A successful pricing model change in accounting firms – how to communicate and support your employees through the transition?

Many accounting firms are considering transitioning from traditional hourly rate invoicing to a fixed-fee model, where clients are invoiced regularly, such as on a monthly basis. This model is more profitable in many ways, as the adoption of artificial intelligence and automation reduces the time spent on tasks while maintaining the value of the work and expertise.

Additionally, fixed-fee invoicing provides accounting firms with more predictable cash flow, reduces uncertainties related to client invoicing, and enables the bundling and scalability of services. However, the transition is not always seamless – especially as employee resistance to change can significantly slow down the process.

Read more: Pricing models in accounting firms – enhance your business with contract invoicing

Why might employees resist the pricing model change?

Resistance to change is a natural phenomenon, especially when it involves modifications to job responsibilities and revenue models. It is normal for any change to generate some degree of resistance. Transitioning to a pricing model where clients are billed a fixed base price, with additional work and investigations charged separately on an hourly basis, may initially cause fear or uncertainty among employees. Below, we outline some common reasons for resistance to change.

💬 Client communication

Employees may be concerned about having to explain and justify to clients why certain services incur additional charges beyond the fixed fee. Customer communication may be perceived as challenging, and there may be a fear that clients will react negatively to the new billing model.

❓Uncertainty about what the fixed fee covers

When transitioning to a fixed-fee model, employees may feel uncertain about which services are included in the price and which tasks will be billed separately. If these boundaries are not clearly defined, employees may worry about facing difficult situations with clients if they cannot confidently answer pricing-related questions.

💰 Changes to established work practices

Long-standing employees who are accustomed to an hourly billing structure may find fixed-fee billing unfair or difficult to manage, especially if client work has previously been tracked by the hour. Changes in work practices may also raise concerns about compensation – if salaries were previously linked to billable hours, how will this work in the future?

How to communicate the pricing model change to employees?

Communication is one of the most critical aspects of the pricing transition process. Internal communication requires significant effort to ensure that employees understand the reasons behind the change. They need to recognize what they stand to gain and, most importantly, why the pricing change benefits customers. You can actively influence this process and reduce resistance to change through effective communication and by involving your employees in the transition. Consider the following strategies to facilitate the shift:

1. Clearly justify the change – Transparently explain to your employees why the change is being implemented. A contract-based, fixed-fee billing model is not only a more financially viable option, but it also stabilizes the company’s cash flow and enhances the customer experience.
   
2. Highlight employee benefits – Fixed-fee billing can improve employee well-being by reducing the pressure associated with hourly-based invoicing. It allows employees to focus on higher-value expert tasks rather than tracking billable hours.
   
3. Support client communication – Many employees may worry about how customers will react to the new pricing model. Provide clear guidelines and tools to facilitate client discussions. It is particularly important to define what is included in the fixed fee and what is billed separately. Offering employees ready-made communication materials can help them confidently explain the new model to clients.
   
4. Involve employees in the process – Avoid implementing changes as top-down directives. Instead, include employees in the planning and decision-making process. This fosters a sense of ownership and helps them understand the necessity of the transition.
   
5. Provide training and support – Offer training on implementing the new pricing model, client communication, and other challenges related to the transition. You can also organize discussion sessions where employees can ask questions and share concerns.
   
6. Request feedback – Change is an ongoing process that requires monitoring and continuous improvement. Ask employees for feedback and be willing to adjust practices as needed.

By following these steps, you can create a smoother transition, reduce resistance, and ensure that both employees and customers see the benefits of the new pricing model. It is essential to ensure that your employees understand the reasons and necessity behind the change. If they do not fully grasp it, implementing the transition will only become increasingly difficult.

Both the accounting firm and the client benefit from the pricing model change

Although transitioning to contract-based billing is highly relevant today, many accounting firms have yet to change their pricing models due to the challenges involved. Of course, there are some cases where a fixed pricing model may not be the best option for a client, but for most businesses, it is a highly suitable choice. However, rather than waiting passively, now is the time to start evaluating how a fixed-pricing model could fit your business.

The reality is that artificial intelligence and automation are already reducing the volume of traditional accounting tasks. This means that firms must find new ways to price their expertise beyond simply charging for billable hours. Additionally, modern clients expect increasingly transparent and predictable billing practices, making a fixed-fee model an attractive option.

It’s important to recognize that fixed pricing benefits not only the accounting firm and its employees but also its clients. Many firms fear negative client reactions to pricing changes, but based on our experience, most clients respond calmly and rationally. The fear of overwhelming negative feedback is very often unfounded.

We hosted a webinar in December 2024 on the topic “Prisrevolution inom redovisningsbranschen: påskynda ditt kassaflöde med avtalsfakturering”. In the webinar, Head of M&A Sweden, Cedric Frostdahl from RAN Group, and Niklas Plym from Koho PSA discuss the importance and challenges of pricing changes in the accounting industry. Watch the webinar recording here (available only in Swedish 🇸🇪).

Did you know that with Koho PSA, you can automate the entire invoicing process and save a significant amount of time? You can easily generate invoices based on quotes, contracts, and logged work hours.

Or talk directly to our expert.