The Power of the Subscription Economy
Technology has changed the way we enjoy products, services, and experiences. Life happens faster and we adapt quickly to new environments. Technology allows us to get better results if we tap into its power.
Think of how technology has changed life for you:
Health: Consider the data that we get from fitness trackers. Digital services will change the way that we obtain healthcare by providing data to our doctors. In turn, they help us work smarter and prevent disease. This data can be easily tracked, making it easy to be rewarded for healthy habits and to notice changes in our bodies.
Entertainment: How do you listen to music or watch movies? You likely no longer buy a CD or purchase a video, but rather pay for an experience that allows you to listen to all types of genres of music and entertainment on your smart device.
Similarly, as bookkeepers and accountants, our role is changing from number crunchers to interpreters of data. We must shift our mindset from that of a commodity provider toward that of a value-added service provider.
Pricing a product is pretty straight forward. To price a widget, first you determine the desired profit margin and then calculate all of the production costs to build that widget. Once you have the costs calculated, you set a price to provide your desired profit margin. This is known as cost plus pricing. As accountants, we like cost plus pricing because it is easy to calculate and we see less risk. Assigning a value to a service and its result is a difficult thing for our financial brains to digest.
Be bold in your pricing strategy, because your customers are willing to pay for the value of the outcome - but only if you can teach them what that value is. Put yourself in the shoes of the person who needs your service. What is their desired outcome? You will keep customers happy if you provide real value and solve their problems. But how do you price that intangible product? Billing by the hour is certainly not the answer! Start to look at what value your product gives and the overall experience you provide.
What is the difference between selling a transaction and selling a relationship? Start with your customer and look at the services you provide. Next, consider all of the needs of your client and determine what they would pay to have those needs filled. You can become the go-to advisor in their business by building a genuine relationship with them that focuses on filling their needs, both tangible (a clean set of financials) and intangible (peace of mind).
We are data gathers and our clients need data to help grow and manage their business. We can provide solutions that make it easy to gather, keep, and review data in a helpful dashboard. Easy to read dashboards help our clients make smarter decisions and allocate their resources to profit making streams. Our clients gain peace of mind and knowledge that allows them to focus on their businesses. The value of this advice and the way our clients feel after they receive it is of the highest value.
Start listening to your clients and immediately you will have the ability to optimize your services. You can create a menu of services that the client really loves because it fills their needs and evolves as their needs change. That is how you become an advisor rather than a number cruncher.
Think of your product as a moving and changing experience rather than a static product. Enlist your customers to help you with innovation as you search for solutions to solve their problems. Technology is changing so fast that we need to be in touch with the newest apps and solutions that will save our clients time and money.
Companies who are providing their services as a subscription are more agile when adjusting to changing needs. Remember when software used to be issued in a BETA format while the product was tested and designed? Once the product had been through the testing phase it was released in a package that was a one time purchase. Users could download product updates, but not in real time. Now software developers issue a product and, because the software is a living thing that is hosted in a nimble environment called the cloud, software changes occur in real time and adjust to changing needs of customers almost immediately.
Embrace the new intelligence technology and change your mindset to value pricing. Understand that you are selling a relationship and not a product. To keep your customers engaged, you must provide real value and solve real problems for your customers.