if you're, let's say you're like a launch copywriter or something like that, part of your fee, or actually, I guess Facebook ads is a good example because almost every Facebook ads does like a commission structure.

So basic ads, if you run, if you work with someone who runs Facebook ads, you often will pay them a flat fee monthly to manage your ads and do some of the strategic work. And then. Often you also pay a commission of the ad spend. So if you're spending $10,000 a month on ads, um, you will pay, I think it's usually like 10%.

So you usually pay about a thousand dollars a month [00:20:00] in addition to their flat fee. Um, that's a commission structure. Well, it's not really a commission structure. That's a percentage, a percentage structure. Um, but like a performance-based structure, um, is often. Um, like when I was, I had a couple clients who did performance-based.

So like when I worked on events, if I kept my event, the event within a specific budget, I would get a piece of the, uh, profit margin. Um, because that was. So, I don't know if it has a ton of applications for accounting or bookkeeping. I think it kind 

Serena Shoup: [00:20:33] of, it can, especially in the startup world. Um, I actually, towards, this was one of my early on, I'm going to call it a mistake, I guess, love learning experience, but I took on a client that needed a lot of help.

Um, a startup situation and forecasting and things like that, but they didn't have revenue yet, obviously because they were a startup. So I bared the risk and I was like, okay, well, once you start making revenue, I'll [00:21:00] take a percentage. I'll base my fee off of a percentage of your future revenues. And based on the forecast that we had done together, I would have made my money back after a year and been very profitable.

But the first year I spent a lot of time working for free. That's right. So it has been applicable in our industry. I would say, maybe go the route of doing a flat fee for the, for the actual bookkeeping work and then, uh, you know, structuring it differently above and beyond. So you're still getting some.

Income, I would not base your entire, uh, your entire fee on commission. Yeah. And I would play like of revenue. I would say 

Lauren Caselli: [00:21:41] this is probably one of the riskier pricing models. Like if you don't have a T, especially like, for example, the client that I worked with at like, you know, we did a percentage of budget, um, our percentage of profit margin, then the event she had done the event for four years.

So there was like a history of like, this event is mostly profitable. Most of the time, if you can make it more profitable, you can, [00:22:00] um, part of your fee can be that. Just make sure that like the risk, you know, performance-based 

Serena Shoup: [00:22:05] risk is something, the risks should be something that you're in control of.

Whereas in that situation, I was completely not in control of that because I'm not the one going out and selling there. 

Lauren Caselli: [00:22:17] Exactly. Yeah. Yeah. So that's something to consider. Um, the other thing is commission. Um, I don't know if this happens quite often. Um, but this feels more of an old school model before the internet existed.

And people like could do their own search, but, um, commission-based model often was like, if you were referring a CFO, you know, you didn't do CFO services in your company, but you were referring to CFO, CFO. A lot of times you would, um, potentially work with that vendor, that CFO and. Ask for a commission of any ongoing clients that you referred to her or him?

Serena Shoup: [00:22:52] I think there is some of that between bookkeepers and CPAs in some communities and stuff. Um, I personally don't [00:23:00] operate really on a referral fee structure like that. Um, I just find people that I really trust with my clients and I just want them to take care of them. 

Lauren Caselli: [00:23:11] Yeah, totally. Um, and also, um, I think it's, you know, some industries it's more common than other industries, like an event.

It was super common. Um, and now with the internet is way less common. And so I think it's also changing in the last 10 years with the internet and people have access. So, so maybe don't don't bank, your whole business on commissions, like run their whole businesses with commission because. You know, it was like either there was no other way to find people there than like the yellow pages.

And then the last one that I like to talk about is value based pricing. Um, this is like very common and very sexy these days. Um, I also think that, uh, it takes a really long time and work. It takes work with a significant amount of clients to get to the point where value-based pricing makes [00:24:00] sense. Um, so value based pricing is often, um, When a client comes to you and they have, uh, they have a significant problem.

So usually when we talk, when we're talking to clients, um, on our intake call, we want to really see how well we understand their problem. And I think you get better at that. The more you work with clients, the more you do sales calls, um, And so value based pricing is based on that, the assumption that the problem that you have identified that the client agrees is the problem.

Um, and that you have the ability to solve is worth significantly more because of your expertise and your experience, then, um, like, you know, then hours, it would take you to do for example, right? And so like, uh, an example of this kind of thing. Uh, maybe like a non service-based. Um, well, we'll go with my current house cleaning situation.

Uh, I currently [00:25:00] live in a small town and, uh, we are a tourist town and I, uh, in the wintertime can wait and book, uh, someone to clean my house, uh, you know, the same week that I'm trying to get my house clean, but in the summer I forgot that. Um, because folks are here for vacation often bookkeeper, um, sorry.

Uh, house cleaners are booked months in advance. And so, um, If my, if I'm going out of town tomorrow, I don't have anyone to clean my house. And if a housekeeper said, I can come and clean your house for $300, I would say, okay, like just, I just need it done. You know, it just needs to be right, because the value of, of that service is the time that I have the urgency.

Um, and the sort of like, you know, I'm valuing it highly because you know, I have, have to have to get a house cleaner. Yes. So the 

Serena Shoup: [00:25:47] way that we could, why that in the accounting industry is for a cleanup. If somebody needs their books cleaned up so that they can work with someone like you to figure out their pricing or so that they can file their taxes [00:26:00] because we have a tax deadline coming up and it's an extension deadline.

So there's a lot of people right now. Um, at the time. We're recording on August 11th. So in exactly, almost a month, we are up against the, um, nine, 15 tax deadlines. So if someone comes to you during this timeframe and needs a cleanup, I mean, you can charge a premium because you don't have very long to do it and they need it done, or they feel.

Late file penalties. 

Lauren Caselli: [00:26:28] And also they need to know that they are going to work with someone who gets it, right. They can't just hope for the bookkeeper. Who's not, you know, they need to work with someone who has the experience, who can execute it and that they can trust. And so that's sort of one way to think about value based pricing.

Um, the other way to think about value based pricing is. You, you know, you're really, you're trying to really identify the problem that the customer has. So let's say, you know, this is kind of a tech example, but let's say a company is trying to go public and similarly they need to clean up and they need someone to like interpret the data.

[00:27:00] Like for them, if they go public, depending on how much, you know, what their revenue is, like, it could be millions, millions of dollars. And so if you're charging, you know, a hundred dollars an hour, like you want to make sure that. Um, your work is in proportion to the potential payout for the client based on the work that you're doing.

So, um, what this could look like is, you know, like you said, you know, someone who really needs their, you know, tax extension filed immediately, you need it to be done competently and capably and quickly, um, someone trying to go public who needs, you know, a good interpretation of their financials, et cetera.

So, um, and also the other piece of value based pricing is that. That company trying to go public and me Marcus Elliot, that has, you know, like 20 expenses. I am not going to value your service the same way that company would value your service. And so the idea behind value based pricing is that it is specific to client each client, and it is specific to each client's problem.

And so something that, [00:28:00] that company values the company going public values is going to be much more extensive than what I would value it at. Um, right. Um, so that's, what is important to keep in mind with value based pricing is a, you need to have a significant amount of experience to sort of understand those nuances across clients.

And then B you have to really understand the problem that the client has and know that you can execute well. Um, and that all starts in sort of like the sales intake process and really kind of doing the coaching piece of that. You understand? 

Serena Shoup: [00:28:36] Yeah. And then with it, with that too comes, they might have some problems that are not services that you normally offer, but you know, you can solve them.

So it's kind of at that point, like a decision you have to make like. Would it be worth it for me to offer my solution and would they pay for it? [00:29:00] Right? Like there's so many variables that go into it and it's such a guessing 

Lauren Caselli: [00:29:04] game. It is a huge guessing game. Value-based pricing is I would say undoubtedly, the most difficult.

And I think the biggest mistake that folks make is that they try to do it too early in their business. Um, and, uh, they don't quite understand. You know, the problem that they're trying to solve. And then also, I think the other part you hit the nail on the head is like they don't have enough experience working potentially across either a whole company or across industries to understand just like what some of the things to watch out for are on like a.

You know, a bigger custom project. Um, but almost always, if you are moving into more custom work, if you are getting really tricky requests that are outside of sort of normal, I don't want to say normal, like bookkeeping accounting services. Like, I don't even know you might have some ideas. Right. But like, if you're getting like different odd requests, those are probably good.

Candidates to consider the value based pricing model, [00:30:00] because it requires a level of expertise in the field. Um, and be sort of like a, uh, um, ability to really like, understand what that problem is and say like, nobody else can solve this like me, because I understand this because I worked at, you know, maybe you worked at.

A similar big corporate company. And they want that expertise that you have because you worked at Walmart and target.

Serena Shoup: [00:30:27] That's exactly what came to mind when you were talking about like experience in the field. And one huge thing that comes up a lot. The bookkeeping world is, and I see this in groups, people are like, I have a potential client that works in the real, you know, real estate investing or something like is a very big, um, like retail, you know, they have inventory.

So those two things for me, That requires a niche consultant. Like you need to have a deep background in those two, um, industries to be able [00:31:00] to really be able to serve that client to what they need, especially if they're having issues. Right. So it's like that that's one area where if you did come from corporate, like for me, for example, I worked in manufacturing, so I have that background, but it's not right.

So you have to gauge that too. It's like, yeah. That's I, I know that and I could help them with it, but do I actually want to yeah. 

Lauren Caselli: [00:31:24] Yeah. And I get it. Totally. Yeah. Yes. You're, you're totally right. Again, it also sort of depends on, you know, like, cause you can use a variety of these models in your business.

You can say I'm going to work with like two sticky clients a year where in manufacturing. You know, for example, if you loved me, you know, I love the sticky problems that manufacturing come up and there's nobody else that I know. Or there's very few people who work both in manufacturing and in have this, you know, have this other piece of it.

Right. Jeez, you know, in the south, in the Southwest. Um, and then the rest of it is like, could be some retainer clients. Um, it could [00:32:00] be hourly clients, it could be packaged clients, um, but just know that you don't have to choose one specific pricing model. Um, you can use them based on the types of clients that you want to have and want to keep and how you want to do.

Yeah. 

Serena Shoup: [00:32:15] And that honestly, like people, people talk a lot about diversifying revenue streams, but in this conversation, you can achieve the profitability in your goals that you want by just diversifying the different pricing structures that you have now. Create some administrative burden, but sure. You know, um, if you know that, like for instance, you do understand manufacturing and you're like, okay.

So if a client came to me and they really needed somebody to like shore up their, their SOP and their operations in the inventory department so that they can actually track their inventory and implement a system, I know I could help them do. What is the price that would make it worth it for me to take one of those clients on per year, and then you can build [00:33:00] everything else around that based on at the time that you have left and all that kind of stuff.

Lauren Caselli: [00:33:06] Um, I know we wanted to talk about retainers because I have thoughts about retainers. Somewhat anti retainer, not anti retainer, just anti retainer and how they're taught. 

Serena Shoup: [00:33:16] I, that is why I wanted to talk about it. Like I was just about to bring it back up. Cause you mentioned retainer and there is a lot of like, even I'm slightly confused, maybe it's because I know what it requires and I'm.

I am not down for the retainer style relationship. Um, but let's talk about what exactly is a retainer structure, because I think it gets thrown around and misused because it's not the same as subscription, right? Yeah. 

Lauren Caselli: [00:33:45] Yeah. I don't know if I've ever done a subscript, like work with someone who does a subscription model for a service based business, but we can talk through it.

So anytime there is any sort of pricing model, any sort of structure in your business, there's always a risk. For you, there's always a reward for you. There's [00:34:00] always a risk for your client and there's always a reward for your client. Um, and so when you are thinking about retainers, most of the time folks think the reward for me is recurring work and I don't have to go out and sell a new client every month.

Um, and we have a. Amount of deliverables that I deliver. Let's say, you know, let's say you'd have a meeting and then you like reconcile their backend and whatever. Um, and you charge them, you know, a thousand dollars a month or whatever for, for the deliverable. Like the deliverable. Um, what happens with that is that the client is taking essentially no risk and also the scope of a retainer model.

So in, let me back up in the sort of world of retainers retainers originally were an hourly based kind of model. So you let's say you hold, uh, you, you know, I wouldn't use the example of lawyers because I feel like I 

Serena Shoup: [00:34:57] do too. I'm like, that's the one example I have [00:35:00] too, because I've actually worked with yeah.

I've worked in that whole situation and kind of been burned. So 

Lauren Caselli: [00:35:07] yeah. So, so in the legal field, you, nobody ever is like, Hey Boyer, I would like to work with you. And I need to work with you in a month. It's usually like I have something going on and I need to talk to you in five minutes or tomorrow when you are a lawyer, you cannot exist.

It's like you would not be able to run a profitable business. If folks are constantly coming to you with their emergencies, unless you have a way to, um, to serve them. And that's how, uh, that's what a retainer does. So let's say, um, um, Want to put my lawyer on retainer. What I'm paying for is not necessarily my lawyer's time.

I mean, I guess I am paying for that, but what I am actually paying for it is the assurance that my lawyer is going to email me back within 10 minutes or an hour of my email, [00:36:00] because I have bought their attention. 

Serena Shoup: [00:36:04] Okay. That's the part that I get hung up with with the whole retainer structure, because I'm like, I don't want anyone to have immediate.

Yeah. 

Lauren Caselli: [00:36:12] Right, right. And also like, think about your industry, right? If there's like, my brother works with a lot of, um, he works with a lot of investment. He works in mergers and acquisitions. He works with a lot of investment bankers. Those folks charge hourly and there are on a retainer. A deal could blow up over a weekend and he needs to know that he's going to email his banker and they're going to be like immediately getting back to him.

So, um, what I see though, a lot of times is that folks want the comfort business owners want the comfort of recurrence. Income or revenue every month, but they're not understanding the value of the retainer. And generally the value of a retainer is the access to your immediate time and attention, not the work that you are doing.

The work is valuable. Yes. What if you [00:37:00] are just saying, okay, every month you're getting, you know, I'm giving you the deliverables and, you know, you're removing the admin because your client is, you know, just hanging every month. Um, that the client is essentially not taking a risk because what is preventing them from just saying, okay, we don't want it want the deliverables next month, or we're canceling.

Yes. Cancellation clauses, et cetera. Um, but what, uh, what I recommend folks do is instead of structuring their retainers, On a deliverable basis. Um, unless you have a client that is very clear, unless you have a client that you work with and they're just like, we are, you know, they don't ever overstep their bounds.

They don't ever, you know, uh, you'd like send them the, um, you'd like send them everything and then they don't get back to you until the next first of the month. They, you know, they're really respectful. Um, what happens far more often with retainer clients is they think that they just have access to all the time.

And so I often recommend if you're doing a retainer model, With the services, do it from an hourly perspective and just work [00:38:00] slower or, I mean, like, I don't, I don't want anybody taking advantage of anyone. Um, but. Consider the fact that, uh, you may or may not be including the time that your clients send you emails, call you, um, you know, follow up with, you know, all of those like little communication touch points that may or may not be included in, um, like the actual retainer model.

So that's why I always record. Retainers be hourly based. Um, I have never heard of a subscription model and maybe that's more, 

Serena Shoup: [00:38:33] it's very similar because when I hear in the accounting industry, people talk about moving to a subscription based model. It is surrounded by access. So it's like we guarantee, you know, on this subscription level, we guarantee a communication back within 24 hours.

And on this one, you, you know, you're at a lower price point. So you're kind of at the bottom. The, the lists 

Lauren Caselli: [00:38:56] and that like makes sense when you think about like tech support type 

[00:39:00] Serena Shoup: [00:38:59] situations, kind of like that. So it's like, um, there's a lot of similarities between the retainer style and a fixed package.

Yeah. You know, in all honesty and it, they both come down to, um, defining your scope and just working with clients that you'd know are going to respect boundaries. Um, but what happens if you're working a retainer package and you are doing it on an hourly base, would you then say, say your client pays you for 10 hours every month, maybe.

Um, you know, maybe they. Utilize you for that 10 hours, because they didn't invite you to their, you know, their executive meeting or their leadership meeting or something that you normally attend. Um, do you then, like, w how do you handle them? Not using up all the hours? 

Lauren Caselli: [00:39:49] Yeah. You let them know, like you have three hours, if you don't lose that, if you don't use that.

You 

Serena Shoup: [00:39:54] lose them. You wouldn't. Yeah. Okay. I think that's where people, that's another [00:40:00] point to like, just put in your engagement letter, if you do decide to use a retainer style, like, and if people are paying for so many hours of access every month, then you want to communicate like it doesn't roll, roll forward.

Like we're, we're like Verizon or whatever, 

Lauren Caselli: [00:40:15] right? Yeah. Yeah. Go easy on the retainer, right? So start, you know, five hours, 10 hours a month or something like that and evaluate, right. And maybe every second week of the month, you send out, uh, an email to your clients to say, Hey, just as an FYI, by the 30 30th of this month, you have six hours left.

Um, let me know if you want anything to do and I think, or you want it, you know, there's anything that you want me to look at or anything you want me to review? Um, the other thing that like retainers, aren't great for all clients, right? If you have, um, Let's say you have a client who all they need is, you know, monthly bookkeeping and you do a meeting and you show them their financials and they like never email you.

And don't have enough revenue where they have like sticky situations. They're not investing like maybe a good, you know, [00:41:00] option for like a monthly retainer at like five hours a month, you know, like five hours a month. Yeah. Or just moving 

Serena Shoup: [00:41:06] them to a fixed package of like, you get your meeting, you get like, you can email me in between meetings because they're not utilizing it anyways.

Lauren Caselli: [00:41:16] Yeah, but like clients who are good for retainer models are clients who like need you a lot and need you. And everything feels like an emergency. And a lot of times, sometimes, you know, a lot of times I feel like I just don't want to work with clients that are like that. And I'm like, yeah, yes. And if you put boundaries on it, if you say I'm happy to work with you, we need to move to this model and that solves their problem.

And you're getting paid for the emails that, you know, 4:00 AM, even though you don't like respond till nine 30 or whenever. That is a great way to do it, um, to say like, you know, in order for us to work together, I'm going to move you into a retainer model. It's 10 hours a month because they see you need additional help and support around, you know, this, you know, IPO or whatever, right?

[00:42:00] Serena Shoup: [00:41:59] Yeah. That would be a great option. Honestly, for like that instance where I talked about that startup I was working with, like, I could have. Actually made money, you know, more money on that if I had just moved them to a retainer offer, but I mean, and then they would have just been responsible for, you know, finding a way to pay me, but it's kind of the same, cause it would be like, I would get like kind of emergency emails.

Like we need to figure out this pricing and blah, blah, blah. And it's like, um, Or if you're working with a client, that's getting funding from the SBA and you're just kind of waiting for the SBA to respond. But as soon as they respond with questions, like you have to hop on it. Right, right. Yeah. 

Lauren Caselli: [00:42:42] The other thing that I've seen folks do is, um, you know, this might be like similar to the package model is that they do a retainer.

Like, let's say, I don't know if it's the retainer is even the right word, but they do like a monthly, if you buy three months of this fixed package, um, we'll do it in like a [00:43:00] VIP day style. So they do sort of like VIP day retainer models where it's not even a retainer. It's more like. Purchase for a certain amount of months.

Um, and that can be a way to solve your sort of like recurring revenue problem. 

Serena Shoup: [00:43:15] I don't feel like in our industry, like recruiting revenue is the problem. The bigger problem is like balancing the workload. So like you kind of, um, we kind of have to either. Just know your work might fluctuate in charge hourly, or, you know, be very picky about the type of clients that you work with.

But yeah, I don't feel like, like in every other industry everyone's trying to figure out like, how do we get recurring revenue? So we don't have to go out and market all the time. Like I, the only time I have to market is when I want more clients or recurring revenue, or if I lose a client, which is it's a sticky relationship, so that hardly ever happens.

Yeah. 

Lauren Caselli: [00:43:58] Uh, it's so interesting. [00:44:00] Cause when you're like, you know, balancing the work, I think a lot of times you're right in that maybe it's time for a price increase if you're having trouble balancing all of the work that you have. Right. Um, uh, usually, uh, when there is sort of like too much of a disconnect between available time and, you know, clients that you have, um, I think a lot of times, it's, it's time to look at your pricing because even on your busiest months or weeks, you should still be making sure that you're working.

Hopefully in a appropriate amount, you know, obviously it's really, it's tough, you know, I know taxi then, et cetera, is like really, really challenging. And it probably this filing deadline coming up is also really challenging. But just knowing that, um, if people are paying for your services, uh, and really love the work that you're doing, um, and you find yourself not having a ton of bandwidth, it might be time to have it.

Great increase. Yeah. 

Serena Shoup: [00:44:57] That's uh, um, I'm glad we brought it to [00:45:00] that point because actually, if you're thinking about joining my upcoming, um, revamped bookkeeping business accelerator program, uh, Lauren will be guest teaching a whole workshop on how to raise your rates. So do you want to talk about what you usually go over in those workshops?

Because you've done these for other groups. Yeah, totally. 

Lauren Caselli: [00:45:22] So a lot of times, again, we talk about the moment that where you are thinking about. Um, thinking about a rate increase, but aren't sure if it's time. So we'll talk about some situations where you might consider it's time to up your pricing, um, for your clients.

Then we'll talk about how to communicate it because a lot of times folks are like, I'm so scared. Um, but if you're doing great work, most of the time, um, you will get clients who are happy to pay pricing increases, particularly if their businesses are growing. Um, And, um, how do you make sure that you are communicating it effectively?

Um, we'll talk a little bit about pricing models, um, to consider, you know, what are we doing the rate raise for? Are we trying to [00:46:00] get more time back? Are we trying to introduce a new service? Are we trying to work with clients in a deeper way? Um, so we talked a little bit about like, why are we doing this?

Um, and then the last thing we talked about is, um, PR like, how do we project based on, you know, how do we get over the fear of like, what if the client says, no, you know, I have to drop out, you know, and I have to lose a client, you know, what happens? And a lot of that is numbers and spreadsheets stuff. Um, because if you're charging more for fewer clients, uh, then you have more time and more money, or even at least at very least, at least the same amount.

Yeah. One more time does, 

Serena Shoup: [00:46:35] because it's, it's typical to have a little bit of attrition with price increases, but hopefully your overall price increase will, um, at least cover the difference and then you've won back time in your day. 

Lauren Caselli: [00:46:48] So yeah. And then you can go forward with new clients and have the new and the new rate.

Um, so yeah, a lot of times price increasing is just understanding why you're doing it. Um, and understanding, [00:47:00] uh, what it would look like and then communicating it. I think that's where people struggle the most, um, communicate for people, pleasers 

Serena Shoup: [00:47:08] workshop. Do you, do we actually workshop, like, okay, let's look at, let's pull up your client roster.

Let's look at where everybody's at. Um, or do you give people the steps to take so they can do that on their own. Yeah. So 

Lauren Caselli: [00:47:21] generally I'll, uh, so I have a couple worksheets. One is sort of like a cashflow spreadsheet, which I'm sure, I don't even know if I need to give it to your group because you all probably have your own cashflow spreadsheets.

Um, but basically what I like to do is a live demo of like, okay, let's say I'm working on with one client. What would it look like if we increased our package pricing for this $500 a month, what does that look like for my cashflow? What does that look like for my time? What does that look like for, um, you know, for my annual revenue at the end of the year, um, and then we just play with numbers for a little bit to see like, oh, actually I would not need to take, you know, I could lose two clients.

If I raised, you know, three clients, $500 a year, whatever. Works. [00:48:00] Um, sometimes it's just understanding the numbers. Um, and then we talked through a lot of like mindset issues, which, um, I don't, but we talked through like, what is preventing you from doing this? Um, are you afraid of the justification? Uh, you know, the work so.

I think the numbers is a good place to start, especially with data driven folks, because they're like, I get this, I understand numbers make sense. Um, but the harder part is sort of moving into the communication piece. Um, and then having some, uh, some tools and some scripts for objections of clients. And say, you know, we're not sure we're not ready.

Um, or just how to frame it in general. I would say most times when folks implement price increases, whether they're designers or when I work with folks who are, um, you know, in different industries, their clients are just like, okay. And it's yeah. 

Serena Shoup: [00:48:50] I think, I think the harder thing, or at least this is probably a mindset block or whatever you want to call it for our industry is that most of our prices are, [00:49:00] is a recurring model.

So it's like. We are locking them in to a new price. It's not like they can just easily walk away if they don't want to go into the new price. But I mean, in all reality, anyone can just walk away anyways, but it's just like a different, um, you know, you have. Different considerations, I guess, rather than, um, you know, you're not, you're not talking about losing a repeat customer.

You're talking about losing a current customer. 

Lauren Caselli: [00:49:29] Yeah. Yeah, totally. And I guess that that's a good point to consider. Um, and maybe, you know, in an industry where, you know, I think the other piece of that we will talk about. Lately is, um, is understanding sort of like, um, understanding the market and where you sit in the market and your positioning in the market.

And sometimes if you're in a place where you're not positioned, if you're positioned competitively in that you have, you know, like you've niched a little bit, or you have a specific type, those price increases are often easier than if you are a niche [00:50:00] more broadly. Um, and again, not saying that one is better than the other, just knowing that if you're a little more broad.

You are probably competing on price. And so your price increase, you know, will be, uh, potentially a little bit more, you'll get a little bit more pushback, um, because clients are coming to you obviously for the work that you do, but, but oftentimes we'll compete on price. And so it's another consideration to think about when you're, um, when you're thinking about your positioning and where you sit and how you want to serve clients.

Um, and because often times folks will, um, Pay more for someone who is very specific. Like again, someone who works in only with the architects are, you know, only in construction or something like that. Um, and so just being aware of that, um, your positioning as well. 

Serena Shoup: [00:50:48] Awesome. I'm super excited for that workshop.

So,  I thank you so much for joining me today. I really appreciate it. We're getting near the end of the time that we have scheduled. So do you have [00:51:00] any final thoughts you want to leave people with or, you know, let everyone know where they can find you to connect? 

Lauren Caselli: [00:51:06] Yeah. Yeah. So I hang out a lot on Instagram.

I'm at Lauren Caselli. underscore, and would love all of your pricing questions.  And, uh, if you have any, any other questions happy to, um, well, hopefully I'll see you in the fall, um, in the, in the bookkeeping business accelerator, but if not, feel free to connect with me on Instagram at Lauren Caselli_. 

Serena Shoup: [00:51:29] Awesome.

Thank you. And Lauren goes live a lot and talks about these pricing things and consulting type stuff. So lots of valuable content, , that she posts on Instagram. So I definitely recommend giving her a follow. So once again, Lauren, thank you so much for joining me today and, um, we'll see you in. Awesome.

Sounds good. All right. Bye 

Lauren Caselli: [00:51:52] bye. [00:52:00] 

 

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