Bundling as a Pricing Strategy for Corporate Services

01 | What is bundling

A pricing strategy is a plan used by businesses to determine how much to charge for their products or services. It is an important component of the overall marketing strategy, as pricing can have a significant impact on a firm's revenue and profitability.

Here is the list of the most popular pricing strategies, classified by type:

💡 Bundling is a strategy where two or more products or services are offered together as a package deal at a discounted price. One of the most popular bundle examples in our day to day life are combo meals at fast food chains: burgers and fries are usually cheaper in a package rather than bought separately.

02 | Pricing strategies for corporate & accounting services

Talking about finance and accounting firms, the most traditional pricing model is cost-plus: when you add a markup to the cost of a service in order to determine its selling price. The markup is typically a percentage of the total cost and is intended to cover the company's overhead expenses and generate a profit. 

The best example of a cost-plus pricing strategy is when you bill per hour. It is a traditional pricing method where the firm charges clients by the hour for the services provided. The hourly rate may vary depending on the seniority of the staff members who are working on the project, the cost of accounting software used to handle accounts, the number of currencies, and other factors.

However, more and more firms are using year-round value-based or fixed fee pricing, charging a set fee for a specific service or project, regardless of the time and resources required to complete it. As this pricing model is often used on a retainer basis, accounting firms may suffer significant profit losses, for instance, if an accounting software vendor suddenly raises its subscription fees.

Depending on a firm's goals, cost-plus or value-based pricing strategies can be further specified as:

03 | Pros and cons of bundling services

The report delivered by Currencycloud payments firm in 2021 found that 71% of businesses believe that customers value having their financial services bundled in the past, 95% in the present and 96% in the next five years. Considering these stats, it feels like bundles are well received by clients. What about the advantages of bundles for your practice?

Here are five main points that make this pricing strategy beneficial:

1. Increased revenue. Bundle pricing can encourage clients to purchase multiple services from the accounting firm, resulting in increased revenue per client. Considering quite low profit margins for bookkeeping services in general, offering bundled services can become a game-changer.
2. Simplified billing and payment: By offering bundled services, the accounting firm can simplify the billing and payment process for clients, as they receive one invoice for multiple services rather than separate invoices for each service.
3. Improved client retention: Clients may be more likely to stay with the accounting firm if they are satisfied with the bundled services and the convenience of working with a single provider for multiple needs.
4. Competitive advantage: Accounting firms that offer bundled services may have a competitive advantage over those that only offer individual services, as clients may prefer the convenience and cost savings of bundled services.
5. Opportunity for cross-selling and up-selling: Bundle pricing can provide an opportunity for accounting firms to cross-sell and up-sell their services to existing clients, as clients may be more willing to purchase additional services if they are offered as part of a bundle. Considering the rise of added-value accounting and advisory services: you can introduce a new service offering by making it more affordable in a bundle with your usual accounting and bookkeeping offering.

However, there are also significant downsides, driven by the complexity of designing and implementing a bundle pricing strategy. In other words, you need to cook them right: determine which services to bundle, how to price them, and how to communicate the value proposition to clients. These are potential risks of not getting bundles right:

1. Lack of flexibility: Bundle pricing may not be suitable for all clients, as some clients may only need or want specific services, and may not want to pay for services they do not need.
2. Difficulty in pricing: It can be challenging to determine the appropriate pricing for bundled services, as the pricing must reflect the value of each service and the cost savings of bundling them together.
3. Risk of reducing profit margins: Offering bundled services at a discounted price may reduce profit margins for the accounting firm, especially if the costs of providing the services are not reduced by bundling them together.
4. Perception of lower quality: Clients may perceive bundled services as lower quality or less personalized, especially if the accounting firm does not tailor the bundled services to the specific needs of each client.
5. Difficulty in communicating value: Accounting firms may find it difficult to effectively communicate the value of bundled services to clients, especially if clients are not familiar with all of the services included in the bundle.

04 | Example of bundled corporate & accounting services

Reinhart & Associates is a certified public accounting firm. The firm offers various accounting and bookkeeping services as part of their bundled packages, including monthly financial statements, bank account reconciliations, accounts payable and receivable management, payroll processing, tax preparation, and financial planning.

These packages are designed to provide businesses with comprehensive and cost-effective solutions for their accounting needs. The firm states the benefits of using bundled accounting services, such as improved accuracy, timely financial reporting, and increased productivity. 

The bundles they offer:

• Bookkeeping & Payroll
• Business Taxes
• Quarterly Consulting
• Accounting

05 | What's next?

To implement bundled services, start by analyzing your clients' needs and preferences to determine the most popular services, then bundle complementary services that align with those needs to offer additional value. For instance, secretarial services can be a good addition to your incorporation package, especially if they are required by law.

When you decide on the contents of the bundles, wrap them up, speaking about the overall benefits they bring. Don't focus on services, but on the value they bring to your potential customer. Communicate your bundles through your website, social media, and email marketing, and offer special promotions and discounts to encourage clients to try them out!

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