july2021 - 9

FEATURE
intermediate, premium (or bronze,
silver, gold), with some flexibility of
customization within each level
* Within each of these levels, firms
define the periodicity of service delivery,
e.g., basic can include monthly
reporting. In contrast, premium can
consist of even daily or at least weekly
service delivery.
* The level and depth of insights increase
as the package level increases.
* The quantum of exper t-t ime
" included " in package " consultation
and advisory " phone calls/meetings
increases as clients opt for higher-level
packages. In other words, you indicate
to existing clients and prospects that
if they need more than one meeting
(do not limit the time per meeting)
per month with you for advise, they
would need to purchase a higher level
of CAS package.
* Firms define " scope of work " for each
package, but CAS firms also illustrate
clear examples of " out-of-scope work. "
Many firms call it " one-time projects
work. "
* Periodicity of service delivery and the
" actions " that clients can take based
on the insights/recommendations you
deliver (not just the reports)
* Level of predictability in the periodic
amount of money client will pay in
CAS fees
* Flexibility to charge for out-of-scope,
finite, non-recurring projects
Based on the above-mentioned
guiding principles, CAS firms use
the following methods to create the
" packages " for their CAS offerings.
* Generally, three levels, e.g., basic,
DECIDING ON CAS
PRICING
Just how much should you charge
for CAS to balance profitability and
clients' value experience? This is an
art but also a science. The full insights
on this aspect are out of the scope of
this short article, but here are some
key pointers:
* In general - clients seem to accept the
total cost of accounting to be not more
than 2 to 4% of the topline revenue of
the business.
* If you charge X dollars per month for
after-the-fact write-up work, CAS-fit
clients should pay you 2-3X dollars
per month.
* Automat ion can increase your
firm's productivity of data-intensive
processes by up to 80-85% and reduce
the total cost of producing the work
by 40-50%.
* Avoid cost+ method of pricing (don't
bill inefficiencies to clients) but have
some measurements in place, e.g., your
average cost/time per unit of work of
each type, so you can enhance your
processes/technology/automation/
pricing.
CAS PRICING RISK
MANAGEMENT
CAS clients prefer the fixed fee
pricing method because it removes
the uncertainty of how much they
will pay every month, i.e., it reduces
clients' risk. The best way, and many
CAS firms figured this the hard way,
is to ensure you minimize your CAS
pricing risk by getting the client to
agree to:
* Review the CAS engagement after
60-90 days to relate the final CAS
pricing to each client's actual volume
of work.
* Review the CAS engagement every
year to relate the growing or reducing
volume of work based on the business
volume trend of each client.
* Including a clause that allows your
firm to increase or decrease the price
if the client's work volume increases
or decreases by 10% or more.
HOW TO PITCH YOUR CAS
PACKAGES
Once you have crystallized components
and pricing (dollar figures) of
your CAS packages, the next important
thing is to pitch the packages
to your prospects effectively. I am
sharing some of the methods that I
figured accounting firms are already
leveraging out there:
* Show your highest priced CAS level
package first
Several psychological experiments
have proven that the fear of loss is
considered about twice as powerful
as the pleasure of gain. In other words,
pitching " You will get these additional
benefits if you purchase our higher
CAS package, " is likely to be half as
effective compared to pitching " If
you purchase our next lower level of
CAS package, you will not have the
benefit of these X number of actionable
insights. "
Your highest-priced CAS package
is your anchor price. Because the next
price level is lower than the anchor
price, the price pressure gets released
immediately. At the same time, your
lowest-priced CAS package will look
like the " cheapest " option. Likely, the
prospect would want to avoid being
seen as the one who made a " cheap
choice. " It is, therefore, critically
important that your intermediate
package is as profitable as possible
for your firm.
* Give your pricing " why "
Your prospects and clients are
NOT professional accountants or
even educated in accounting. They
simply do not know what it takes to
produce the levels of work required
to deliver the intelligence and insights
they see in your CAS packages. Hence,
they may perceive your pricing as " too
expensive " or even " too low " (creating
doubts about the quality of your work).
To overcome such unsubstantiated
perceptions, you need to tell why your
prices are what they are.
* Show them the difference
It is very difficult for clients to understand
why they should now pay more
and for what. Therefore, when you try
to sell CAS to existing clients, show
them the before CAS and after CAS
insights difference, so they clearly see
the additional value they will get if
they upgrade to CAS.
The quick insights above are some
of the most proven ones in the profession.
But, the pricing methodology for
CAS can be very well defined based
on your CAS experience. The key to
success is to experiment, observe,
measure, and adjust for a long enough
time. ■
Hitendra R. Patil is author of
the new book, " The Definitive
Success Guide to Client Accounting
Services (CAS). " He is
a 2017 to 2020 Top 100 Most
Influential People in Accounting,
and Head of Customer Success at
AccountantsWorld.
JULY 2021 ■ www.CPAPracticeAdvisor.com
9
http://www.CPAPracticeAdvisor.com
july2021

Table of Contents for the Digital Edition of july2021
