In 2006, Dominique Molina, CPA, had a revelation: she was working too much.
It was busy season, and like many nights, she was working late from her home office. As the owner of a successful tax firm in San Diego, she felt a great pressure resting on her shoulders.
In a laser-focused, deadline-driven push to the end, her 3-year-old son put everything in perspective.
“My son came into my office and started to ask me a question,” Molina remembered. “But he stopped himself and said: ‘Never mind. I’ll go ask Dad.’ I was crushed.”
Even at this young age, her son knew his mother was off limits until April 15. Molina didn’t know what to do.
The main reason she started her own firm was to avoid late nights like this. And on top of the workload, despite having tons of clients, she wasn’t making the revenue she expected. Molina came close to giving up. But instead, she did something even more drastic to solve her problem.
After busy season, she reduced her client list by 83 percent and brought in more revenue because of it.
Consider what you love. Then put a value on it.
Molina loved the “magic of tax” — the strategy, the consultation work, the relationship building. But by concentrating on a high-volume of tax returns, she wasn’t leaving a lot of time or energy for any of these things. She also wasn’t using the full extent of her education and experience. And what was worse, her clients weren’t getting the most out of these either.
“What CPAs bring to the table is expertise — to use numbers to help businesses become more profitable or strategic tax planning to help clients pay a lot less in taxes,” Molina said. “It’s what I love to do. But when I reviewed my business model, I realized the things I loved doing were the things I wasn’t being well compensated for.”
Molina was charging low hourly fees for valuable advisory services as add-ons to tax returns. This meant she was undervaluing these services — and herself. With that insight, Molina flipped her focus. She implemented a value pricing model, charging more for the tax planning services that delivered the most powerful results for her clients.
“But I knew for this to work, I had to communicate that value so I could help my clients feel good about paying more for those services,” Molina said.
And that’s where the real work began.
It’s all about the presentation.
Molina had to get her clients on board with value pricing, and that meant they had to understand why this new business model would benefit them.
To do this, Molina created packages of services that highlighted her high-value tax advisory work. By linking these services — and higher fees — to increased quality and often tax savings, she hoped clients would recognize that even though they were paying more, they would be receiving more value in the long run. She also accepted that not every client would want to come on board and braced herself to lose them.
“It wasn’t an overnight, fast adjustment,” Molina said. “It took about 18 months to see real change — to see this as a sustainable, feasible way to run a business.”
As the value pricing model became more and more profitable for her — and for her clients — she was able to cut down her client list to less than 30, and her hours dropped significantly. She was thrilled.
“I was excited about the positive experiences I was having with my clients,” Molina said. So excited, she decided to take her success with value pricing on the road.
Put the pieces together.
“Value pricing has been buzz terminology for a long time, but it’s difficult to know how to adopt it,” Molina said. “It isn’t something we learned in school.”
Recognizing there was a need for more education around this pricing model and tapping into her own success, Molina set off to change how other tax professionals handled their businesses.
In 2009, she co-founded the American Institute of Certified Tax Planners (AICTP) in San Diego. This not-for-profit membership organization teaches tax professionals how to implement a value pricing model by providing valuable tax planning services. She now spends most of her time teaching other tax professionals how to define their value and develop prices that are more representative of that value.
“There is a different way to run a firm, do really well by your clients and have a fulfilling work-life balance at the same time,” Molina said.
You can hear more about Molina’s story in this Small Firm Philosophy podcast episode. If you are interested in implementing value pricing in your firm, get an overview of the trends around this billing practice from the 2018 PCPS/CPA.com National MAP Survey Executive Summary. Learn how to develop a process for pricing, invoicing and collection from Chapter 203 of the MAP eHandbook or review the Pricing Tool in the PCPS Trusted Client Adviser Toolbox to find out how you can incorporate value billing into your pricing model.
This is a reprint of an article published on AICPA Insights. You can find that article here.