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Delivering Value to Customers


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To get right to the point: I want to know how to charge a customer exorbitant fees and convince them they got a lot of value out of it, in other words, make them "believe in" the price.

I want some perspectives from consumers here (i.e. everyone reading this). I guess I don't have anywhere else to ask. I could ask my coworkers about this, but they have a completely different perspective, they're the ones providing the service, and they've gotten so used to it that they can't really give a good opinion.

I had a lot of problems this past season with our pricing for tax preparation. The way our prices work is this: Every form has a charge attached to it, naturally the more complex the return, the more it's going to cost. The cheapest return is a 1040EZ ($39), the most expensive I've done was about $505. A lot of people who have never been to HRB are frankly, outraged by the prices. lol. Even during our district meeting, the district manager asked something like, 'What can we change to help our clients?' and someone immediately said, 'Can we lower the price on the 1040?' You know it's bad when the actual tax preparers aren't even convinced that the prices are fair.

I did a return for a couple that was making a combined income of about $400,000, the guy was the president of a small company, the lady was an executive of a large firm, so you would think they wouldn't care about the $280 fee, but actually they were like, "Wow, that's a little high." They had never been to HRB before, trust me, all the new clients are STUNNED by the fees.

I've started 143 tax returns in the past 3 1/2 months, but only 126 actually paid and filed with us in the end, the others I never finished for whatever reason. Out of my 17 "unresolved" clients, probably 10 or 11 of them walked out due to the high price.

What I usually do is emphasize what you get, and it's not 'just' paying for tax preparation. Everything you pay for:

  • tax preparation
  • unlimited advice
  • insurance - by filing with us, if you get audited by the IRS and i made a mistake, we cover interest and penalties on additional tax assessments
  • free audit assistance - if u get audited, we tell you what to do. Just because you've never been audited doesn't mean you won't in the future. The IRS audits people by "grading" every return, but it also does random correspondence audits. Even if you have a simple return, sometimes it's just a pain in the ass to deal with it.
  • the training that we go through - All the experienced people have fairly extensive training, and it's only $20 / year for us (for unlimited classes that you want to take, all the way up to master tax advisor, just $20/year). So basically the customers are paying for it.
  • the experience - No. Doing your own return for the past 40 years doesn't count. Even though I was only entrusted with fairly simple returns, I have found that 80% of my clients were each unique in their own way. I imagine when I take over 9000 classes this summer/fall, 95% of my clients will be unique. And trust me, you won't learn obscure tax laws until you actually apply it yourself.
  • We offer "second looks" on returns that have already been filed to see if it's been done correctly. It costs $29. 87% of the returns we look at have errors on them, many of these errors were done by Certified Public Accountants. If you want us to do an amendment, we waive the $29 charge.
  • If you don't wanna sit around here for 1-2 hours, just fill out our drop off form, and leave all your documents, and I'll call you if I have any questions, and I'll let you know when I'm finished.

P.S. If you own a business, you can deduct the cost of tax preparation under the category "legal and professional" expenses. ;) If you're itemizing on an individual return, you can deduct it if you have enough job and miscellaneous expenses to meet the 2% of AGI floor.

Try that with Turbotax. lolowned

I'm sure I just sold a few people reading this right now, even if you weren't expecting to listen to a sales pitch on a thread on TGL. Sounds like a good deal right? Or maybe you still think it's not worth paying $150-$250 (that's probably the average price of my returns, if you own a business or rental property, it's automatically >$300), in which case I want to hear why.

The problem is I'm not very good at presenting this stuff in real life, and I'm not sure when to do it. I suppose the best time is in the beginning. We have to get people to sign a "Client Service Agreement", it briefly discusses some of our products and services, but it kind of sucks and I often glossed over it. (The important part is the arbitration clause that everyone signs so you can't sue us. lol)

Maybe it's because I'm not convinced enough by my own services. If I don't believe in the product I'm selling, how can I possibly convince a customer to believe in it?

If a customer exclaims that this is overpriced bullshit, I'm inclined to agree with them. I'm guilty of straight up telling someone before that "Even I think this is too expensive, and I would charge you less if I was in control of the prices." Hah.

I've been reading Customer Service for Dummies and Perfect Phrases for Dealing with Difficult People. In both books, they warn against using "leading language" when handling a dissatisfied/angry customer, both in your actual words, and your body language. Stick with sympathy and neutrality. Some examples it used:

Leading: Thank you for letting me know about that humiliating experience.

Sympathetic: I'm sorry to hear about that experience.

Leading: When did this terrible problem begin?

Sympathetic: Start from the beginning and tell me what happened.

Leading: Which part of the bill did they get wrong?

Sympathetic: Which part of the bill concerns you?

The book doesn't mention it, but you definitely need to avoid condescension which shows quite apparently through your false sympathy. And I decided starting things with "I'm sorry" can be dangerous. Especially when a customer requests something and you don't have it or can't help them, "I'm sorry" makes people pissed off, and sounds like leading language to me anyway.

Obviously I'm an idiot for telling people, "Yeah, I think it's too expensive as well." and that's why I have so many walk-outs.

I'm just not sure how to properly respond to a customer that says, "Well that's too expensive, I don't like it."

This is usually what happens (keep in mind that the customer watches the computer screen while we're at the desk):

1. I finish the tax return, I tell them, "Ok, that should be it if you don't have anything else for me. Do you have any questions before we look at a little summary of your return?"

2. Once I'm done explaining to them their tax flow or whatever, and informing them of their refund or liability, I ask for more questions, then we get to the billing screen.

This is where I don't know what to say or do, and properly.

3. "Ok, we can discuss billing now." When you get to the billing screen, it shows a little screen where you can look at approximately how long it takes to fill out each form/schedule/worksheet. I always tell people this is a pretty optimistic estimate (and it is to me). And this is where I remind them that we don't charge for an optional form if the benefit exceeds the cost.

4. On the next screen, it shows your bill, and this is where even my heart skips a beat. It will list what each form costs, and the grand total.

Sometimes I just go through it and let them know "Ok, we had to file the 8889 for your HSA contributions, and that was $30" etc. I made the mistake in the past of constantly saying, "So basically it just all adds up." I had someone say, "It really does." lmao. Leading language.

Honestly I just don't know the best way to transition to the discussing billing. This is one thing that needs to be addressed in the tax interview process, because I think most of us are just botching this part which is make or break. This is where people make the final decision about whether they're going to pay or not.

After that screen, we're supposed to present our "Peace of Mind" extended guarantee. It's a $30 deal good for 3 years on that return. Not only will we pick up interest and penalties if you're audited, but extra taxes assessed up to $5,000, and we'll represent you before the IRS with an enrolled agent with power of attorney.

In the beginning I didn't really "believe in" the product, and that's why my sell numbers were so low this season. But after a while, I stopped "offering" it to people and I started recommending it.

And I noticed my take numbers went up when I told them it would be $30 more *after* I presented all the benefits of getting it. Instead of saying, "We have our Peace of Mind guarantee for $30..." people often cut me off right there and tell me they don't want to spend any more money.

(And actually, I stopped going to the next screen on the computer which shows some stuff about the P.O.M. guarantee, because it has this huge $30 (fail) and some people say no before I even get a chance to speak.)

Anyway this post is getting too long. Basically I just have problems with selling stuff. I don't have this huge profit motive, and that's why I find it uncomfortable attempting to persuade customers into paying for my services/products. If I have no motive for selling, then obviously I'm not going to be very successful at it.

But perhaps there is some sort of... philosophical position one can take. Can we be determined to sell a product with no regard to the profits we reap? Even if I'm not totally convinced of the prices I charge people, is it possible to find a motive to do so? I always have the ability to push through a sale, which is all word play and smooth talking, even if I myself think the product is bullshit, simply by morally detaching myself from the process. But is it possible for someone like me to find a "should" in the sale?

And if anyone knows a good book about salesmanship, please tell me.

Edited by Michio

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This is a very direct and honest post, Michio.

I think my first question is, what defines a fair price, in your opinion? I think one answer that isn't unreasonable is that something is fair if one side doesn't have an unfair advantage over the other. So between you and your customer, you know more about taxes than the customer does, so you have the advantage. Therefore, the price would be fair if the customer would still purchase if the customer knew everything you do about the service your provide. In other words, the price is fair if you would buy your own product if you had the same interests as the customer.

I can't get into too much detail because I don't know much about taxes. I've only filed 1040EZ forms myself, though I find it interesting that people pay $35 to have H&R Block do that for them :)

But I think it might help if you didn't think only about the price, and about how the customer might think the price is too much, but try to hold two things in your mind at the same time: the price as well as the service you provide. If you can do that, then you need to get your customer to do that. When you move to discuss billing, maybe there's a way you can present it so it isn't a "price-only" conversation, it's a fee for a service that your company is providing. Also remember that the customer, by showing up, is already interested in your service--the customer is in need of something that you provide, so don't feel like you have to justify the service that you offer.

Probably the main thing is don't make the customer feel like an idiot. I'm just trying to imagine, so don't take what I'm saying with too much confidence, but if I was a customer what I would be doing is trying to make the smart decision, so that's the way I would sell it. Don't sell yourself as the person who knows more about taxes than the customer, but sell the customer's good sense in coming to you for tax advice. Basically, whenever you can, make the customer feel smart and intelligent as well as in control. At least, from your description, that's what I would do in your situation.

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