Value Pricing or Value-Based Pricing is when you bill clients based on the perceived value of your services, and this perceived value may vary from client to client, and can change over time.
You can find tons of information about value pricing online (I have added a few links below), so I am not going into details about this model here. In this blog, I am going to show you how QuickBooks users can setup and use Value Pricing in TimeRewards, and how TimeRewards and QuickBooks can help your company smoothly transition to this model at the pace you want.
At TimeRewards, we implemented Value Pricing in Oct 2017 in response to the growing interest in this billing model. We heard terms like ‘Firm of the Future‘ or ‘Value Price or DIE‘, this scared the hell out of us, and we put our heads down and came up with a great 360 degree solution to help Accountants, CPA, and Lawyers implement this model.
We divided Value-Based Pricing into 5 different segments;
- Build – create your plan packages.
- Engage – get the client to buy into a package.
- Deliver – track & complete promised tasks.
- Get Paid – invoice client for the package.
- Report – is value pricing working for you?
1-Build Your Package
In TimeRewards go to Setup | Packages and click on + Add Package
Step 1: Add New Package
Enter a package name, eg; Basic Accounting, Professional – come up with a strategy for naming your packages, if you don’t have one yet, you can come back and change it.
Enter the Suggested Price, you can always change this for a customer engagement.
Set the Billing Frequency, for this package. We recommend using Monthly, but you have an option to invoice Quarterly too.
Last, set the Group – Bronze, Silver, Gold, or Platinum. We recommend setting this level based on suggested price, but you can use any strategy you want – this is for reporting and grouping purpose only.
Step 2: Add Service Items
From your list of service items, add the service items you want to include in this package.
QuickBooks Users: Service items need to be setup in QuickBooks, and TimeRewards needs to be linked to QuickBooks. See how to setup TimeRewards for QuickBooks Integration
Step 3: Select frequency of service to be performed
The last step is to set-up the frequency for each service item in this package. For example, in a Bronze package, you may do Bank Reconciliation once a month, while in a Silver package you may do it once a week.
Congratulation – your package is set-up, go ahead and set-up few more packages
Go to Customer list, and select a customer from the list, then go to Billing Tab. Select Value Pricing from the Job Type drop-down, and click on + Add
Here, select the package, change the Bill Amount if you have negotiated a special rate with the customer. Since the customer may upgrade or downgrade packages over time – enter the Start and End Date, and Save.
TimeRewards will do Two things for you:
- First, it will set-up a billing schedule based on the billing frequency of this package. Click on the +Sign next to package name, to see this schedule.
- Second, TimeRewards will set-up a list of ToDo items with due dates. Click on the +Sign next to billing schedule to see these ToDo items. Here you can adjust the due dates, and also assign one or more employees to work on these tasks. If you don’t assign tasks to employees, these tasks will be available in an Open pool, from where employees can pick tasks to work on.
Besides invoicing client for the package, you can continue to bill clients by the hours for services not covered in the package. This is a great way to control your transition into Value Pricing. As you move along, you can include additional services into this model at a pace that you are comfortable with.
Now lets see how TimeRewards helps you deliver on your commitments.
Go to My Time | To Do | All Task, here in the Open Task section, you will see a list of all current and upcoming tasks. Based on the package, and frequency of tasks in the package – TimeRewards has created these To Do items. You can click on Take It (button appears when you hover over a task in list), to start working on a task , or as an Admin you can assign current and future tasks to one or more employees.
As an Admin, you need to make sure that the Open Task list is empty, and as an Employee you need to make sure your To Do list is current. TimeRewards will nudge you along the way to make sure your organization does not miss any commitment.
QuickBooks Users: To Do items can be sent over to QuickBooks for Payroll and Invoicing
Somewhere along the way you need to invoice the customer for the package. On the due dates, TimeRewards automatically adds billing transactions for packages to the billing queue. You can review it, click on Create Invoice to generate the invoice, and send it to customer or send it to QuickBooks for further processing. Once you get comfortable with the system, you can automate this task to reduce manual reviews.
Would you be better off billing by the hour? Are you charging enough for the work you have done? Let TimeRewards answer this for you.
Here are some sample reports:
- Package Productivity Report by Customer – Which customers are draining your resources.
- Resource Planning – See if you have adequate staff to fulfill your future commitments to customer
- Package vs Hourly – Is value pricing making you money or costing you money?
Links about Value Pricing:
What is Value Pricing? The opportunity, plan, the price –