Goldilocks and the Three Prices 🐻

Read Time: 5:00 minutes

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In the last issue, I discussed how to value price in your accounting firm. This issue will examine how I use tiered pricing to create an offer. I call tiered pricing "The Goldilocks Pricing Strategy" because you are building a good, better, best proposal and trying to sell the middle package.

Benefits of The Goldilocks Pricing Strategy

Tiered pricing allows you to experiment with pricing. There is less likelihood of rejection when you present three prices, giving you more freedom to attach more value to the higher packages. It also allows prospects to compare prices against the tiers rather than competitors.  

I also use tier pricing to get paid well for things I do not like doing. For example, I prefer not to do driver-based forecasting, so when I hear a client wanting to forecast actuals, I will put this in my top package for a premium price. 

Structuring Tiered Pricing in Your Accounting Firm

The Goldilocks Pricing Strategy gives clients a choice and lets them see the difference in value between each tier. The three prices are: 

• Celebrate price – go out and pop bottles profit!

• Just the right price – above industry standard profit 

• Floor price - industry standard profit

The floor price is an anchor that is around the minimum industry margin. You aren't trying to get people to buy this package. It's designed as a baseline to show that tiers 2 and 3 are more valuable.

You want to put all the value in the second and third tiers to get the client to buy the middle package. Finding the right tier prices will take trial and error. I look at pricing as a dial that can be turned up and down based on future projects in the pipeline.

These prices should be listed from the highest package to the lowest package. The highest price will create a reference point for the buyer, making the next two packages appear to be less expensive.

Setting the Price 

I play around with the pricing of the tiers, but I use the percentage differences mentioned in this HBR article on tier pricing as a guide. It recommends the following: 

• The best price is not more than 50% of the better price

• The good price is not more than 25% below the better price

So, based on these percentages, a package with a $1,000 floor price would be the following: 

• Best $1,875

• Better $1,250

• Good $1,000

I would increase the prices if I felt more value in the best and better packages. In my firm, the floor price is significantly above the industry margin because it is my coaching package where I only meet and strategize with the client. I do not follow this formula all the time, as you can see in my assessment course example below:

The Downside of Tiered Pricing in Your Accounting Firm

The Goldilocks Pricing Strategy can create some issues. It can create confusion and cause clients not to pick the package they need. At the end of a proposal presentation, I tell a prospect which package I recommend for them to eliminate any confusion. 

I then have the prospect tell me what they are thinking. Sometimes, a prospect has picked a different package based on pricing. I have tried explaining what they would be missing, but that only sometimes works. 

A client picking the wrong package based on price is the main downfall of tiered pricing. It could hurt you if the selected package does not get the client the expected results. 

Once the package is selected, I only send them that package in Ignition rather than all three to avoid any further confusion. 

Implementing Tiered Pricing in Your Accounting Firm

Here are the steps I would recommend to implement tiered pricing in your accounting firm: 

1. Develop a floor price.

2. Ask prospective clients questions to determine what they deem valuable. 

3. Confirm what you heard by reading back to them the key components of your conversation.  

4. Put things you deem the most valuable or dislike doing in your top package. This could be: 

   • Services (historical vs. forward-looking)

   • People in meetings (1-on-1, multiple owners, or leadership team)

   • Communication (Email, text, or scheduled calls)

   • Frequency of meetings (most clients want more of you)

   • Type of meeting (in-person, Zoom, or cohort)

5. Play around with adjusting packages based on the percentages discussed above and the estimated value you calculated. 

6. Ask the prospect in person or on a Zoom call with the camera on what questions or concerns they have. Getting both verbal and body language feedback is vital. 

Remember, value and tiered pricing is an art. The only way to get better at it is to start doing it.

Thanks for reading, Luke Templin!

P.S. There are four ways I can help you grow your CAS offerings when you are ready:

1. Automate your CAS offering with daily financial digest on autopilot

2. Apply to join my How to Start Offering Advisory Services Cohort. The first session of cohort #1 received an average rating of 9.2 out of 10!

3. Mini-courses on CAS

4. Join Megan Tarnow and me at the #CASsaloon every fourth Thursday at 2 PM CST on “X” to talk all things CAS.

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