Steps to start billing by plans
Plan-based billing allows you to charge for the services you offer instead of for the hours you work. But how do you get your practice to stop charging by hours and start doing it for the services it offers?
What is plan-based billing?
Plan-based billing involves grouping services into packages for which you charge a certain price. The price is set upfront and is independent of hours. This means your clients know what they’re going to pay - and you know what they’re going to pay you in advance.
Although this is a new idea for advisory practices, it’s very normal in other markets. This business model is used by Internet providers, phone companies or online services like FacturaDirecta, for example.
Plan-based billing allows you to dissociate the cost of your services from the time needed to produce them. So you have an incentive to improve your business efficiency and productivity.
Towards plan-based billing
Plan-based billing is a very attractive option. It’s a much better monetization model than hourly billing, considering that thanks to FacturaDirecta repetitive tasks are reduced to a minimum.
But when you’ve decided to make this change, how do you implement it? Where do you start?
In this guide we propose 10 steps to achieve it. We hope it’s very useful for you.
1. Get informed and prepare a good strategy
A change of this type can’t be done overnight. It needs planning and a good strategy. The better you prepare, the better the results will be. These are some ideas to achieve it:
Get informed
Look for information about this business model. Look for sector experts, blogs, podcasts or other publications on the topic.
Learn from other advisors
If you have friends, colleagues or acquaintances who have or work in advisory practices that have already taken this step, you can ask them and learn from them. From the process they followed and their plan structure. How did they make the transition? What mistakes did they make? What program did they use to do it?
Improve your marketing
This isn’t usually a strong point for advisory practices. But you’re going to need to communicate clearly so you need to improve. You’ll have to tell your clients exactly how plan-based billing can benefit them.
2. Create your plans
Creating plans makes life much easier for you and also for your clients because you can group your services into packages that you can sell at a fixed monthly or annual price.
This allows your clients to choose the package that best fits their needs without having to worry about details, or choosing from a long list of services.
But what services should you group and how?
A good idea is to offer the highest value-added services in the most expensive plans. This gives you the opportunity to get your clients to end up contracting your most expensive plan. These are two possible structures for your pricing plans:
Good, better, best
When you offer these 3 options, people tend to lean towards the middle plan. On one hand they don’t want someone to see them opting for a cheap plan or contracting a plan that’s insufficient for their business needs. On the other, they don’t want to pay for something they don’t need. Although it’s easy for them to eventually move to the higher plan with time and your guidance.
Minimum, popular, custom
This structure gives you a lot of flexibility. The minimum plan is the most basic plan you can offer a client without losing money. The popular is the plan that offers the services most small businesses need. And finally the custom plan is one that starts from the popular, but is modified to fit exactly with the client’s needs.
3. Create a pricing page
When you have your plans defined, it’s essential to define prices well for each plan. Charging too much or too little can be fatal for your business.
The first step is to define the most economical plan well. For this, you must find the balance between:
- The minimum price: It’s the minimum price you can offer without losing money.
- The expected price: It’s the reasonable price for the plan considering the included services.
- The ideal price: It’s the maximum you can ask without overcharging.
4. Communicate it to your clients and employees
Now that you have your service plans created and their prices defined, it’s time to make them known to:
- Your clients: they need to know what you’re doing and why. Think about how you’ll communicate it to them and test with some clients before making a mass communication.
- Your employees or team members: they need to understand that the change will bring value to the practice and that it’s the way to innovate.
Although this stage may seem easy, it’s one of the most complicated to carry out. You’ll have to repeat the advantages of the change many times to clients and also to your employees. It’s not just about a change in prices, it’s about a change in business strategy and culture.
5. Evaluate each client’s situation
Offering plans to your clients doesn’t mean you treat your clients like clones. It’s simply a way to make it easier for them to choose the services they want to contract.
Your clients’ business models are various, but it’s very possible that their accounting or advisory needs are similar. Accounting and taxation are subjects that are generally regulated in common for all companies (with specialties).
Learn from your clients’ needs, it will help you:
- Better define the services and packages you offer.
- Communicate better with them.
These are two basic aspects to become a valuable advisor for their business.
Talk to your clients about their needs in person. Listen to the problems they’re trying to solve and think about how you can help them. Ask them about their business. The answers will help you get an idea of their situation and needs.
You need to know:
- Your clients’ problems.
- How you can help them solve them.
- The work it would cost you to solve their problems.
You can get your clients to see you as a valuable advisor, offering services that traditional advisors don’t offer.
6. Tell your clients the value you bring them.
With the knowledge accumulated in the previous point, you can improve communication with your clients. You can tell them:
- The value your service brings.
- How much time you can save them.
- Specific issues you can help them with.
- How you’ve helped other clients.
- How you’ll collaborate from now on.
This is a critical point. If you can’t clearly communicate the value you bring to your clients, clients won’t see any advantage in your services and obviously won’t be willing to pay for them.
In an ideal situation, after talking to your clients, they should see you as an extension of their business.
7. Start slowly
Implementing plans to all clients at once is not the most appropriate. Rather it could be a disaster, better start with one or two.
If you can choose, it’s best to start with a small client with simple accounting and taxation. Start with an easy client, preferably one who hasn’t changed too much during the last year.
You also have the option of starting with a completely new client to whom you can explain your pricing plan model without having to justify why the change.
8. Adapt plans and prices only if necessary
You can modify the plans you offer to adapt them to your clients’ needs. But ideally you should try to maintain consistency, too much variability makes management difficult.
And the same goes for prices, you may need to adapt some price but try not to do it too often.
In our case we don’t modify either the features or prices of any plan for any client.
9. Become your clients’ advisor
You have to get each of your clients to see you as a trusted advisor, helping them in a way that traditional advisory practices don’t:
Train them
Help them set up their account. Give them practical advice that helps them organize their workflows and documents. This will also make your job easier.
Meet their needs
Make sure to meet their needs by giving them the service you promised. Solving problems will help you be something more than a traditional advisor.
Give them your support
Be proactive, not just reactive. With the service payment model, you can be proactive and solve problems before they become a nightmare for your client.
10. Continue offering value to your clients
The purpose of modifying your business model is to offer better service to your clients. And this should result in more billing and more profits for your practice.
It will also allow you to be closer to your clients and strengthen your professional relationship. This will improve client retention and allow you to offer higher value-added services in the future, moving clients towards more expensive plans.
The plan-based billing model allows you to have happier clients. This is much better than the hourly model where the client may feel you’re charging them too much, even when you’re not.
A plan-based billing model is a change in your practice’s strategy that will allow you to abandon the classic advisory model to fully enter an exciting and new market. If you can bring value to your clients, you can get great benefit from this new business model.
