How to use business data to determine your fee structure
Accountants often tell us that one of the hardest things to get consistently right for their firm is pricing. Often, the type of clients you work with changes over the years – as you grow, develop your niche, or switch tack – and it takes work and dedication to update your fee structure to reflect those new goals.
With the right data, though, you can make decisions about how to rework your firm’s pricing structure in a way that makes sure you are prioritising both profit and client satisfaction. Our time and fees module can give you the practice insight you need to help you do that. Here is how to use data to review and optimise your pricing models.
Analyse key data points
There are several essential data points you can start tracking to inform your fee structure. Our time and fees module gives you full transparency across them all:
Time spent on clients – track the hours you dedicate to each client and task to help you understand where you are using resources most effectively.
Staff performance – monitor which colleagues are working on specific projects and evaluate how efficiently they are working. This insight can help you allocate work more effectively, as well as justify billing based on expertise and productivity.
Project complexity – record how much time different types of projects take. It is no secret that more complex projects typically require more resources and time, but do your fees reflect that?
Review and adjust pricing models
Once you have a clear understanding of the data points you need to track and have begun to build a picture of the story they are telling you, you can review and adjust your pricing models to better fit both your firm’s needs and client expectations. You might consider:
Hourly billing – for clients who prefer transparency and come to you for ad-hoc work. You can use your time tracking data to make sure your hourly rates are competitive and fair, reflecting the expertise and time spent.
Fixed fees – for simpler, more predictable tasks, use your data to analyse past projects and determine average time and resources required. Then, set fixed fees that keep you profitable, while offering clients clarity and peace of mind.
Value-based pricing – if you want to move towards value-based pricing – a model that focuses on the value delivered to the client, rather than the time spent – you could use client satisfaction data and outcomes to set prices that truly reflect the worth of your services.
Tailoring models for different clients
Sometimes, a one-size-fits-all approach can work when it comes to pricing, particularly if you work in a specific niche or market. In our experience, though, it is more effective to design a fee structure that accommodates the varying needs and preferences that different types of clients have.
Using data to analyse your client portfolio, consider what types of clients make up the bulk of your work – and which ones you enjoy working with and particularly want to retain.
If you are targeting mostly small businesses and startups, for example, you might consider package deals for common services and fixed fees for predictability. Larger corporations may be happy to pay for value-based pricing or retainers, while offering discounted rates for long-term engagements can be a good way to build loyalty with clients who have worked with you for a while.
Similarly, you can use data to encourage positive client behaviour – identifying incentives that can help improve your relationships. Depending on your portfolio, this might look like:
Early payment discounts – by analysing payment patterns, you will have a clear idea of which clients consistently (or mostly!) pay on time – and can offer them discounts to encourage this behaviour further.
Bundled services – looking at data on frequently requested services can help you to create bundled packages that offer value, while securing more business.
Referral discounts – by tracking client satisfaction, you will be able to identify those most likely to refer new business and offer them incentives to do so.
We have designed our time and fees module to provide you with the data you need to truly understand the picture behind your firm’s portfolio – and arm you with the numbers and insight you need to create a fee structure that works for you and your clients. Start exploring these features today to see how they could transform your practice.
