SMSF compliance services provided by accountants are unlikely to drive and improve practice revenues as they do not present a unique business proposition, a strategic business consultant has said.
Speaking at the Institute of Public Accountants 2016 National Congress in Melbourne last week, KnowlegdEquity director Courtney Clowes said value-based pricing, as opposed to cost-based pricing, was the most effective charging method for accountants, but it was impossible to implement in regard to compliance services.
“It’s very hard to do value-based pricing on compliance work because it’s close to a commodity,” Clowes noted.
“Other people can do it, so the only time you can start adding this value is if you’re a bit unique or offering something others aren’t doing.”
He pointed out all the major accounting bodies’ journals had recognised compliance work would not be the way forward for accounting practices.
“[The message is] that compliance is not dead, but it’s just getting easier and easier and more people can do it. That’s the commodity, so where’s your value add?” he said.
Other industries had been able to transform commodities they were selling into a more unique proposition, but it was more difficult to apply to accountants providing compliance services, he said.
He said Colorbond was an example of a company that was able to achieve that.
“Colorbond, who provided steel roofing, brought out those ridiculous ads where the guy runs out in his underwear and has a look at the roof and gets all nostalgic,” he said.
“Their sales went through the roof afterwards [because they took] a product from being a commodity to being some special technology.
“Through clever branding and advertising [they were able to convince people] this is something you want on your roof and to aspire to.
“It meant they can do this value-add-based pricing.”
In a similar vein, he advised accountants to immediately begin formulating a strategy for their practices to move away from pure SMSF compliance services toward other support services, such as advice, for which people would be willing to pay more.