Some things become so familiar over time that we fail to notice them.
This applies to many of the things we have achieved in business. My client and mastermind of K&H’s new website, Julian Sharples, recently brought to my attention a very good example of this: Fixed Price Agreements (FPAs). This was prompted by words of praise for this method of charging in, of all places, Gordon Ramsay’s autobiography ‘Playing With Fire’. In the book Gordon says:
“Accountants come in two sizes: they are either expensive or f*****g outrageous. In the early days, we needed little more than straight auditing of the company books. This meant that they checked over what we had stuck in the computer for the last twelve months, added seasoning, such as a bit of depreciation, agreed the tax computations with the local taxman, and signed off the accounts for the year. Nice and straightforward, and it probably didn’t cost an arm and a leg. Martin, who was to be tragically killed just as we began to appreciate his full value as a financial advisor, not only met our needs efficiently and on time, but had come up with the brilliant idea of an FPA, a fixed price agreement. This meant that he estimated what his auditing services would cost, divided by twelve, and we set up a standing order so that the fees didn’t hurt so much and Martin’s practice could eat regularly. As our needs grew during the year, the cost might rise and there would be a simple adjustment at the end of the year.”
We have been using FPAs at K&H for eight years now, and many businesses are coming to accept that this is a better way to charge their customers. At the time it seemed like a huge leap of faith to move away from time-based billing but whenever we take on new clients from accountants who still charge in that way, it is a breath of fresh air for them to have certainty about what they are being charged, and to have the cost spread over the year.
Pricing has been the number one way to make quick improvements to the fortunes of every client I have worked with on business development. Gordon Ramsay has reminded me that it is not just the amount but the method of charging that you need to think about.
There is always a way of changing the way you charge to differentiate your business from the competition and help your customers. Does Gordon’s second favourite F word (Fixed) apply to your prices and service levels?
Have you ever been surprised or inspired by business ideas found in unlikely places, like celeb autobiographies?