“All you can eat” payroll pricing. Or A La Carte?
A critique of charging methods in payroll bureaux
Up and down the land I hear the same old story from accountants in practice and see the same line being trotted out on their websites: “flat rate charges for payroll”.
When I have asked clients why they work this way the justification seems to be that it gives the client certainty about their payroll costs (good for them!!) and it makes it easy for the firm to churn out the same bill month after month. That’s it!
I have never understood why anyone would adopt this approach, it sounds to me just like the restaurant which proudly flaunts “all you can eat for one price”. There are a number of downsides to this, the most obvious being that your client is invited to eat as much as they like – please GORGE YOURSELVES on our service, use as much as you want it’s all the same price. Why wouldn’t they when there is no disincentive to do otherwise?
There are some other downsides, the first being a subtle one, working on the clients subconscious. Personally, I don’t equate quality with quantity, nor with ‘all you can eat’. In my mind I have images of re-heated gruel under infra-red lights and a kitchen with dubious health standards. These are the subliminal messages you are sending to your clients.
Up until recently, the ‘all you can eat’ approach has worked adequately well. Clients took full advantage of the accountants’ generosity and payrollers just got on with it. But auto enrolment has fundamentally changed the entire landscape for payroll:
- Many experienced staff have left the profession
- More companies are outsourcing their payroll work
- Payroll teams are pushed to the limit with ever-increasing legislation
So, when bureaux are busier than ever before and time is a super-precious resource, I question the wisdom of giving it away.
The ‘New Reality’ sweeping through payroll bureaux means that it’s time to fundamentally rethink pricing. The psychology of an A La Carte pricing model creates an impression of super high quality, desirability, something to be consumed carefully and very gratefully. By offering your clients an ‘A La Carte’ payroll service, you are inviting them to take only what they need in any particular pay period. The client can choose to take advantage of more or of less of your valuable service as and when they need to while retaining the same certainty of knowing what they will have to pay. Most importantly, you are also drawing a very clear connection in the clients mind between utilisation of your staff and charging for that usage. This is a vital step forward in repositioning your firms’ payroll service to be fit for the New Reality:
- It puts YOU back in control of payroll service delivery
- It helps your client to appreciate the true economic value of the service you deliver
- It gives your clients choice
- When your payroll staff undertake work for your clients it is in the knowledge that it is appreciated and valued
- It will highlight over-demanding clients, giving you the opportunity to better manage their expectations
- This is a big one – it means that payroll staff can STOP DOING TIMESHEETS! This, in itself will free up 1-2 hours of productive time for every employee, every week
Plus….A La Carte tastes much nicer!