What's Next For Accounting? - Issue #116

📃 10 Tips To Optimize Your Renewals

This week I ran through my tippy top tips for renewal season. Nothing earth shattering but a lot of small things I got right & wrong over the years:

  1. Note changes in scope throughout the year
    If you don’t, you’ll forget about them and give away work.

  2. Involve the team in the renewal process
    When I told the team to do #1 they had a hard time remembering. When they were the ones talking clients through renewals, they remembered.

  3. Include a list of changes in scope with the renewal proposal
    If you don’t, they’ll forget about them and undervalue you.

  4. Include a summary of results you’ve achieved for them to-date with the renewal proposal
    If you don’t, they’ll forget about them and undervalue you.

  5. Don’t forget about change in client company size
    Too often we get a few years into an engagement, their business has quadrupled in size, but your fees have only gone up 20%. It’s probably not a linear relationship, but it should be a factor.

  6. Employ decoy pricing
    I’m in favor of 3 options because people like feeling like they have a choice (and they probably should have a choice), but if I want them to choose the third option, I’m not going to price it $100 $200 $300, I’m going to price it $100 $275 $300.

  7. Stop worrying about clients leaving
    If your firm runs a 40% margin, and you’re increasing prices 20%, it takes more than 33% of clients leaving before profit goes backwards. Imagine if you had a third less work to do and made the same money 🫠

  8. Renewals are an opportunity to add value & improve profitability
    Leave it to the last minute and it’s going to feel like an administrative task.

  9. Incentivize clients to lean into new processes
    When we transitioned several thousand annual engagements to an up-front model, we did this by telling them they could see the price they’d pay up-front by reviewing their proposal online. Dangling a carrot makes that new thing feel like less of a chore.

  10. When you’re making a pricing call the right answer is almost always the bigger one
    Pick the bigger number and move on.

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