Across Australian firms of all sizes, accountants are hesitant to move away from traditional fee models, in particular time-based billing, Kath Bowler, chief executive at Licensing for Accountants, told AccountantsDaily.
“The hourly rate is such a limited model. And it doesn’t reward efficiency and it doesn’t focus on technology. It’s extremely valuable in working out a cost to serve, but it has limitations in working out the value to both the client and the business,” she said.
The Licensing for Accountants client base represents a reasonable cross-section of the industry, and Ms Bowler believes that from “massive” firms down to sole practitioners, fee models are a problem “across the board”.
“It’s all about the mindset of the person. I was a bit surprised that there was no correlation on size,” she said. “It’s top-down.”
Ms Bowler believes part of the hesitation to move to a value-based model is an innate fear that accountants have of selling, or of ripping off their clients.
“There’s people out there promoting value-based pricing which is ripping clients off. And [accountants] focus on those extreme models. They just need a more balanced model,” she said.
“They’ve got to understand they add value in more ways than just saving tax. And they’ve got to believe in that. And then also understand that charging on a value-based model does not mean ripping your clients off. It means being rewarded for the services that you provide,” she said.
“It starts with the accountant actually understanding that they add value in more ways than just saving tax. You save them time. You have knowledge and expertise that takes years and years to build up. And if you’re doing it right in the advice world, you’re focusing on what it is that the client is trying to achieve from a goals perspective. And there’s a lot of value in helping someone achieve their goals.
“So for me I find we need to teach the accountants about how they can add value in more ways than just saving tax. Getting them to understand and believe in that. Then once they believe in that, they can sell it to the client.”