Geoff Richmond of 21C Management Pty Ltd. attended the Principa Practice 2020 Conference last May in Hamilton Island, Australia. Paul O’Byrne and I spoke on Value Pricing and no timesheets, and Geoff went back with his Team and began immediately implementing these ideas. You can read his initial Blinding Flash of the Obvious here.
In an e-mail to Principa Founders Ric and Kerry Payne, Paul O’Byrne, and myself, Geoff provided a 90 day progress report, available here in our Trailblazer section. In his letter, Geoff details the hurdles they’ve encountered as well as the benefits. We will leave it up to you to judge which one outweighs the other.
It is interesting to note how difficult these concepts really are, since they go against everything accountants have been taught about pricing for the last two generations. For example, Geoff states in the hurdles section that he provides Unlimited Access for free (phone calls and meetings). But VeraSage does not recommend you provide these for free. They are incredibly valuable from the customer’s perspective, and should be bundled in with your fixed price (they also allow a firm to command a higher minimum price).
Geoff also still mentions hourly rates and realizations, such as in his benefits section where he says on one-off projects they are making an additional $100 per hour. I point these anomalies out not to be critical but rather to illustrate just how endemic the hourly rate thinking is in the professions. This is not an easy change to make, since it does go against two generations of accountant DNA. I wish it were as easy as a technology upgrade, or trying a new product such as TIVO or an iPod.
But it’s a change in beliefs, a change in theory. And that is far more difficult, and takes much longer, to implement, especially across an entire profession. We congratulate Geoff on his courage, tenacity, and vision for blazing the trail so many other firms will follow in the future. We need early adopters and risk takers such as Geoff, otherwise we’d all still be in caves rubbing rocks together for fire.
I thought I would share with you what VeraSage Senior Fellow Paul O’Byrne wrote to Geoff upon reading his progress report (of course, we are all still waiting for Mr. O’Byrne to share his wit and wisdom here on the Blog for the first time!):
Bugger me, what a great read!
I don’t what I enjoyed most:
– your evident joie de vivre (so often lacking in accounting firms)
– “…to 30th September this year we have banked $375k compared to $206k”
– “…they questioned whether our quote was $7000 each rather than in total”
– “..I believe we are consistently making an additional $100 per hour plus on one off projects.” (tempered by the fact you’re still thinking in terms of rate per hour)
– ” the pressure is to get the compliance work out the door so we can develop value add strategies for our clients”
– that you sent it to Ric!
Geoff, I remember vividly our conversation after the conference and had every confidence you were going to make a success of it.. if you went for it. You have and you did.
I recognise ALL of the symptoms and events you describe; there will be other hurdles to come, but they don’t have to be setbacks.
Thanks so much for writing—and in such detail—it’s really heartening to hear.
Also, Ric Payne wrote this e-mail to Geoff:
This is a really great email Geoff. Thank you so much for keeping me in the loop. It is also very timely because I tried to call Ron Baker yesterday to see if he’d heard anything from you. I have to admit that I’m fast coming to the conclusion that the only thing that may save this stogy profession is to adopt something as radical as what you have done. Everywhere I go I talk to people who are totally bogged down with an out-dated service model, who are making nowhere near as much money as they should be in these unbelievably busy times, who have so much opportunity in front of them but they can’t see it because they are fiddling around at the margin with clients for whom they don’t create much value by delivering commodity services, through disengaged and un-motivated people, at appallingly low prices.
Get this will you, I was talking to a CPA in Seattle the other day about outsourcing to India, he said he loved it but was waiting for the bill from his outsourcer so that he could send out his own bill to the client—I asked him how he billed it and this is his billing rule: “I charge all my time at my standard rate ($175) then I add 20% to the Indian cost. The client saves a bundle, I have no write-off and everyone is happy.” He adds, “This is great.” I realized I’d met the guy who is driving industry prices down!
Geoff, your email is a total breath of fresh air and I’m so happy that you were able to get to Hamilton Island and meet the Baker O’Byrne team at a time you were ready to do something different. I have to say I’m very proud of your accomplishments.
Stay tuned, I’m sure Geoff will keep us updated on his firm’s progress. Congratulations again Geoff for being a pioneer for the profession!