Have you seen those ads that offer bookkeeping for only $20 per hour?
You might have been upset, or concerned, or just totally confused as to how that’s possible. And so today, I am going to demystify those cheap offers that get almost all bookkeepers quite frustrated and concerned (and rightly so).
The bottom line is, those are probably just PRICE LEADERS. In today's read, allow me to clear up the confusion and give you clarity and control, so you can take a breath and decide whether you'd like to use a price leader yourself as a competitive advantage in your practice.
So first of all, let's have a look at what a price leader is. I remember quite vividly my first exposure to a price leader. I was about 16 years old and my parents were back in the electrical retail game and I wanted to buy a shaver, and I noticed that we had one in the cabinet in the shop for $19.95. Now as you can imagine, because I was family as well as staff, if I wanted to buy something, I could buy it at a wholesale value, at a discount. And so I thought, it's 19.95 but I'll get it cheaper. So I asked my mother how much the shaver would cost me. To which she replied $20 – 5 cents more!
She then went on to explain that this was a price leader, which does go by some other names, but that's the label I'm giving it. So a price leader in retail is a great product in its own right, but it is usually at the BOTTOM END of a particular category. And oftentimes, like in this case, it might be priced with little or no profit.
The idea behind the price leader is that
when prospective buyers see the PRICE LEADER (way back then, it might have been in a catalogue), they're going to come into the store.
And while they may decide to buy the price leader, more often than not, they will buy a higher quality product in that category. And this isn't trickery. This is actually just a normal way for any business to be competitive.
The product set as a price leader is already really great in its own right. But when the person has come to the store, they get to SELF-ASSESS whether they want to buy a product in that category that is of higher quality. In my case, I had the privilege of spending 5 cents more than the general public. And even though I wanted a particular color, my mother insisted that I get the color that wasn't selling. As I say in my book, they are the toughest bosses I ever had – but look at the lesson I learned that I am still able to use today, in a completely different business.
Now, the way a price leader works in retail is a bit different as to how it works in bookkeeping. You know those websites that advertise bookkeeping from $20 an hour or bookkeeping from $20 a week or something like that? I often see bookkeepers on online forums distressed and concerned about these cheap offers, which is fair enough and rightly so. But guess what? They are really just price leaders.
Just like with all sales and marketing, I do NOT advocate for leaving your values and ethics at the door, or for marketing that really does our industry damage on the whole. Read on and I'm going to explain how you can
use a price leader in a really genuine way that will give you the OPPORTUNITY to talk to more people,
which in turn will give you the opportunity to convert more prospective clients into actual clients, which all adds up to helping more people.
You may have heard me say that bookkeepers are solvers more than sellers, and a price leader is yet another way to gain OPPORTUNITIES to SOLVE more problems – because sometimes it's about getting the opportunity to overcome an objection. It's about getting that opportunity to show someone your VALUE, rather than having them buy into these cheap offers from other bookkeepers and competitors, when you would like an opportunity to show your value.
Now, having a price leader is not essential for you to win business, but they do work really well and they're definitely an option that I would like to educate you around. When I have used a price leader in my business and my advertising, it's always been a genuine offer because you know I always have my values intact. And frankly, many of the price leaders that you see may be genuine offers as well, which I'm going to explain now.
One product that we offer from time to time usually to existing VIP clients is to handle a second accounting file, which might be something that's just has a holding entity. Like, a commercial premises that is charging the main trading business for rent. So almost nothing's happening in the file and they're a VIP client, so I might say: for that file, I'll just charge you a hundred dollars a month and we'll take care of things. It means that I'm not making tonnes of profit, but they're a VIP client who's paying me well for the other trading entities, so I'm going to offer them that.
Now if I break down that product, which is a say $99 a month, that breaks down to roughly $23 a week. So if I was to advertise bookkeeping from $23 a week on my website, then I'm using the lowest value product in a category in my business as a price leader.
So you can see, this is a category that I can use. I'll never advocate for lying, and I don't think you're going to see many people out there lying – people are intrinsically good. This is more about you understanding the nuts and bolts of SALES and MARKETING, and things like that.
They are there to actually give you more opportunities to have more discussions, and to have the opportunity to SHOW YOUR VALUE so that your market and prospective clients can decide if they'd like to choose you over your competitors without price as a priority.
So the price leaders that you've seen already probably work in a similar way. Now you're a bookkeeper, you can do the math. No practice is really going to be able to sustain bookkeeping at $20 an hour and make a profit. But, they may have a product in a category that they could charge $20 an hour for, which might be like an admin-related task. But overall, I do NOT advocate for advertising bookkeeping at $20 an hour. Okay? It's not something I've ever done as a price leader because to be honest, I think that really doesn't make sense, and I think it probably does our industry on the whole, damage. But, I'm not condoning all the price leaders used out there. I'm explaining what a price leader is and how you can use it with, once again, your values and your ethics intact to be competitive.
Ultimately, just because one or two bad eggs are using price leaders in a way that's not particularly ethical (and probably damaging to our industry), doesn't mean that you can't use them in an ethical way to be COMPETITIVE.
In fact, post-pandemic, I have identified that there is a need to make changes to our strategies around PRICING in order to avoid losing the opportunity to convey our value to prospective clients. While digesting post-pandemic behavioural changes in consumers in 2021-22, and educating myself around what had happened and how that impacts our industry in terms of sales and marketing, I had a light bulb moment where I strategised and adapted to all these changes that had happened so much more rapidly than ever before. I have then FUTURE PROOFED everything relating to, as I might call them, price wars coming through in the industry – which we can't bury our head in the sand with.
We have got to look at how we can ADAPT once again with our values intact. And what I came up with was completely game changing. Simple, but game changing. And simple doesn't mean easy. Simple just means simple strategy.
Now in terms of taking action, you can use price leaders in your marketing collateral and on your website and in your social media, based on the stories and examples I just shared. But, in The Strategic Bookkeeper Transformation Program, I am unlocking an additional secret which came from that light bulb moment late in 2022. It is so GAME CHANGING in terms of competitive advantage, and still so simple to implement, hence I have decided to keep it in the vault for the members of my program.
So while I share tonnes and tonnes of game changing strategies freely on my podcast, and you've even got my book to read and use as a how to guide, in the program, we go deeper and deeper. And so if you do elect to join my tribe as part of my Strategic Bookkeeper program, you'll unlock a VAULT of education, assets, strategies, incredible competitive advantage, and support. And when I did have that light bulb moment, it's kind of testament to how things are always changing and evolving, and we all are always changing and evolving. But what I do is, I look at what was working before versus what is working now, and the changing landscape of our industry. I am then able to take these fresh NEW STRATEGIES into the program because the program isn't static, it's a membership program. You're in there working with me – future proofing, adapting, doing better, and staying ahead of the pack, and being the most competitive in the pack.
So, you can probably imagine my passion as I write this.. I have priced this program for every bookkeeper, and it comes with a 100% money back guarantee. But, hand on my heart, it's so easy to get your money back on that program in no time.
Now, if you'd like to know more about the program or apply to join, just head to this LINK. But otherwise, you've got tonnes of stuff today that you can use to think about price leaders. I really hope that demystifying those cheap offers that you've seen gives you some comfort that
nobody can actually offer bookkeeping in Australia for $20 an hour and really make a profit
– they are using it as a way to lead people in.
So think of that phrase, price leader – they're leading people into their brand sphere. Those people are then making an inquiry, and then they've got the opportunity to do the needs analysis and convey their value. And so, there is nothing wrong with you looking at that strategy for your business as well.