Geraldine Carter helps single-owner CPAs go down to 40 hours without giving up revenue.
In this episode, Geraldine reveals effective strategies for tailoring your accounting service business to suit your lifestyle, enabling you to increase revenue without feeling overwhelmed by excessive work.
Podcast: Play in new window | Download
Why you have to check out today’s podcast:
- Discover how accountants can increase their earnings while reducing their workload
- Learn to craft your message to highlight the value you offer, rather than focusing solely on the cost of your services
- Uncover the transformation within the services you offer
“Your clients have an expectation to pay and if your prices are too low, they might not buy from you.”
– Geraldine Carter
Topics Covered:
01:56 – Working less but earning more
03:41 – Flexibility, autonomy and working less hours
05:38 – Mindset shift to less hours work
08:48 – Pricing strategies so accountants work less and increase income
11:10 – How message is structured to a CPA’s client in terms of raising his price
14:44 – The idea of selling services but delivering transformations
16:42 – Understanding the services accountants perform and how they earn recurring income
17:20 – What transformation does accountants deliver to companies
22:36 – The beauty of having people see the value in your own business
Key Takeaways:
“The revenue that you create in your business has nothing to do with the time that you put in. I mean, you have to grind out the beginning to get it all set up and going. But you can get to the place where you do not have to work 40 or 25 or 15 hours a week. You just have to stay at it until you figure out how to get your hours down.” – Geraldine Carter
“Thinking that revenue comes from work for clients is like thinking that time comes from your watch, it’s not how that works.” – Geraldine Carter
“Your buyer decides what price they want to pay. So, we do tiered pricing, we offer it to the clients.” – Geraldine Carter
“Most accountants are selling services, but they’re creating and delivering transformations.” – Geraldine Carter
“For business owners listening, do not underestimate the power of pricing wisely.” – Geraldine Carter
Connect with Geraldine Carter:
- Website: https://geraldinecarter.com/
- LinkedIn: https://www.linkedin.com/in/geraldine-carter/
Connect with Mark Stiving:
- LinkedIn: https://www.linkedin.com/in/stiving/
- Email: [email protected]
Full Interview Transcript
(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
Geraldine Carter
Your clients have an expectation to pay and if your prices are too low, they might not buy from you.
[Intro]
Mark Stiving
Today’s podcast is sponsored by Jennings Executive Search. I had a great conversation with John Jennings about the skills needed in different pricing roles. He and I think a lot alike. If you’re looking for a new pricing role, or if you’re trying to hire just the right pricing person, I strongly suggest you reach out to Jennings Executive Search. They specialize in placing pricing people. Say that three times fast.
Mark Stiving
Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the simple relationship between them. I’m Mark Stiving, and our guest today is Geraldine Carter. Here are three things you want to know about Geraldine before we start. She’s the founder and owner of Geraldine Carter, LLC. I wonder where she got that name. She’s been running her own business for over nine years targeting accounting and small business firms, and she’s been to seven continents and 51 countries. Welcome, Geraldine.
Geraldine Carter
Thanks, Mark, for having me. It’s good to be back.
Mark Stiving
I was going to say, I should have said welcome back, Geraldine. Because you’ve been on a couple times before.
Geraldine Carter
I’ve got you covered.
Mark Stiving
Yeah. Thanks. So we’re going to talk about some fun stuff today as always, and one of the things that is interesting about the way you do your marketing is you market to accountants. And I see this all the time, but you always say to them, work less and yet you’re a pricing person. Tie those two things together for me. Would you please?
Geraldine Carter
Yeah. So in the accounting industry, I work with single owner CPAs and accountants and EAs, but they’re all single owners and most of them have been at it for at least a decade or 15, 20, 25 years. And in the industry there is a strong tendency to overwork because they come from a space, a history of hourly billing, and he who billed the most hours won, right? They were in that dynamic that has been the predominant way of thinking for millennia. And many accountants still are in the groove or the trap of working way more hours than they want to be. So that’s the problem that I solve for them primarily is going from working a 65 hour week down to a 40 hour week without losing revenue. And we do that through a couple of things, but one of the primary ones is fixing their pricing. They have a number of pricing challenges. Many of them just depend on what generation they come from, like I said, a history of hourly billing. So they think that work performed over time for clients is what creates revenue. But we all know that revenue comes from value creation. So there are a number of things to fix when we fix them, their hours go down and then their revenue goes up.
Mark Stiving
Okay, so all that makes sense in theory. if I were working 65 hours a week, which I might, I don’t know, right? But if I were working 65 hours a week and you could find a way to make me more productive so that I could make more per hour, even if I’m not billing per hour, right? I could make more per hour. I’d still want to work 65 hours a week. I do this because I love it. And so if you could make me make 50% more for working the same amount of time, that’s my choice. I chose that one.
Geraldine Carter
Yeah. So I don’t have a right or wrong about how much people want to work. My clients are the ones who are working 65 hours a week and don’t want to be. They still love what they do. They love accounting, but they’d rather be doing it more like 25 hours a week. And what they really want is their own flexibility, their autonomy. They want their time back and their lives back. COVID sent a tsunami of work through the accounting industry and they’re just now that water is just finally beginning to recede and we’re starting to see the wreckage that has been left behind. So they are tired, they’re fried, they’re spent, and they just want to be able to have a business that supports their life and their lifestyle, but without grinding it out 65 hours a week while still doing work they love for clients, they enjoy. So like I said, I don’t have a wrong or right about how many hours a person works. I just want to help them shape the business that they want to have that makes the money that they want and so that it supports the lifestyle they want.
Mark Stiving
Excellent. And one of my favorite sayings is I love the flexibility of running my own business. I get to choose which 18 hours a day I want to work.
Geraldine Carter
Yeah, totally. Which is like normal in the business owner space. Everybody thinks that you have to work all the time, but if you’re working all the time, you haven’t figured it out yet. So because I work 10 hours a week and I make more than enough money to support my family and all the rest. The revenue that you create in your business has nothing to do with the time that you put in. I mean, you have to grind out the beginning to get it all set up and going. But you can get to the place where you do not have to work 40 or 25 or 15 hours a week. You just have to stay at it until you figure out how to get your hours down if that’s what you want.
Mark Stiving
Right? Okay, so now, let’s talk about how you do this. You run into an accountant’s office and they’re billing by the hour and they’re working their 65 hours a week. What do you do? How do you get them to shift their thinking?
Geraldine Carter
Okay, so shifting their thinking does take some time. Shifting their thinking can take a good 8, 12, 16 months because assimilating these concepts take some time, especially if they come out of the Big 8 way back when, when they were really schooled in this mindset of bill 2,500 hours a year. And a lot of us came up through the ranks of working W2 where we were paid for our time. So it does look like revenue comes from time, it does look like revenue comes from work performed over time for clients. But thinking that revenue comes from work for clients is like thinking that time comes from your watch. It’s not how that works. So, but changing that takes, like I said you might be looking at a year. In the meantime, I take a client and I’ve got to go through their business and see how they’re doing things.
Are they still billing by the hour? Have they moved to flat rate pricing? But it’s just kind of a ruse for cost-plus at a really suppressed price. Do they have prices that are all over the map? The same thing, 15 different prices for 15 clients. Do they have legacy clients who they feel bad raising prices on? Do they have little old ladies that they feel guilty about because they see the little old lady’s income and they’re like, God, she can’t afford this for that. So they don’t raise the price. Do they have new clients coming in at all kinds of different prices? For them, pricing can easily comprise four, if not six or eight different problems that we need to recognize that we need to distill and then solve them serially as we move through the client roster without overly rocking their revenue boat.
Mark Stiving
So you make them fire the little old lady?
Geraldine Carter
No. I offer them options, right? Because I don’t know what is best for them. What I do is walk them through my thinking and the trade-offs that they’re making and I help them think through for themselves the impacts of their decisions. And if what they want is to get down to a 30-hour week so that they can be home when the school bus comes to drop off their kids, then we’re just making trade offs about which clients we keep on the roster at what prices. And it’s all just trade-offs. They get to pick who they keep, who they let go of, but most commonly they have probably 40% more clients than they can realistically handle. So dealing with that is really what we’re looking at to try and get their workload down to a manageable size.
Mark Stiving
Okay. So what I just heard you say is if we fire 40% of our clients, then our work is reasonable, our workload is reasonable, but I want to hear about raising prices because I want to make as much money as I used to make.
Geraldine Carter
Yeah. So what’s the question in there exactly? Is it like, if I fire 40% of my clients, what’s going to happen to my revenue and I can’t handle a pay cut?
Mark Stiving
Yeah, exactly.
Geraldine Carter
Okay. Yeah. So inside the existing client roster, prices are suppressed by a factor of two to three. Those prices have room to be oftentimes doubled. The dynamic that’s going on right now in the accounting industry is 300,000 accountants have left the profession, potentially, arguably because the hours were miserable and the pay was terrible. So of course they were going to leave. So now you have a shortage of accountants and you have a steady demand. It is a seller’s market. So it’s simple supply and demand, right? Their prices can stand to go up. Not that I advocate price gouging or extortion, but it’s a free marketplace and you can, there is a buyer on every price rung of the ladder.
There’s a buyer at every price. So you get to decide how you want to price and make the math work with the kinds of clients that you want to work with for the value that you’re creating at the prices that you’re happy with, at the workload that’s going to fit inside your life. So the shorter answer is we look at the client roster and we say, okay, who is underpriced here? We repackage, we often do tiered pricing so that CPA doesn’t have to decide the air quotes at the right price because they think there’s a right price. And I’m like, Nope! Your buyer decides what price they want to pay. So, we do tiered pricing, we offer it to the clients. The clients most often go with silver because we design the pricing curve to nudge clients to silver because it’s the highest margin, it’s the easiest to systematize. Gold is often, but not always a sort of anchor price, a decoy to nudge people to silver.
And we just move through the client roster, client by client having conversations saying, hey, here’s bronze, silver, gold, which one do you want? I realize this is a significant price increase, but we’re doing this because we think you deserve and expect a higher level of service. We’re reducing our client roster so that we have more time and space for you to get what you need to operate your business with greater clarity, make better decisions, and so on. So the clients almost always go with silver. It’s four times higher than the CPA was previously priced. Everybody’s happy.
Mark Stiving
Very nice. So what’s the communication? You just did rattle off a bunch of communications and how you communicate that, but is that the entire piece of the communications to the client that you’re about to move to a higher price point?
Geraldine Carter
It depends. The most common general message is, hey client, we know that you’re looking for a higher level of service. We’d like to be able to offer you that higher level of service. We’re making some changes to the direction of our business. We hope that you come with us. If you don’t want to come with us, here are some names we recommend. If you feel like recommending people, here is the way that we’re going to work with our clients going forward with bronze, silver, and gold. You get to pick and we can start on X day. We only have room for, let’s pretend a hundred clients. This letter is going out to 400 of our existing clients. So please let us know by the 31st what your choice is.
Mark Stiving
Okay. So it seemed like you said two different things to me. One was we do it one client at a time and the other is we just send it out to a hundred clients, or we just tell them we did.
Geraldine Carter
Yeah. Okay. So this depends on how much change the CPA wants to make to their practice. Do they want to make sweeping drastic changes or do they want to just trim the client roster down 15 or 25%? Because some of my clients will make sweeping changes, meaning that they will shed 60 to 75% of their clients. Right? And still their revenue will go up. It also depends on the timeline. Is tax season right around the corner or is it eight months away? If it’s eight months away, we have more time to do swatch tests on prices. So we can take a swath of 15% of clients, send them a batch of letters at a time. So we’re not going one by one necessarily because that would be too slow in terms of the time it takes to make change.
But if you go 15% at a time, you see what the response is. You see if you shot too high or too low, almost universally it’s too low. So then we bump the prices up 25%. We send out another batch of letters to 15% of the client roster, rinse, repeat. And after four rounds of letters, now you’re at 60% of your client roster. You have a sense of what the response is. And then now you can just send the remaining 40% of letters. So like I said, it kind of just depends on the time of the year and how much transformation we want to make. That informs how many people get communicated to at once.
Mark Stiving
Awesome. Okay. There are two things that I dearly love about what you just described to us. One of which was, I didn’t expect this. What you’re doing is transforming their business. So you’re not going in and doing a price change, which is in my mind what I expected to hear. Oh, we’re going to go do a price change and we’re going to fire a few customers. We’re saying, let’s transform the way we do business. And it makes all the sense in the world. Because the second thing that I take away from what you say, which I dearly love, is that you’re not gouging anybody at all. They’re delivering way more value than they were getting paid for. And the way the market is set up today the relative value. So it’s really hard to go out and find another accountant at a really low price and do the work that you want. So the relative value is really high at this point in time and there’s no reason that they shouldn’t be finding ways to move their prices up. And so doing it as a business transformation just makes a ton of sense.
Geraldine Carter
Yeah. And there’s a piece in there that we haven’t touched on yet, and that is that most accountants are selling services, but they’re creating and delivering transformations. And most of my clients are delivering transformations in the form of money, time, stress, and clarity of decision making. They’re helping clients make clearer, better decisions, and understand the impact of the decision before they make it. They’re helping their clients increase revenue, perhaps decrease expenses, increase margins, save on taxes, lots of money related transformations. They’re helping clients save time by getting accounting and tax off their plate or by informing them of how to do it better so that they don’t make mistakes that have to then be corrected and so on. Right. Reducing stress because now the business owner knows that they can make payroll this month and they don’t have to stay awake at night wondering, like playing a shell game of money.
Can they pay? Can they cover payroll? So accountants are creating, delivering transformations, but pricing the service. So I help them recognize that not only are they creating transformations which are infinitely more valuable for their clients, but they can price the transformation. And for them being accountants, I’m an engineer by education. We like things that are tangible. We like formulas, we like numbers that fit in boxes with one solution. So for them to think about pricing intangibles, the intangible of transformations is like a mind bender for them. But then I walk them through and I’m like, here’s how you do it. And I give them a formula for how to price transformations. And then they’re like, oh, okay, this is great. And then that’s how prices go up four times.
Mark Stiving
Okay, I’ve got to understand this formula now because when I think of a transformation, I think of an event. And when I think of accounting, or at least the type of business you’re trying to run, I’m assuming it’s a recurring revenue type business that we’re trying to run
Geraldine Carter
Mostly. So some of their services are like, annual tax is not a monthly recurring, but I’d say probably 75% of the people I work with have monthly recurring revenue in the form of monthly accounting.
Mark Stiving
And so you sell them, the accountant is going to sell the transformation. And then they have to be there to maintain the transformation. And so that’s where the recurring revenue comes from.
Geraldine Carter
Yes.
Mark Stiving
Okay. Just because I’m so curious, how is it that accountants transform businesses?
Geraldine Carter
I might not say that they transform the business. That might be a stretch too far. But the serial transformation as a business owner who has monthly cash flow means that you need to understand how much is coming in, how much went out, did everything that was supposed to come in, did everything that was supposed to get paid, get paid? Most accountants and business owners do bank balance accounting. They look, they open up their bank account online and they’re like, wow, 60 grand. Great. I’m going to go buy a trek. And they don’t realize how much of that money has already been earmarked for things and they get themselves into hot water. So just by way of this little example, when an accountant is working with a business owner month after month, helping the business owner understand how much cash they have or not helping them get to a place where they have three months and then five months and then seven months of cash runway.
So they don’t run dry in the winter season. If they have a seasonal business, helping them make hiring decisions, do you have enough money to hire that person? How long before they generate revenue instead of soaking up revenue? Because you’re training them for three months before they get up to speed. Businesses that are not stagnant are by definition, growing and changing. And the business owner is constantly making decisions and they need numbers to be able to have clarity and they need to be able to have conversations to make sure that they are making good decisions, looking down the road. And as long as the business is growing or changing, that happens every month. So there’s always value in that clarity from the accountant. And that clarity, better decisions leads to more money, more revenue, higher margins, et cetera. So there’s always room for serial transformations.
Mark Stiving
Okay. That makes sense. So, we’re helping the business owner know how and where to spend money in a growth mode, in a growth situation,
Geraldine Carter
Helping them see the impact of decisions before they make the decision. Right. Because the accountant may or may not feel comfortable providing the advice as in you should do this, but in talking through the decision, talking through the numbers, the business owner understands better and makes a better decision.
Mark Stiving
Yeah. And so, they’re actually much more of an advisor than they are just an accountant.
Geraldine Carter
Yeah. So, and a part of this is traditionally accounting has been in this narrow lane of strictly accounting. And I just tell you what happened to your money last month, but there’s far less value in, hey, here’s what happened to your money last month. Well gee, thanks. I saw my credit card statement, I know where that money went, I spent it. There’s so much more value in the cash flow and in the forecasting and the 12 month rolling forecast, in the scenario planning that stuff traditionally isn’t what accountants were taught, trained, schooled in. But it’s not that hard, it’s not rocket science. So for those who are open to it, they are moving in that direction and offering that kind of guidance and those kinds of services to their business owning clients.
Mark Stiving
Yeah. Nice. And again, we’re talking about actually generating value for the client, which is why they get paid. Yes. So, excellent. Excellent. Geraldine, what do you want to share with us that I didn’t ask? This has just been fascinating. I always love this.
Geraldine Carter
It is such a broad question. It’s okay. So something interesting that I observe among my own clients, I recently did a sort of a study of my 10 best performers, put them all on a table side by side so that I could understand better what drives the best performers and what they have in common. And one of the things that was clear was that they had to price effectively. Some of them priced aggressively, but they didn’t have to price aggressively. But when they did, that made a huge difference at light speed in their business.
Mark Stiving
Quick, when you say aggressive, you mean low or high?
Geraldine Carter
High.
Mark Stiving
Okay.
Geraldine Carter
Yeah. So really pushing the envelope and getting way out of their comfort zone and past the thought of I would never pay this for that. Which was what a lot of them think. So the ones who priced somewhere between effectively and aggressively, they had to price between effectively and aggressively in order to be included in my top performer list. Not that I rank my clients that way, but I was trying to find out what drives success in their terms. So I think for business owners who might be listening to not underestimate the power of pricing wisely, which might mean lower depending, but for my people just given supply and demand, in their case it’s absolutely higher and much higher.
Mark Stiving
Okay. So first off, I rarely say it might be lower because it’s almost always higher.
Geraldine Carter
Yeah.
Mark Stiving
And secondly, I have to tell you that I’ve been having this conversation with my mentors and people who work with me that I don’t charge enough. Right? And so I have the exact same problem that everybody’s like, really? Someone’s going to pay that much.
Geraldine Carter
I know, I would never pay this for that. That’s way too expensive. I know all my clients are going to head for the hills. That’s crazy. That’s way too much.
Mark Stiving
So I was actually going to put together a project with my team saying, okay, so they can hire me or they can hire those people. Why is it that this matters? Right? Why would they hire me and how can I justify a higher price than them? And Right. This is stuff I teach all the time, which is fascinating, but it’s like, yeah.
Geraldine Carter
Yeah. I mean, it’s so hard to do for yourself and that you mention it, my own coach yesterday was like, you have to raise your prices. And I had all the same thoughts as I behave just like my clients are talking to me like, oh no, no, I can’t. Oh my gosh! it’s so hard when it’s your own business and your own services, it’s so hard to value because you’re not in your client’s shoes.
Mark Stiving
Yep.
Geraldine Carter
So having other people outside of you who can see your value, the value of the service that you provide, the transformation you provide through your client’s eyes is enormously valuable.
Mark Stiving
Well, and, and so let’s for a second, let’s put this on our, on our clients, right? ’cause every one of our clients feels the same way, right? They’re terrified to raise prices, they’re terrified to raise prices a lot. And one of the most valuable things that we can do is provide them the confidence that says, hey, this isn’t going to hurt that much. In fact, not only is it going to hurt, it’s going to feel good at the end.
Geraldine Carter
Yes. Because you’re going to make so much more money when you pay me.
Mark Stiving
Right. So pretty, fascinating. Nice. Geraldine, we’re going to wrap this up, but I’m going to ask the final question. What is one piece of pricing advice you would give our listeners that you think could have a big impact on their business?
Geraldine Carter
It would be double your prices!
Mark Stiving
Double your prices. Hang on a second. Let me see If I could double my prices. I probably could. I’d lose some clients. But I would still win some.
Geraldine Carter
Yeah, that’s the thing is, it’s hard to see the new clients who will come to you when you double your prices. Because clients have an expectation to pay, not to get back into it, but when I was in China, I needed pants in a hurry because it was freezing cold. I didn’t have any, so I went into a store, found a pair that fit. I’m five nine, it’s not that easy. And they were $3. And my thought was, what’s wrong with these pants? Are they going to unravel the moment I walk outta the store? I had an expectation to pay at least 20 bucks for a pair of pants. If your clients have an expectation to pay and if your prices are too low, they might not buy from you.
Mark Stiving
Yep. Absolutely right. Perfect! Geraldine, thank you so much for your time today. If anybody wants to contact you, I assume if we have any accountants listening, they’re going to call you tomorrow. So, how can they do that?
Geraldine Carter
I have all kinds of free goodies on my website with all the things that we just talked about, and they can be found at geraldinecarter.com/free.
Mark Stiving
Free. My favorite word. I’m sorry. Except for when I’m selling. To our listeners, thank you so much for your time today. If you enjoyed this, would you please leave us a rating and a review? And finally, if you have any questions or comments about the podcast or pricing in general, feel free to email me, [email protected]. Now, go make an impact!
Mark Stiving
Thanks again to Jennings Executive Search for sponsoring our podcast. If you’re looking to hire someone in pricing, I suggest you contact someone who knows pricing people contact Jennings Executive Search.
