Skip to content

How Accounting Firms Avoid Hitting the Revenue Ceiling

by |
Blog Business Model Pricing Value Pricing

How Accounting Firms Avoid Hitting the Revenue Ceiling

Calling all CPAs. How Do Your Accounting Firms Avoid Hitting the Revenue Ceiling?

As you know, inflation has been going through the roof and the price of everything is getting higher and higher. However, at the same time, accounting firms haven’t been increasing their prices and continue to grind on the profit model. How do you increase your revenue when you hit the revenue ceiling?

Time is in limited supply. There are only so many hours in the day so how are you going to increase a revenue model that’s based on hourly billing? Well, here’s the key. If you’re billing by the hour, the only way to increase your revenue model is by increasing your billable hours. Unfortunately, if you’re doing that, you’ll have to keep contacting your clients about the increased hours and end up driving them crazy.

Since there are only so many hours in the day, that means there will always be a limit to your income. The traditional accountant’s billing model is different from that of a realtor. Generally speaking, realtors usually do a similar amount of work to sell each home but if the property value happens to increase significantly for a particular property, then the realtor then gets a much higher commission on it. However, accountants don’t work on that same commission-based model.

How do we avoid this revenue ceiling when there is a limit to the hours you can bill in a day, week, month, or year? You move to a value pricing model.

The Value Pricing Model

When you get away from the available hourly billing model, then there’s no ceiling on your revenue. You can value price it as high as you want. For example, one of my clients recently just closed a client for $50,000 a month. That’s got nothing to do with how many hours they’re putting in and it has everything to do with the value that they’re providing for their client. It then becomes a similar scenario to a realtor selling the house for double the price, then the compensation becomes double. You certainly couldn’t do that with a billable hour model. How could you get another client on board to get another $50,000 a month? Think about how many hours you’d have to put in…it would be insane and that’s how you’d hit your ceiling. See my complete Guide to Value Pricing for Accountants article here.

So if you want to avoid hitting that revenue ceiling, you need to switch to the value pricing model. How do you do that? You go through the executive-level coaching program called the Accountant Success Formula. This is where I show accounting firms where I lead, guide, and protect them on how to move from a traditional billable hour model to a value pricing model subscription. You learn how to get smooth cash flow, reduce the amount of time you have to work, and get clients that appreciate you more. And it’s all about using the correct business model.

I’m Erik Solbakken, reminding you that when you take back control of your business model, you can take back control of your life. Stay tuned for more success tips.

Leave a Comment