On the Xero Ecosystem team, we have the privilege of working closely not only with innovative app makers but to Xero accounting and bookkeeping partners. We see and hear daily from partners that want to provide services beyond traditional compliance. However, the question we often hear is “How do we price advisory services?”
This was a query we touched on at Xerocon Brisbane. We distilled hours of interviews and research and shared the best bits with the Xerocon audience.
There were many actionable tips and insights. Here are some of them, including ones that can be implemented immediately.
Learning from the community
Whilst there’s no shortage of role models using the Xero app ecosystem to successfully deliver advisory services, there are three in particular that stand out:
- AccountsConnect is from the Northern Beaches, NSW and specialises in the trades industry. They have had success monetising app advisory — recommending and implementing apps such as ServiceM8. To automate engagement letters and payment collection, they turn to Practice Ignition.
- Strategy1 is a five-person firm hailing from Devonport, Tasmania, and started out offering only compliance services to their clients. Thanks to the efficiencies gained from using NowInfinity, BGL Simple Fund 360 and ChangeGPS, they have increased revenue by selling extra advisory (such as tax planning) to their existing clients.
- WK Advisors and Accountants is a six-partner, 50+ staff firm with offices in Blenheim and Christchurch in New Zealand. They have an impressive technology stack to deliver advisory services at scale with tools such as Spotlight Reporting and Figured. They have transitioned from a highly efficient compliance firm to having ‘advisory baked into their DNA’.
Having the right mindset
The bigger the headcount, the harder it is to get your team singing from the same songsheet. But it’s certainly not impossible and WK Advisors and Accountants are a fantastic example of this. Every team member has a very clear understanding of how they contribute to helping their clients.
One key action that enables this is having a ‘advisory touchpoint’ KPI for staff — with every interaction with a client or their data, the mindset is to discover or add something that can create value.
They didn’t do it alone. A contributor to their successful transition was adopting techniques and tools from Mindshop, a provider of support solutions for business advisors, and Practice Paradox, a digital marketing company for advisors.
If there was one consistent approach with among successful advisors, it was the importance of having a clear purpose regarding the services they provide to clients and as a consequence, how they would fairly price those services.
This includes a mentality of providing advisory first, resulting in the compliance outputs becoming the byproduct.
It shouldn’t just be the partner or owner of a firm offering advisory services either — staff should be empowered to discover opportunities.
Common approaches to effective pricing
When it comes to determining how to price advisory, here are some approaches from several high-performing Xero partners:
- Fixed-fee value-based pricing: This is a popular structure as its transparent and rewards efficient service delivery.
- Minimum viable price (MVP): The key is to determine the lowest price you can offer while earning enough to justify your efforts.
- Include all advice in your fees: Encourage your clients to contact you with questions. This is how you uncover opportunities to add more value. If clients fear a bill each time you pick up the phone or reply to an email, they’re less likely to consult you for advice.
- Test and learn: Few partners optimises their pricing strategy on the first try. Don’t be afraid to pilot new pricing on a small number of clients and adjust your pricing as needed.
Looking for guidance on suggested pricing? Both Practice Ignition and ChangeGPS have templates with suggested prices for your services. Our accounting and bookkeeping industry reports also provide insight on typical revenue generated from advisory.
Building repeatable and scalable processes
To maximise the earning potential of your firm, you need standardised process that everyone can adhere to. These processes should be built on apps that integrate to remove the barriers to delivering high-value advisory.
Every minute someone is distracted with low-value admin such as rekeying data to a spreadsheet (and trying to figure out errors in their Excel formulas) means they not only have less time to spend with clients, but they’re spending precious brain power on tasks that can (and should) be automated.
When in comes to pricing and delivering higher value services, there are four areas to consider:
When looking to increase revenue from your existing client base, ChangeGPS can help, as not only do they have tools that integrate with the Xero platform to save time but they also offer coaching in the form of the same pricing strategies and marketing templates. Xero partner Strategy1 has used these to monetise services such as tax planning.
Another way to transition into tax advisory is to use CCH iQ, which connects to Xero Tax and alerts accountants when specific clients are affected by industry and tax legislation changes.
If you’re looking to grow your client base, then Synergy 8 is a digital marketing platform that integrates with Xero and Xero Practice Manager.
Proposals and fee collection
Part of offering scalable advisory services is communicating the scope clearly up front with the client. A great app to facilitate this is Practice Ignition, which can also help you reduce debtors and get paid for your work.
Speaking of payment providers, Xero’s preferred ones include Stripe and GoCardless. As we heard at Xerocon Brisbane, businesses that use one of these payment services with a Xero invoice get paid in 10 days on average, compared to 24 days for those without a payment service.
Getting timely and accurate information from clients is a prerequisite for every high performing Xero firm. Without this, it’s impossible to offer advisory at an attractive service level and price.
Having access to data is one thing, but being able to find the insights and tell the story in a way the client will understand is an integral part of the delivery.
You’re not on your own
Whether it’s joining in the discussion in the Xero Partners (Official) AU Facebook group, participating in the fantastic app advisory certification camps provided by Cloud Integration Partners or reading about how other Xero Partners have made the journey to advisory in The Pacesetters: Advisory, there’s plenty of help out there to ease the transition from being a compliance-only firm to a advisory-focused business.
You’re never alone when you’re part of the Xero Community.
You can click here if you would like a copy of the action plan from the “Embracing the app ecosystem: unlocking profit and boosting your business” session at Xerocon Brisbane.