Value pricing is creating a package based on general tasks completed and an estimate of time to complete them with a buffer added on top and this is paid on a monthly or quarterly basis. Hourly rate is a set hourly rate which is paid either in upfront blocks of time or retrospective of time spent on the work. Packages I see are a package designed specifically for the client based on past invoices and tasks completed for that client.
There is a lot of information on the market about pushing for value pricing and I have been speaking to many Bookkeepers that are feeling pressured to use this method. I am here to say you don’t have to do it if you don’t want to!
While value pricing will work for some business models it doesn’t work for all. The reason why it doesn’t work for everyone is because we all have different business models, we all have different views on what value is and we all have different client bases.
While some clients will jump at the chance to have a set fee per month others are happy to continue with the hourly rate and don’t want to change. Some of our clients really don’t like change!
Another issue with doing value pricing from the beginning is when we begin with a client we often find things that need changing, updating or even a full rescue job that required more time and add more expense for the client. Beginning with an hourly rate allows you to iron out all the kinks and learn about what the client requires before offering them a package that will benefit them and will not overcharge or undercharge the client.
I also find clients also want options and they don’t always want packages or value pricing so if you don’t have an hourly option some clients may go somewhere else.
Don’t feel that you have to stick to the one method! You are in charge of your business and how you want to do business.
No matter which way you decide to go in your business ensure you have a clause to review that package/price at any time to ensure it is still relevant for both client and yourself.