Episode 006

Jamie Gruol: Welcome back to Diary of a Tax Practice Owner. I’m so excited to have you here today because we’re going to be talking about how customizing your process for serving your clients is capping your income. Now, today we’re going to be talking about Jessica’s journey and how she has gone from hourly billing all the way through to providing custom, all the way through to providing standardized packages for her clients and what a transformation that has had.

And what type of transformation that has had on her small practice and her ability to build more freedom into her life. So Jessica, I would love for you to first lay out a brief journey of where you’ve gone in your pricing of structure for your clients. Hold on. Jessica, I would love for you to share with us your journey of pricing in your practice and where it has gotten you to today.

And then we can break it down from there. So why don’t you take us back to the beginning? Yeah,

Jessica Smith: kind of like model. Um, I worked at a law firm, which many of you probably know, like it’s all, billables are like super important. You have a certain amount of hours they expect you to work, which is going to include both admin and billable, um, hours. And it never, it was literally the hardest thing I ever had to do. Um, it, if you can imagine having multiple tabs open on your computer screen, it was like that in my brain trying to remember, oh I completed said task, let me make sure that I document the time spent and like what was done so that I could show that I was billable. And I remember the billing process was such a nightmare every year, excuse me, every month actually. Um, it would take, Like half of the month to get all of the time entries in from all the staff and it wasn’t like a hundred person firm This was like 20 people which is still a large team But not so large to where something like this should be like a massive undertaking um Yeah, we we had to get all the billable entries in and then we had to go through The system that they were using all the bills had to be printed.

The envelopes had to be stuffed. It was You It was very manual and it was so frustrating because it was such like, the whole office was like in chaos every time billing came to be a thing. And we talked about it in a lot of meetings and it just was systems were, should have been improved probably. But yeah, it was really, really frustrating. when I moved into my own practice, I, I had to stop time based billing. was uncomfortable for me to do the time based billing. I still like the process for how time based billing allowed me to document a file, to say, Oh, I spent 15 minutes. How does that round up to the nearest 10th of an hour? Having to like plan around that was incredibly uncomfortable and I wanted to do things differently. so I had a couple different opportunities to plan what I thought would be like a really cool package and the capacity planning around that was a little bit of a struggle because how can you plan for something if you haven’t put it into play and see how long something will actually take you. after a little bit of trial and error and really honing in on how much time a matter should have taken me, especially the ones that I was crafting to what I wanted my clients to experience with me. Then it completely shifted because I was no longer stressing over, Oh, I have to make sure that I’m properly documenting this file because if I’m going to bill hourly, I need to send this bill out on this 30 day interval to get payment. Now it was a flat fee upfront and just based on how we had again, carefully crafted and planned the time commitment for each of those matters. We had sufficient markup on those services for us to remain profitable and to continue to pursue, you know, improvement in a lot of areas of the firm. but it was a process mainly because a lot of firms still do hourly based billing, not just legal firms, CPA firms, gosh, you, a lot of it is, you’ll see these job opportunities and it’s, we need, you know, 1800 billable hours for a total of. 21 total, 2, 100 total hours, um, in the work. So it’s very ingrained into our industry. And I just, I couldn’t, I couldn’t do it. I had to, I had to make some changes and I’m happy that I did because it takes that one other skill that I was never really good at in the first place and allows me to still experience the cashflow that I want still work the desired number of hours that I want. And ideally give a great, like. standard level of ex of experience that my clients will have with me. It’s been a very beneficial exercise to have finally gotten there.

Jamie Gruol:I love that. And I, I think I’m with you. I am not a time tracker. I remember back in my project management days, they wanted us to track our time. It was always not correct because I

Jessica Smith: Yeah.

Jamie Gruol: I just couldn’t. Bring myself to just be tracking time. It just is not in my brainset. And I think, you know, they, they joke that accountants are all the same.

There’s they’re people pleasers at the core. They’re probably slightly, um, they have like, you know, what’s the word I’m looking for? Oh God. It’s not, um, normal brain, but divergent. No. When someone has ADHD

Jessica Smith: Neurodivergent.

Jamie Gruol:  and can’t remember their words,

Jessica Smith: Yeah, neurodivergent.

Jamie Gruol:  what are we looking for?

Jessica Smith: It’s

Jamie Gruol:  Divergent. Okay.

Jessica Smith: neurodivergent.

Jamie Gruol:  um, Neurodivergent. Thank you.

I knew all I could picture was the movie Divergent in my head, so.

Jessica Smith: that movie is based on the divide, the

Jamie Gruol:  Yeah.

Jessica Smith: the divergence in how they thought and like molded into societies. So it’s actually a very good example.

Jamie Gruol:  Yeah. Exactly. Yeah. So not only are, you know, tax professionals, people pleasers at the core, but they’re neurodivergent on many cases. And so constant structured processes like that, it goes literally against who we are. Like it just, and if it’s someone like, if you’re listening to this and you’re like, yes, I feel that.

Then you definitely need to think about a different way of building your clients. And I think there’s some people out there doing hybrid model where they have like a value based pricing for some services, but then they do hourly for others. You’ve gone exclusively to value based, correct?

Jessica Smith: Yes, I, I, telling you I struggled really, really hard with the hourly base model. some things probably would still require an hourly base engagement. They’re very, very limited. Usually I see this in

Jamie Gruol:  Okay.

Jessica Smith: type, type example. Um, but I try to still, instead of saying I build exactly this many hours, I try to say we’ve reached this many hours. I try to do blocks. So I might say, okay, we have

Jamie Gruol:  Gosh,

Jessica Smith: blocks. And then, you know, Oh, we’ve reached our 10 hours of this block. Let’s do another 10 hour block. Um, that way I’m not doing. every 30 day statement kind of thing. Cause those, again, that process is extremely difficult and I feel like I’m so neurotic that I would be triple checking everything and still things would be missed.

Um, so for me, a value based flat free flat fee model. Has been very transformative in how I am even thinking about my own Cash flow ar everything. It’s it’s been a very fantastic exercise for me

Jamie Gruol:  love that. So let’s talk about the client in this case. Because some people would say, well, that’s not providing your client the best of service. But I, I tend to differ or like disagree with that. I think that value based, especially because, you know, in a lot of the work that I do is value based, the services we provide are value based, you know, here at Workflows for Taxpayers.

What is your perspective of what the client is receiving and how is this beneficial to the client in the long run?

Jessica Smith: So I think one of the the biggest things that i’ve seen is an expectation of when things are going to be Delivered, received, we’re going to have, you know, regular meetings. The, because I’m so consistent in how the service is provided from a sales perspective, it’s a lot easier because I’m able to say, here’s this consistency that we’re able to provide.

Here’s the of times we’re going to meet a year. Here’s what the objective is going to be of what we’re meeting. Here’s how we’re going to discuss these things. And you know, there are things sometimes that come out of that perfectly little planned package. But I’m able to fit those in because everything else has a standard method of delivery, a standard time it’s supposed to go out. We have other policies that we put into play for when, you know, something comes up outside of, we’ve put together. We’re, we’re able to adapt much

Jamie Gruol:  Right,

Jessica Smith: the needs of our clients as opposed to, you know, Kind of hate to say throwing things at the wall and seeing what sticks Um our clients

Jamie Gruol:  right, right.

Jessica Smith: higher level of satisfaction and you can tell I can tell this by Honestly, just verbally when we’re at our meetings, but also by the number of referrals that they send our way because, you know, people are saying, yeah, they, we, you know, we get to have these meetings and we get to hear about, you know, what opportunities we have for tax savings and we have the ability to schedule a call if we need to, to get you on the phone, like they see this, Oh my gosh, I have direct line of access to this person and it’s all, you know, planned out and wrapped in a pretty little bow.

And it’s, you know, It’s worked very, very well and we always find room for improvement. There’s always service enhancements that we’re trying to build into that, and other ways that we’re able to, you know, help our clients ideally reach their goals overall. So it’s been a very good process for us. And yeah, my, my clients are very audibly, like telling me how much they enjoy it.

Jamie Gruol:  That’s great. Yeah. And I think one thing, you know, People don’t think about it this way. When I was with a tech professional, they charged a perform fee and it didn’t include any additional services. I didn’t know if I could or would be billed to read if I reached out to them. So I never reached out to them.

I never asked the questions or if we got a notice from somebody, I didn’t know to send that into them and that they could help me with that. And I think when you start thinking more broadly and more holistically about your value base. and moving away from the time tracking and keeping tabs on every hour you’re spending, your clients can sense that you’re more of an advisor to them, right?

Like you step out of that service provider and into an advisor role naturally. And so then when you, you know, a lot of people are moving to advisory, as you start moving your clients more into a value based advisory model, That’s not as foreign to them as the, like a stark shift from, we’re going to prepare your taxes.

And it’s going to be like, how many hours it takes me to do that. You are naturally moving into that through your pricing structure. What are your thoughts on, on that? Because I think a lot of people that are listening are thinking, how can I start bringing more value, be more of an advisor role to people?

And how do I transition from this hourly model into that?

Jessica Smith: Well, I mean, the good news is a lot of people have kind of already figured it out, so you don’t have to necessarily start completely from scratch. I think one of the concepts that I enjoy sharing with people is having a tiered base model. There’s been a lot of just, kind of, Proof that this is a good model for a lot of people where the clients are provided options.

And then you’ve kind of carefully built into this, like, what’s the bare minimum? What’s where you want people to be? And then what would be like this high ticket offer? Um, and you can see this in a lot of different capacities and a lot of different providers that do this. Um, think one of the hardest exercises for me was knowing what was that minimum level that I wanted to offer and then what was like.

The gradual build up and that definitely took some time to plan out. Um, but I, I asked around, you know, what services are other people providing? You know, I asked my clients, what, where are you feeling that you need more support? Where are you feeling that you need less? a lot of that, again, it’s just, you kind of just have to write things down, give it a shot and see how it goes. and then ideally get feedback to see if this is the process that makes sense. I’ve reworked my packages, um, probably two or three times and you know, I think we found a really good sweet spot and we might change them again here in another couple of years, but there’s a lot of information available and there are plenty of people willing to share. So you don’t have to start from ground zero. Um, you can definitely get a good portion of the way, um, to find out what this, how this value based. tiered structure kind of works. Um, so I definitely tell, you know, recommend to people if you can find the right process and the right people to get in front of to discuss this, you could probably come up with a great solution this value based pricing model.

Jamie Gruol:  Yeah, absolutely. Absolutely. Yeah. Well, the other thing that I wanted to ask you about is how has this simplified your business? Has this changed the way in which you’re thinking about how you structure your team, the tools that you need, like what are the impacts it has had around simplifying your business?

Jessica Smith: So for me, this coming to a more standard kind of like, coming to more standard level of service allowed me to actually plan my work week. And the capacity for what I’m capable of doing, you know, in a much easier fashion, have check ins and those occur between July 1st and September 16th. knowing that we’re going to have these meetings and we have, you know, 30, 40 clients that are going to be doing those check in meetings, we know during this timeframe, we need to have certain time periods available for those appointments to take place. So. it’s allowed me and my team the chance to say, Hey, have this work that we have to somehow, you know, fit in here and there, we’re able to do so with being mindful of like maybe appointments that haven’t been booked yet. So we’re able to actually more effectively plan and hopefully prevent, you know, delays and still meet deadlines and all of that.

So that’s been, I think a really component to standardizing, um, you know, my, my service level. And also just having regular touch points. Um, I, I did put into, uh, consideration the time periods that these would take place. Um, having something in the middle of the year, because if we have, you know, six to seven months to plan, uh, for what might take place trying to come together at the very end of the year only, and trying to make up for all of what we didn’t get to cover earlier in the year. can plan ahead. We can hopefully prevent a balance from being due or we can reduce taxes a half we paid because maybe the prior year was so great and this year is only so so and we don’t have to make payments, uh, in, in that large of an amount. So there’s the opportunity to tinker with like the results of what you’re going to give your clients.

And we built that into so many parts of the timeframe for how things get. Absolutely.

Jamie Gruol:  And it’s, I think also on the other side, when you have the simplification of going to the package model that you talked about, you don’t have to have 85 engagement letters. Right? Like you get to even like simplify out your service levels so that you aren’t creating all of these customized, unique to every client workflows that just make things more complicated in the actual delivery of it.

And if everybody is on these three different tiers in your example, That allows you to always ensure that you’re communicating with your clients at the appropriate times and that simplification helps a ton when it comes to the actual operations of what you’re delivering and often results in needing less team effort because you’re leveraging systems and automations.

You don’t need as many bodies to execute on the service delivery. Do you agree with that? And I didn’t have anything to add on that.

Jessica Smith: Um, you know, in, in kind of this role switch that we had with Vanessa, where she was primarily my assistant and now we’ve transferred, uh, moved her to a role in client success. She’s really more involved in the process and it’s helped because now I’m not the only point of contact. Um, she’s able to step in and take over a portion of the work which allows me to remain focused on the work that brings in the income. and that’s been super helpful and we’ve worked that in so we have rolled her into a lot of the communication. Um, this was very intentional because I wanted people to know that. If you have to ask me a question, you can also ask that question from Vanessa. She’s fully empowered to handle a lot of those.

And if she needs my assistant, her and I will communicate that together and then she’ll usually be the one to do the followup. This has been so amazing because you know, at some point I am not going to be the only one performing this work. I might bring on additional team members and I had to start priming my clients now to getting used to not just reaching out to me. Um, Um,

Jamie Gruol:  Mm.

Jessica Smith: but I’m happy that I’m doing it because I’m seeing the benefit. You know, Vanessa feels more empowered with the work that she’s performing and she’s excelling in this role. It’s definitely a role that she was made for. Um, so I’m enjoying that part of, uh, the process. But it, it took some time to get there and we had to plan and define what that looked like for her. Um, but it, so far has been, it’s been great.

Jamie Gruol:  Love that. I love that. Well, thank you, Jess, for sharing your ideas around how moving away from that hourly model over to more value based is helpful. We hope that you have taken away some interesting ideas around how you can make this transition as well. I will add, it did not take Jessica Like two weeks to do this.

This has been an iterative process over the last several years. And you know, as she pointed out, like she had on a team member and then once things got settled in just the change of the pricing, then she started thinking, more broadly. Like how can Vanessa be serving a different role in the service of our clients?

And how can I focus more on the actual value based work? And this is just something that takes time. So if you’re like, Oh my gosh, I don’t even know where to start. Don’t worry. You can do this too. Just make small steps and Understand as Jessica pointed out what others are doing and there’s lots of great opportunities and resources out there for you.

And we even are going to be releasing a special masterclass on this and workshop that is going to walk you through Jessica’s process. And we’re also going to walk you through how you can systematize the automations to work for you in TactGel around pricing models and around the ability to get into a value based package that to your set and how you can make that streamlined and super efficient for you and your team so that when it comes to bringing on new clients, you drive them right into that value based conversation.

And. Your existing clients will even be sharing with you about how you can transition them to your new working model and decide, are they still a fit or no longer a fit for your firm? And these are the conversations that you want to be a part of and having exposure to them. gives you the skills and the ideas to be able to start taking those steps forward.

So we invite you to join us. You can find the link below this video. And if we have already held the workshop, the live workshop, you can always go to our website and find the replay of it available there because we know that this is a conversation that needs to be had amongst a lot of practice owners.

And we’re glad to be the ones to help lead that. So until next time, we look forward to getting to share with you more ideas around how you can work more efficiently and effectively in your small practice by sharing with you the stories of tax practice owners and how they’re working in their businesses today.

So we’ll see you in the next podcast. And until then have a beautiful day. We’ll see you soon.

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