How to price your accountancy services – the science behind it!

All decisions are emotional

What many people don’t realise, including accountants, is that their prospects make decisions based largely on how they are feeling. That’s why something as simple as a first impression can have such a big impact. 

To help you understand just how much this is true, you can look at the science behind the decision-making process. For example, neuroscience shows that emotional input and input from our gut stimulates the process of decision making in our subconscious brain. This means that the whole process starts without our awareness in our subconscious brain (aka our Prefrontal Cortex). Only when our conscious brain starts to become aware of our decision do we start to construct the rationale for our decision. 

When it comes to thinking about how to price accountancy services, knowing that decision making is not rational, but rather based on our emotions, past experience and emotional state at the time, is a huge advantage. Why? Because only when you understand how the mind makes decisions, and therefore the process your Prospect goes through when buying from you, can you be confident in charging what your firm is really worth and get the conversions that you want. 

Decision-makers tend to take the path of least resistance

Whilst understanding that ‘decision-making is largely based on emotion’ is advantageous to you, it is also important to know that your prospects, just like everyone else, also tend to favour the path of least resistance when making their decisions. What we mean is this:

There are two types of thinking:

• System 1 thinking: fast and automatic

• System 2 thinking: slow and takes lots of mental energy

While System 1 thinking is quick, automatic and based on our intuition and experience (e.g. 2 + 2  equals what?), System 2 thinking is slow, rationale, and attention-hungry (e.g. 34 x 27 is?). As System 2 thinking is so attention-hungry, when we use it we struggle to do anything else at all, e.g. walk, talk on the phone. This is why the type of thinking that the brain wants to default to is System 1.

How the brain takes ‘shortcuts’ when decision-making and how you can use them

The brain is the most energy-hungry organ in the body; it uses up to 20% of our available energy and oxygen. It’s for this very reason that our brain is always trying to find ways to be more efficient and conserve energy. 

When it comes to decision-making, the brain takes shortcuts in a number of ways (outlined below) especially if they feel that there is too much information, a lack of meaning or a need to act fast. If you can help your Prospects and Clients use these shortcuts (e.g. default to this System 1 thinking), then you will find it much easier to charge what your firm is worth.

Contrast effect

One of the ways our brain helps us to avoid getting overwhelmed with information is by ‘priming’ or noticing when something has changed. Our brains struggle to make sense of a number in isolation, so comparing it to something else gives it meaning.

How to price accountancy services? 

Anchoring is where you ‘anchor’ a figure to a recent number. So, for example, if you lead on your pricing page with a cheap-as-chips package, say, £50 per month, your potential clients are going to be relating the quote you give them to this figure of £50. That means it is going to be hard work to sell them a package of over £500. As well as anchoring, our brain doesn’t look at the new figure in isolation. It uses the Contrast Effect Bias (amongst other biases) to measure it up against the old figure and places significance on the amount of change, whether positive or negative. This Contrast Effect is very significant when you are renegotiating a fee increase with an existing client. 

This is why we always recommend to our members that they (a) put their prices on their website (because you want to be anchoring your prices not someone else’s in the mind of your prospect) and (b) display their most expensive package first.