Aug 2017

Why Value Based billing isn’t dominating in Australian Accounting Compliance

By: Odyssey Outsourcing
Tags: compliance work commoditization, Timesheets, value based billing, value pricing

For anyone who has been in the Australian accounting compliance arena for any length of time, the argument for “Value Based Billing” (VBB) is an ongoing Holy Grail.  For some who have eliminated timesheets and moved to Value based billing the proof seems to be there, but for the majority of accountants we don’t see a stampeded to VBB.

Somewhere something has happened that has put VBB into a stall, if not a dangerous free fall. We believe there are a number of factors at play here.

Whilst business coaches are forever telling Australian accountants they need to move away from an hourly labour model, and move to value based billing, we’ve only seen fairly low acceptance of this argument, and for those that even accept the argument it’s frequently put into the “too hard” bin. Or like New Year’s resolutions (do we still have these?) we put them up there with the diet, and other bucket list type items.

Reality is there are too many leakages in the balloon for it to gain any air. From the accountants perspective, “if it ain’t broke, then it doesn’t need to be fixed”, so why change. Also, mob rules dictates that you don’t want to be the first one over the edge, and there isn’t enough stampede action happening to gain critical mass.

One of the big game changers is the internet and the ability to price shop. This puts Australian accounting compliance fairly in the sights, and pushes it straight out to a commodity. Anyone can shop around, and if they don’t like the price, then they’ll shop around. So compliance can’t easily be value priced.

From Odyssey’s perspective, we’ve been trying for several years to dovetail a price offering in line with an accounting firms price offering. This “fixed price” usually works by taking a percentage of the firms sales price. This offering has been around for over a decade, and in itself offers a myriad of problems. For example what is the appropriate percentage of the accountants fee? What if the accountants fee includes other non compliance work? What if the compliance work is discounted to gain other valuable work.

So if Australian accountants aren’t demanding different pricing systems from their outsourcing providers, then it’s pretty clear that VBB isn’t gaining traction.

At the end of the day, no Australian accountants want a fixed price offering from an outsourcing provider. Flexible resource offerings seems to continue to dominate the market, and continue to be in demand by Australian accountants. And in the Internet age in which we live, customers aren’t going to accept value pricing of a commodity, and this pressure can continue with the ongoing movement towards the commoditization of Australian accounting compliance work.

So where does that leave VBB? Quite possibly a great concept several years ago, but in this new age probably relegated to yesteryear.