Ep. 22 | Skyrocket Your Tax Firm’s Growth with Value-Based Pricing
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John Tripolsky:Hey, everybody, and welcome back to the Mr. R show. If you're not familiar with what we actually talk about here, you're probably in the wrong place anyways. But in case you are returning and are an avid listener of this show, you're probably here for one of two things. Right?
John Tripolsky:For some personal educational advancement on your text practice or and or I should say, you're here because you're, I wouldn't say cheap, because you don't like paying for some things, we should say. And that's why you're here because we give free CPE for listening to this. So before you keep listening to this, I will add this caveat. Obviously, by listening to this on Spotify, Apple, wherever it is, you don't get a CPE for that. Click on the link that's in the show notes.
John Tripolsky:It will direct you to Earmark. Earmark is where we run our CPE through so that way you get all the credit you can possibly get, and you don't have to go back and listen to this again. Although I think we're pretty entertaining at times. But all that aside, today, we're gonna talk about a topic that we have touched on a little while ago, actually, earlier on in the show about, I don't know, a year and a half ago or so, I believe it was number eight or nine, somewhere around there, we talk about something called a subscription model. Now, obviously, I imagine we are all paying a subscription for something, whether it's Netflix, your Peloton that you may have to dust off every once in a while because you don't use it or use it all the time.
John Tripolsky:You have to actually clean it, down to dog food, anything like this, Netflix, tons of things you're paying a subscription on. So why that is related to a tax practice, we're gonna dive back into, and there's no better way to do this than talk to a couple people that have actually gone through this. And, well, I guess we could say I'm the the guy that carries the most seniority in the room. Not old. We will say wiser than myself.
John Tripolsky:But Chris Pacquiro, how's it going, man? And one of these days, Chris, before season, I like that one. And but, you know, one of these days when I'm feeling risky, I'm gonna try to remember, not just read them, but remember all the acronyms that technically come after your name. Although I'd probably sound like my four year old daughter trying to read the alphabet backwards and sideways. But, anyways John So what
Chris Picciurro, CPA:Thanks for that warm introduction. I will say one thing I might add by after your name, acronym of PETA. Pain in the Pain
John Tripolsky:in the accountant? What are you talking about? Yeah.
Chris Picciurro, CPA:That's alright. That's alright, though. We're we're we're excited about this podcast episode. You are correct. Episode eight, we did subscribing to a better firm where I walked through the eight steps that you need to take to get from a more transactional or compliance driven model for tax, not just tax, tax and accounting firms versus a subscription model.
Chris Picciurro, CPA:So it's we're so it's really cool that we have that content, and it it's very theoretical. What's extremely special about today's episode is we're bringing on a not not just special, saying a lot of special, a guest that has gone through that with his practice, and Yvonne has done an amazing job. I we've gotten to know each other over the last few years. We are in the same peer to peer mastermind group. We talk about the value of that all the time on the show, and Yvonne has has some specialties.
Chris Picciurro, CPA:He but also this transformation, this metamorphosis to a subscription model, it's not easy, but it's but it's not easy sticking with what you've got. But he's able to change the mentality, and it has really opened up a lot of other things for him, and just freedoms as far as time. Know, I kinda feel like if if someone says, well, what, you know, what do you what do you think success is? And it's funny I had because, yeah, like you said, John, I'm old. I went to our kid's career fair at the school this fall.
Chris Picciurro, CPA:My daughter is a freshman in high school, and what they have prompted questions. And then one of them was, what do you feel is success? And I think that for me, it's the the ability to spend my time doing what I absolutely love to do. That could be work because of the work I'm doing, I love it. That could be certain sports.
Chris Picciurro, CPA:That could be watching my beloved Detroit Tigers. It could be a variety of things. Obviously, spending time with my family is is number one. So anyway, I feel like Yvonne has done a great job and over the last few years. And but, also, I'm excited for him to share a story.
Chris Picciurro, CPA:So welcome to the Mr. R show, Yvonne. How are you doing?
Ivan Arroyo, CPA:Hey, Chris. Good. How are you? Hey, John. How's it going?
Ivan Arroyo, CPA:Yeah. You know, like like like, just like you said, I I I meet the well, how long has it been? I think we met, you know, two years ago.
Chris Picciurro, CPA:I think two years. Yeah.
Ivan Arroyo, CPA:Yeah. And I and I can't remember. I think I I wanna say that you did a webinar through Canopy, and that's I I agree. You talked about subscription, your model. Mhmm.
Ivan Arroyo, CPA:When I saw that video, I was like, woah. Yo. That's that's that's very interesting. You know, why, you know, why army do this? And like John said, you know, we paid subscriptions everywhere, Jen, you know, YouTube, whatever, every single you know, everywhere you look, we're paying, you know, those type of fees.
Ivan Arroyo, CPA:And so anyhow, you know, that's, you know, that that's first time I saw it, and I was like, man, you know, we should I I should definitely look into it, and, you know, I I gotta see how it works. You know, long story short, you know, we, you know, you we work together. You you helped me with that, you know, that that the formula, the spreadsheet. You know, it took a while. I definitely think, you know, it was out of all the, you know, if I've done, let's say one good move every year in my business, would say this is probably, it takes, you know, the top spot or one of the top, you know, spots of you know making a change in our business.
Ivan Arroyo, CPA:Freedom, I mean it just changed the whole atmosphere from simple things like even invoicing. I don't do the invoicing, my wife who you know she's the other boss here at the office, she's in charge of all the invoicing. I think I want to say it should take her, I don't know, five, six hours to do all the invoicing every month. Now I think it cut down to less than half the time. So just simple things like that, made a big difference.
Ivan Arroyo, CPA:Budgeting, you know exactly the minimum you're going get. Obviously there's always little extra things, for example, sometimes people call, they want to have a consultation, and that's all extra, but we know exactly what we have on subscription model. I don't know if I mentioned it to you, but after working with you, we came out with two different models, there was a basic and a plus. So, you know, most clients decide on the basic, which is fine. I would say 20%, thirty % decided on the plus model.
Ivan Arroyo, CPA:Either way, it worked perfect for clients and us. You know, the one thing that I think, know, one of the fears is that if I do this, am I gonna lose all my clientele? Right. We, you know, so my wife and I, we got together, we made a spread spreadsheet of everything, all the clients, how much we billed them for the year, how much time we spent on a monthly basis. And so we had different columns.
Ivan Arroyo, CPA:Okay, if we lose 20% of the clients, you know, this is much revenue we lose. Right? Compared to if we and if we keep the you know, these clients and these, you know, x amount signs up to the basic model, we have this revenue and, you know, and so forth. So we, you know, we, you know, we compared, you know, we did a bunch of what if scenarios. Right?
Ivan Arroyo, CPA:You know, and again, it's it's it's normal to to to be afraid of, you know, what happens if, you know, if I do this. But you know, in the end, you know, yeah, we had, you know, two or three clients that left, but it's almost like clients actually liked it better because, you know, they picked this plan, the basic plan, they know exactly what they're getting, you know, what they're paying for. It it just, you know, it I I was surprised, to be honest. I I was expecting a lot more pushback from clients, but, yeah, you know, it's it worked out pretty well, and I think this is the first year we've gone full, you know, full blown subscription model. So far it's going well.
Ivan Arroyo, CPA:We get, you know, new potential clients, you know, we mentioned that right off the bat. Our website says that, hey. You know, we're, you know, we're in a subscription model based fee. And, you know, it's again, you know, I think clients actually like that, you know, that they have two options.
Chris Picciurro, CPA:Well, that no. And let's so I'm gonna circle back. We're gonna get back to where you're at right now. Can you tell us a little bit about the history, the name, history, location of your your CPA practice? I know you and I know, obviously, by getting to know you over the last couple of years, that you work with your your wife, which is which is amazing.
Chris Picciurro, CPA:That would be I could barely play pickleball with my wife, but that but we we survive it. I think delegation of duties and staying in our lane, but but what an amazing business partner to have that you can really be open and honest with each other. But, yeah, can you tell us about where it all started? The idea to go off on your own, where you're located, where your client base is? Do you have any specific niches?
Chris Picciurro, CPA:I know that you have some distinct advantages over other firms as well. You know, it's, well, I'm out
Ivan Arroyo, CPA:of the Wenatchee Valley, which is in Central Washington, small town idea. The Wenatchee Valley includes three, four different, you know, smaller towns. Would say, I think our population is less than a hundred thousand, you know, which in all the towns. So that's a, it's a, you know, pretty small valley, and there's quite a few, you know, CPA firms, bookkeepers, and you know, different type of professionals. But you know, there's a lot of work, either that or people like us, you know, we keep getting clients.
Ivan Arroyo, CPA:You know, the idea of going on my own, know, never even thought about, you know, going on my own. It just sort of happened after college. Was working, you know, firm, I think, you know, for two, three years. I can't remember, let's see. Yeah, two or three years.
Ivan Arroyo, CPA:You know, there was a minor fallout, and so at that time, I remember in town, there was a few people who I knew of that were doing taxes, you know, they're just tax repairs, and, you know, I kept them hearing people talking about, hey, this guy, you know, he does, you know, tax preparation, individual taxes, small businesses. He's doing very well and blah blah blah. And so I was just like, you know, you know, these guys are doing well. It seems like they just kind of took the, you know, H and R block training and, you know, they webbed for it. So I was just thinking if, you know, they can do it, should be able, you know, I got a college degree, I should be able to do this.
Ivan Arroyo, CPA:And so, yeah, I mean that I just kind of went for it, picked up one client. I remember, you know, walking down the avenue, you know, our main avenue, parked my car one end. I had a little, you know, little duffle bag where you look professional looking duffle bag, dressed up, took, you know, took some business cards and just walked into restaurants and businesses, introduced myself and, you know, hey, I'm so and so, you know, I'm sure you have an accountant already, but if you ever need, you know, a new accountant or whatever, or any questions, just my card, feel free to call me. Yeah, I mean, I think I picked up one or two, you know, like just from that walk. From there on, you know, a lot of it was word-of-mouth.
Ivan Arroyo, CPA:I don't think I've ever invested on any, you know, advertising as far as like, you know, newspaper or radio. I wanna say that we we've always been big on indirect advertising. And what I mean by that is is, you know, sponsorships of, you know, kids sports, you know, donations to to to a church and, you know, things like you know, basically, you know, I I mean, I see the way I look at it, you know, we help out and at the same time those people talk by you. So that's like, you know, I call it indirect marketing. Or, and then you know, word-of-mouth.
Ivan Arroyo, CPA:I think, know, it's amazing how when someone who's, you know, the way when someone refers you, it's almost like you're already halfway in, right? As opposed to walking up to someone that doesn't even know you. And so we we've been very fortunate that a lot of our clients talk, you know, they that's you know, they say good things about, you know, about our firm and, you know, but me and my team, that's yeah. It's you know, each year right now, we're actually not take, you know, it we're we wanna drill, but it's, you know, we we we've pretty much reached our sarcastic. Now right now, we're we're we're being very selective.
Ivan Arroyo, CPA:You know, it has to be a pretty big account for us to take on new clients because we're maxed out, and then some of our clients just keep growing. So we're basically growing, you know, growing with our clients, but back when I started, yeah, mean, was just, you know, like that walkthrough avenue and, you know, I like watching sports, so I'll be honest, you know, I also got some clients on going to the local, you know, sports bar and just drinking beer, watching the game and then just talking to people. And next thing you know, like, what do you do? Well, what do you, I do this. They're like, oh, wow.
Ivan Arroyo, CPA:You know, so I got this company blah, blah. And so yeah you know, year we just kept on getting bigger and then, you know, then fight two years ago, you know, we we we decided to do to do this subscription model. So
Chris Picciurro, CPA:So thinking about no. You made some great points. And if you're you know, for those of you listening, getting a client is you know, your client selection is absolutely important, not just where they're at right now, but do they have upside? We talk about in our practice, quote the relationship, don't quote the work. You've got to factor in, yes, some of the compliance work, but is this person gonna be a client that grows?
Chris Picciurro, CPA:And it's funny. We were working on some some new CPEs, and John's aware of it, but we've got we we basically created this this this flowchart that takes you from someone that starts off as a lurker. Like, they might walk by your office. They might look at your website. They're just kind of lurking around, you know, to a a lead through a a leads to a prospect, a prospect someone that could really be to a client than to a fan.
Chris Picciurro, CPA:And those fans, you nailed it, Yvonne. Those fans take someone all the it's like shoots and ladders. You except it's the good thing. You get the you get the the shoot down to the, you know, where a fan, a client that's a fan of yours is going to bring you someone all the way to their third step of a prospect. They're not a lead.
Chris Picciurro, CPA:They're not a lurker. And that's huge because now that significantly cuts down the time you need to spend with them, and your credibility is right there already. So you've chosen your clients wisely. I'm gonna talk take you back to when you were strolling down the main street. Right?
Chris Picciurro, CPA:Did you have an did you have a niche that you were looking at? And how many of those clients are bilingual? And did that play any role in being able to obtain
Ivan Arroyo, CPA:Yeah. You know, it's you know, again, I I just kinda went for it. Didn't have anything in mind. I would just, you know, at that time, single. We all know kids.
Ivan Arroyo, CPA:So, you know, to me, was, you know, I don't need to make that much money as long as I can pay for my my my gas, car insurance, and and, you know, a few extra beers on on on the weekends, then I'm good.
Chris Picciurro, CPA:It was a lot cheaper then. Yeah.
Ivan Arroyo, CPA:Yes. I didn't put too much pressure on myself. You know? So it's and so I I swapped them through into random businesses. I didn't have any, you know, any type of business in you know, specifically in my but it's funny because I think I wanna say that we I slowly became, I guess, sort of an expert with with the breastbunks.
Ivan Arroyo, CPA:And I think the way the reason it happened at that time, I had a friend who had a restaurant. And so, you know, that was that was very nice of him to to trust me, you know, with his account because he already had an accountant and he, you know, so, you know, that, you know, I always remember that either he decided to give me a chance and so I picked up, you know, that was my first big account, you know, a restaurant. And from there on, you know, he, same thing, he would tell other restaurant owners, hey, know, this so and so, he's Manuel County and should try him out. And I started picking up, you know, more and more restaurants. After a year or so, we started getting some grocery stores, know, local grocery stores.
Ivan Arroyo, CPA:The Wenatchee Valley, it's a big agriculture town, so we picked up some, you know, small orchard owners as well. And as far as bilingual, I wouldn't say that, yeah, 80% were bilingual, so it was definitely helpful to be bilingual, in a market where there's a lot of Hispanics. Now, I gotta say that I feel that you have to be bilingual, but not just be the typical bilingual. And what I mean by that is that I think personally, it helps me that, I've been going to Mexico every year since I was a kid and I have cousins down there who any chance they had, they'd make fun of me because I would say something, you know, wrong in Spanish or, you know, or that I wouldn't understand, they make fun of me. So, you know, I had to pick, know, I had to, you know, I had to feel improve my Spanish, and so I think, you know, knowing that, you know, that specific, you know, Spanish slang and, you know, the proper words definitely helped out connecting with those Hispanic clients, especially those older clients.
Ivan Arroyo, CPA:We started talking about, hey, I went to a small town back in this, you know, this part of Mexico, and they're like, oh, yeah. You know, so you start it helps create that connection as opposed to someone that, you know, that is bilingual, but they're speaking the language like, you know, they just learned it, you know, it's you don't trade that connection. I've always said, you know, and I don't know if I read it or just, you know, made it up in my mind, but you you always hear about people creating business relationships. I've always said that I'm creating business friendships. And what I mean by that is that, you know, that's the way I see it because I feel that I have to care about my clients and my client has to care about me, you know, to a specific you know, to a certain level, you know, to a certain personal level.
Ivan Arroyo, CPA:Obviously, you know, it is business, but there's gotta be some mutual caring for each other. And I don't know if that's, you know, again, that's just me personally. I don't if that's, you know, it applies for everybody, but I feel that that's made my my connections with a lot of my clients stronger, especially with the ones that, you know, that've been with me for, you know, since I started and that and that stay with me and that that keep growing and they keep transcending meat farms.
Chris Picciurro, CPA:Right. When I would say that if you're you know, for those of you listening, I wish I was bilingual, but you you you can all we can all be bilingual in this way. There's that saying that rich you know, niches equal riches. So for us in our private CPA practice, we're very heavy in real estate. So we speak real estate.
Chris Picciurro, CPA:It's a different language. And when you when you start talking to someone that invests in real estate and they and you say, hey. You know? Oh, yeah. I can't and we're just talking about, like, oh, I do I do buy and hold.
Chris Picciurro, CPA:Like, what markets are you finding any markets that you're getting 1% rule in right now? Are you are you in they'll tell you which but then they're like, oh, dang. You you you understand that. It's kinda like the like like you said, kind of our own slang. So if if you're in a certain industry and you know those terms and you can speak to them at that like that, then they're comfortable that guardrail goes down.
Chris Picciurro, CPA:We're talking, you know, and we're not sitting in a textbook saying, what is your return on investment? What no. You'd see you know, oh, where where are you, you know, are you doing fix and flips? Oh, okay. Are you doing BRRRR method?
Chris Picciurro, CPA:I see. What lenders are you using? We don't need, you know, and and once you so no matter what industry you're in or or maybe geographic location or segment, you probably have some differentiating factor that you can utilize. So
Ivan Arroyo, CPA:That that's a very good point, Chris. You know, it's something that I think, you know, it makes a big difference to you. Like you said, you know, like, we can talk about the the the income statement, the balance sheet, on this account, and I feel that you know that's, if you talk like that to a client, they're be looking at you, but they're gonna be lost, it's like talking to you. I mean yeah you got some clients are, you know, very you know, they they have an accounting background, but in general, yeah, you're you know, I think you should translate those reports into something that's, you know, a more common conversation.
Chris Picciurro, CPA:Mhmm. Absolutely. And and so with you starting the firm when you're very young, obviously, you've you you're still young. You now have a family, and you work with your spouse. We're gonna start jumping into how you did it, but what was that one other than seeing our video on canopy tax?
Chris Picciurro, CPA:There had to be something before then that moment that said, I can't keep doing this turn and burn, you know, model. You're gonna just you're gonna wear yourself down to nothing.
Ivan Arroyo, CPA:You know, I've always been very careful to keep a balance. So, you know, I'm not gonna go back a little further. You know, I think it was my senior year in college. I remember I had a two or three, well a few job interviews and then some job offers. So at that point, you know, I was still going down in Mexico in December with my parents, know, just like, you know, they got used to doing that since I think since I was in fifth grade.
Ivan Arroyo, CPA:And so you know, got used to that, know, basically for me it was normal, December, you know, come December, you know, we're heading down to Mexico, hang out with the family, know, eat a lot of food, parents you know, drink a lot of beer or whatever, so that kind of stuck with me right, and so I remember one specific, I can't remember the name of the company, you know, know, you know, it was a pretty good offer. I think back in 02/2008, I think they're offering, I don't know, 50 ks, 40 ks, you know, that was pretty good amount. And then at the end, you know, the guy was like, do you have any questions for us? And I was like, yeah, you know, how much time off can I get? I was like, I don't care if you don't pay me, you know, I just, you know, I explained to him, you know, reason like, you know, I'm still, you know, it's family tradition, we go down to Mexico in December, you know, the whole month, I was like, you can work me like a slave for, you know, from January through November, I just need December off, you know, even if it's non paid.
Ivan Arroyo, CPA:And the guy was like, well, you know, well, get one week the first two years and to two years of, you know, my increase is two weeks and then after five years, you know, blah, blah. And so I was like, okay, well, you know, thanks, but no thanks. He's like, well, you sure you're gonna, you know, you're gonna get to travel, you're make this much money, but I was like, yeah, you know, you know, thanks again, but you know, no thanks. And so I think it really helped me that, you know, me going down, you know, down in Mexico and you know just even though I'm Mexican American, it's not the same you know hanging out with your family here, as opposed to hanging out with your family down there, I think going down there really teaches you the, you know, the way life is down there, you know, just the whole culture. It was just something that kind of stuck to me, you know, like, hey, you know, I need to find something that's gonna give me that balance, you know, of not working too much.
Ivan Arroyo, CPA:And so when I started, you know, I never, I was never trying to get too many clients where I was gonna be make a lot of money. So money was never really, and it's still not the goal. It's, you know, like, you know, a good living, but keep the balance. And so after a few years of charging the typical hourly base fee or fixed monthly fee, I just start to see how sometimes, you know, some certain clients questioning the fees and, you know, and it was kinda, you know, I I wouldn't say it would bother me. It just kinda, it was a little stressful because I was like, man, I just did this much work.
Ivan Arroyo, CPA:I gave them a discount and they still complained. So, you know, what am I doing wrong? You know, what just what's going on? Like, you know, like, I was just, you know, I was compared to like lawyer, man, I'm like lawyers, they charge us for the emails and they'll put five minutes for an email, three minutes for a phone call and people never complain. And yet with the accountants, we get pushback.
Ivan Arroyo, CPA:And so I remember when we started, we started a flat, I think a flat monthly fee, no, I started hourly and then after a few years, it changed to, I think depending on the size of the business, I think it was a flat monthly fee, which included payroll. And so, you know, I'm thinking back, I'm like, man, what was I thinking? Because, you know, people, you know, especially agriculture during the crop season, you know, like a hundred patriots per week or whatever. I mean, there was tons of payroll. So then I think I was saying twenty fifteen-sixteen, we took payroll out of that monthly fee and we decided to charge on a per check basis, pay period ad per check basis.
Ivan Arroyo, CPA:And so that kind of made a little better, but it still wasn't, know there's still something in the back of my head, was reading on there's still something that it's just not, know, there's gotta be something else, and I remember reading about value based pricing, putting the value on not a number value, but just basically the value of your knowledge, not the value of your time. And so that kind of from there led to me finding out about the subscription model, because I wouldn't say that most of us, do, I mean, we just, you know, if I spend fifteen minutes, I'm gonna charge you for fifteen minutes. Right? But I remember one time someone made an example, they're like, you know, look at it this way. When you recommend a client to change from a sole prop to an escort, for example, form 2,553, it may take you, let's say thirty minutes mass.
Ivan Arroyo, CPA:Right? But just making that change, you just save that client approximately $1,020,000 dollars, and you're gonna charge them a hundred dollars for that form. And so he said, you know, that got me thinking. I was like, okay, I gotta keep breathing, gotta keep doing research, and what can I do to change? Because at that time I knew I wanted to make a change, I just didn't know what or how I was gonna make the change.
Ivan Arroyo, CPA:And once I saw your video in Canopy, I was like, you know, this is it. Well you know, contacted you and everything, you know, we talked about you know the services that I do and yeah, so that that's it it was a it was a, I guess, a slow process. Right. And bits and pieces of me to where I'm at now.
Chris Picciurro, CPA:So when you so making that change, right, did you either go cold turkey and say, look. I'm not doing anything but subscription. So you you kinda have a couple different things going on. Right? You've got any new clients.
Chris Picciurro, CPA:I feel like it's a little easier to go to subscription model with them. Then you've got the current clients that you either have to say, we're gonna grandfather you anywhere you're at and eventually have to go to subscription, or your option is, sorry. You've gotta go to subscription only. Then you have to deal with the clients that refer people that are gonna be subscription, but they get grandfathered into certain pricing because that's a tough part. Right?
Chris Picciurro, CPA:Hey. My I mean, I know this like, my I mean, our our minimum membership now is $5,000. Our average was 10,029 for 2024, and then this year is about 14,000. Again, it's all relative. You know, we don't it's the point is, we might have someone that's a legacy client that would be priced at $7,000 a year right now that's probably paying 3,800.
Chris Picciurro, CPA:So they might say, oh, you know, so you when you made that transition, what was your pricing strategy? And then I want to circle back after that. You're a very nice guy and and I kind of I hope that people think I am too. So, I needed guardrails and I'll admit that I needed guardrails in my business partner and I met about several times and came up with an with this is our pricing tool. The one I, you know, the one I shared with you is different than the one I use now because we got a we changed up, like, doing certain services in that.
Chris Picciurro, CPA:So your pricing tool could always evolve, but I feel there's a very it's very important to have develop a pricing model to stick to because you can you can get into what we call nice guy, nice girl syndrome where you're like, oh, I I think they can afford 300. Yeah, but you should be paying 700, you know? So the role of your pricing tool, I know I went around circles a little bit. But before we get to that, how you communicated that with current clients and then how you made that started making that transition because that's the hard part especially you are very involved in your community. I think if you know, people that are listening to this right now, you are involved in your community.
Chris Picciurro, CPA:Now, that community could be a let's say you specialize in, I don't know, we I'm trying to think, a hat manufacturers. Right? So you you might not have a lot of hat manufacturers in the community, but you're part of these Facebook groups and LinkedIn groups and and trade associations. You still have a community or you're in your local community. You might be coaching someone who you prepared their parents' tax returns for the last five years, and now you've gotta tell them that your prices are getting tripled.
Chris Picciurro, CPA:I don't yeah. So you've gotta so how do you manage I know. I I've just rambled on and I'd asked it's been your first thing, how do you manage the price conversation with current clients, or did you yeah. How's that experience as you worked moved over to membership based?
Ivan Arroyo, CPA:It's a yeah. I mean, it's it's it's it's a tough situation, but, you know well, not tough. Uncomfortable. Right? Especially when you just like you said, when when you prepare or provide services to, you know, the kids, the kid, the coach's parents, you know, and, you know, like set up, you know, I'm a volunteer coach for boys and girls soccer and mountain biking in summer.
Ivan Arroyo, CPA:So, you know, I do get, you know, I do get a lot of, or, you know, parents that that I know to, you know, coming from my services. I actually just went through that, you know, with one of the parents who had made that change. But before I answer that, let me so let me let me tell you how I made the switch. So the way I started was I wanna say that a month after you and I had our our meeting, I think I wanna say it was August of man, what is twenty five already? So I think I was up twenty three, I think it was when we first talked.
Ivan Arroyo, CPA:After you and I finished those three sessions, I picked, I want to say I picked 10 clients, 10 of my bigger clients and that had been with me for a while, that I felt really valued about our services, really trusted me to make the right decisions for the business. And I set up a meeting with all those 10 different clients and I talked about my new services, Hey, we're gonna be making this change, it's gonna be a lot better for, you know, for for your business, you know, more advanced tax planning, more advanced, you know, services in general. You know, we're not doing it yet for all clients. I'm starting out with just a few clients, I thought it was I thought that you would be one of the good candidate for this new service. And so long story short, I met with each one.
Ivan Arroyo, CPA:I explained to them the new service that we're gonna be offering. Out of those 10, I think six of them decided, know, like they signed on to it, you know, and so which was good. I wasn't expecting all 10 to sign on to, you know, to the, you know, to the new model. In fact, my goal was maybe two or three. And, you know, it's always a lot better than I thought.
Ivan Arroyo, CPA:And it's funny because some of them I felt like the fee was kind of high, but I was, you know what, I'm gonna mention the fee and if they mention it, you can work something out. But no, you know, a few of them, I think it was like $22,500 per month. So Wow. Was That's a lot. Yeah.
Ivan Arroyo, CPA:But you know, above what I I think what think what, you know, other than anything that I mentioned, one thing that I mentioned was, hey, you know, with this plan, you can, you know, come meet with me every day if you want to talk with me every, you know, anytime you want. So it seems like that was like the big thing for a lot of clients, know, having access to meet with me without having to worry about, okay, how much more am I going to pay? And so I started with those five, well, 10 clients and then five of those signed onto it, that was the first year. And then last, let's see, think last September, October, after we, you know, we went through the whole clients, you know, my wife and I went through the full list of clients and worked out the basic and plus plan for each client, we sent out a letter again, think it was October, we mentioned, hey, we're gonna be changing starting 01/01/2025, we're gonna have two different models, you'll be getting another email as a reminder and with your new quote on the basic and the plus.
Ivan Arroyo, CPA:So we send the first letter October, I think November, and then December we send out the actual quote, Now please sign whichever one you choose and let us know if you have any questions, but before we did that, we already had that spreadsheets where we made a bunch of what if scenarios, if you lose 20% of the clientele, we're still gonna be at this much revenue, if there's many people sign up to the basic and if there's many people sign up to the Ziplus. And so, yeah, I mean, you know, so I would say, you know, if someone's gonna make the change, I would say, you know, do the same. Start out with five, you know, 10 clients, pick the ones that, you know, that you'll are, you know, the value services a lot and that you feel that would be open to, you know, more advanced services. And then from there on, you know, maybe your layer make make make the big change.
Chris Picciurro, CPA:Well, a couple of things you said. Well, have realistic expectations. Six out of 10 is phenomenal, by the way. Also, if you're doing pricing, give client don't give them too many choices, but give them the choice. Anyone who's raised kids knows one of the secrets is to make them feel like they're making a decision that you're happy with both decisions.
Chris Picciurro, CPA:Hey. Do you want grilled chicken? Or do you want tacos for dinner? Well, I didn't ask what you want for dinner. I'm not gonna go run and get pizza just because you want that, but these are your choices.
Chris Picciurro, CPA:And you gave them the choice. And it gracefully lets them not make a choice because no decision is a decision. So if they don't sign the engagement and you don't really want to continue with them, it's very easy to send an email. Thank you so much for your years of with our firm. We see that you didn't renew your engagement with us.
Chris Picciurro, CPA:Let you know, we'll leave your client portal open for thirty days. Whatever you wanna do, you know, or come you can come by and grab your stuff In because a lot of times they might say, oh my gosh. I didn't realize I, you know, I wanted to stick with you. Sorry. So you can you kinda put it on them.
Chris Picciurro, CPA:Through the process, did you identify any services that you had to either add or drop?
Ivan Arroyo, CPA:Yo. I wouldn't say that. It was more like I don't think I add her or well, let's see. I think it was more of a lot of services that we were doing that were not being billed for. You know, these little things that kind of slip through the cracks.
Ivan Arroyo, CPA:For example, know, being a registered agent for a lot of the, you know, the LLCs and corporations, That was just kinda like, okay, just there, y'all, I'm gonna sign up, you know, put me as your registered agent and we'll take care of any correspondence that we get. And that's one of the things that, you know, it was, I guess you just say we add it to that list so that people know, hey, we're doing this for you because, you know, that's one thing that we never you know, we should be in billing, you know, I don't know, an annual fee for being the registered agent because, you know, that takes time. Any, you know, any correspondence for an LCO for a corporation comes to your office. You gotta open the envelope. You gotta read what it says, and if it's something important, gotta be able to email you, contact your client.
Ivan Arroyo, CPA:And so that's one thing that we were already doing, but it was not built. And so we added that to the list so that, hey, you know, this is something that we're also doing for you. Business license renewals, you know, insurance audits. We actually, we honestly say that what I don't do, but I think my wife would, you know, would take care of those, and I wouldn't say that we took that off, you know, off the list. Let's see, besides that again, it was just a lot of things that we were already doing, but actually billing.
Ivan Arroyo, CPA:And so it was good to put that on the list so people know what they're paying for, and they know what they're getting from you. Another thing that I forgot to add is that when you set up the meeting with those first clients, I would definitely prepare you, study your list, make sure that you know exactly what's on your plus list, on your basic list, because you know they're gonna ask questions, know, like hey I thought you already did this for, well Yeah. But, you know, it wasn't being built for, and it's and it and it takes as much time. It saves you young. Just be open.
Ivan Arroyo, CPA:You know, be be
Chris Picciurro, CPA:transparent. Other industries do that all the time because you've got, like I'm trying to think of some, you know, sometime maybe you went to a certain restaurant and you would sit and order a coffee for, like and sit and drink five refills, right? So that, okay, well you get it now, you know, while minimum order, you know, minimum orders, dollars 5 an hour, you know, just what, whatever it is. And, and like you said, you, you really need to think about your client relationships as a partnership. They're not, you need them and they quite frankly need you.
Chris Picciurro, CPA:And you know, so trusting them, reaching out, trusting them to, that you're going to offer them this program. Now you did it. And you did mention when you reach out to those 10 clients, one of the benefits is that they have unlimited access to you. That's a very scary thing for a lot of accountants to do. I firmly believe, and you also mentioned paid time, time off when that first job interview.
Chris Picciurro, CPA:We've had paid unlimited paid time off for almost ten years in our in our for our team. If someone's gonna take advantage of it, they're probably shouldn't be on your team. They're not very aligned with what you have going on anyway. If you give clients unlimited access to you, I wanna talk through some of that with you. Have you do you feel like if then they accepted it.
Chris Picciurro, CPA:Right? Because a lot of accountants are real worried about that. Has anyone do you feel taken advantage of it?
Ivan Arroyo, CPA:You know, that that's a that's a good point and a good question. That's you know, it is scary. Right? Because now you're thinking man this client's gonna be thinking well I'm paying this much, I'm gonna be with them every day as much as I can. And you know, I gotta say that not one single one of those clients is taking advantage of that.
Ivan Arroyo, CPA:You know they call when they need to, when they have a question, they email to set up a meeting when they feel that you know some changes are coming up in their business, but as of now I haven't had one client take advantage of that. I think for the most part people that sign up to the plus model, which is the one that offers unlimited time with me, those clients have been with me for a while and so I feel that they know that I've informed them enough throughout the years where they don't need to be with me know, so many times throughout the year just, you know, just enough when they're gonna make a change. I guess you could say that they're they're well educated in in in the in the business and and where they're trying to go.
Chris Picciurro, CPA:I would agree. We've had clients that took full advantage of the membership, but I have don't feel like we've had someone ever take advantage of it. That being said, I'm gonna pivot a little because once one of the other misconceptions about moving to this membership model is that your income is limited because you you could always add on to the membership. Someone might you I know you're you have clients that own markets and restaurants. They might open another location.
Chris Picciurro, CPA:Okay? Then that's an addendum to the amendment. That's an that's redundant. That's an addendum to the to membership. Now are you gonna double it?
Chris Picciurro, CPA:No. But there's gonna go up based on what what has to be done. But the other secret sauce, and I'm gonna touch on this with you, we've started you and I have started to collaborate a little bit on tax plans. We've done a couple together. When you start getting into tax planning and strategy, there is a significant amount of deepening of client relationship and also value and also potentially compensation.
Chris Picciurro, CPA:So if you are working with a client on a membership and you have that open door policy and they come to you, typically there's actually more opportunity for your firm to grow by that that meeting. And so I'd like your feedback on as far as when people come to you, how many times is it how are your kids doing in soccer versus I'm thinking about doing this, I'm thinking about doing this, and it's actually led for more ways for you to service them.
Ivan Arroyo, CPA:You don't I gotta say that, you know, again, my philosophy about building business friendships really helps having that connection with clients. And so I think with the plus clients, every meeting, it doesn't start with business. It starts with, hey, how's it going? How was that? How did it go over here?
Ivan Arroyo, CPA:How did it go over there? So is your family or kids or whatever. And then we start talking about business. Again, know my, the Plus clients they had to, they've been with me for a while and so we have, I guess we have a bond, they really trust me, so we you know, our meetings we talk, know, once we get over that, you know, personal stuff we talk a lot about, you know, the direction that, you know, they're trying to go, the current situation, what kind of changes that, you know, wanna make, you know, they'll ask me for suggestions, hey, know, sometimes it's simple things like, hey, you know, we got this new admin in the office, you know, what do you think we should do, you know, with with this person that's coming in, you know, that's gonna take over this person's part of the job and, you know, simple things. Just if point is that you're you're you're communicating, you're talking, getting information, providing ideas, and then once you go to a tax client, I've noticed that these clients really appreciate it and they're impressed with how much they can save by doing test, staying in communication with me.
Ivan Arroyo, CPA:Those two clients that we worked on last year, I mean, they were super thankful. They were super thankful. They were happy, and they were excited. It's funny, they were excited about junior taxes this year because last month's last year, and even I'm excited, but I got them on extension, so I'm excited once I present them with the final results. And so those clients, I get to keep trying to send new clients.
Ivan Arroyo, CPA:You know what, it's sort of like when you go to restaurants and you get good customer service and good food, you don't worry about the price.
Chris Picciurro, CPA:Absolutely. I had a I mean, being being proactive and knowing more information allows you to help your clients so much and helps you be efficient. I've got a really quick story. So my one of our vehicles, broke and it was stuck in our driveway. Very frustrating situation.
Chris Picciurro, CPA:And, it it was a you know, if you get a towed, that's a lot of money. You don't know what's wrong with it. So I called a buddy of mine who's a gear head. He came over and he's like, you know what? I think it's this part on the shifter.
Chris Picciurro, CPA:He ran a diagnostic. I don't think it's a transmission. We got a mobile mechanic to come out. And but because that my friend came over and looked at it, I sent that information to the mobile mechanic. The mobile mechanic had about a 95 percent certain had 95% certainty he knew it was wrong.
Chris Picciurro, CPA:It was a literally a little part the size of a of a quarter, right, in your in the gear shift. He before he got here, stopped at the store, picked up the part, came here, fixed it. He was in and out in literally twenty minutes. I gave him a pretty good tip, which is I was happy. The point is he solved my problem of not having transportation, but because I he I didn't worry about I never asked how much it was gonna cost.
Chris Picciurro, CPA:It was actually a lot less than I thought it was gonna I had a problem. I communicated with him in advance, said, hey, just so you know, I'm not a mechanic. My friend came over, ran a diagnostic. This is what we're thinking. He's like, cool.
Chris Picciurro, CPA:He came over prepared in and out, made the same amount of money as if he would've came here, bozo it around with it, then had a drive, go get a part somewhere, come back. And we could be the same way. We could be the same way with our clients that with a little bit of knowledge in advance, we can look forward in for them. So if you're providing payroll processing, bookkeeping services, tax strategy, and looking ahead, you could be more valuable. And, and like you said, the last thing, like going to a good restaurant, the last thing the client's thinking about is how much does this cost?
Chris Picciurro, CPA:What they're thinking about is how much value do I have here? Because we don't want clients being afraid. I have had incidents with attorneys. We've gone through a lot of IP with teaching tax flow and this mister r and all this other stuff. But the point is I remember being on calls and there were like three people on like, do you really guys really need three people on this call?
Chris Picciurro, CPA:And you get a bill for three people. And I know I'm very much against a time sheet. But when that client has a mentality like they have with you, your resource and but you're gonna add value to them, but you're also gonna add value to your firm. Wanna touch on before we wrap up, you were very good at a young age of creating boundaries and for yourself. I believe a lot of the people on your team have been with you for a long time.
Chris Picciurro, CPA:So if you're if you're accounting firm owner, tax firm owner, you have anyone on your team other than yourself, this is very, very important. We know that seventy five percent of CPAs are leaving this profession in the next fifteen years, and we have a third less people sitting for the CPA exam right now than we did twenty years ago. We have what's called a pipeline issue in a retirement cliff. How do you go about creating a culture to set the boundary for your team members? Because as a firm owner, I've always believed that our my personal clients are the people on my team and also the people I work with.
Chris Picciurro, CPA:It could be an implementation partner or could be, you know, it's the person that we work with for cost segregation studies. I've gotta make them happy. They're my personal clients because our clients are talking to them way more than they're talking to myself or my business partner. So how have you what have you done within your culture of your firm? Because I know you have a lot of great retention.
Chris Picciurro, CPA:I you know, we speak a lot. We're in that same mastermind group, and you have nothing but amazing things to say about people on your team, and I bet that they really enjoy working, at your firm. We'll make sure they don't listen to this. We don't want you getting twenty twenty phone calls while getting even more raises.
Ivan Arroyo, CPA:You know, again, so, you know, my wife is, you know, part of the team. She's she's the other boss. You know, she takes care of basically most of the stuff. Right now. You know, it's fine because I think she's the one that helps me keep a balance even though I know that I wanna maintain that, you know, those boundaries, that balance, sometimes I just kinda forget about it it and she kind of you know brings me back to reality, know hey this and this right?
Ivan Arroyo, CPA:Which I think you know this working with the wife should be another topic, can you know make another episode next and like you know, and I'll tell you how that works because it's a lot of work, but anyhow, you know, again, I think that, you know, my background of, you know, those trips from Mexico really kinda engraved that in my head, you know, how people down there, you know, they work, but they, you know, they enjoy life as well. Right? So I really don't have one specific secret on how to keep the bandages, I just, I kind of think, okay, what would I want if I was working for someone else, right? And what would make me happy? And so I go for that.
Ivan Arroyo, CPA:So for example, here at the office, I encourage the whole team, hey, every fifteen minutes, take a five, ten minute break, go in the hallway, huddle, do I don't know. Talk about gossip. I don't know. Whatever. Just go in there and, you know, just talk.
Ivan Arroyo, CPA:And so, you know, it's four girls, two guys. So girls are very good about doing that. You know? They they they they they get together and and they're loud. And so once you hear that noise, then you know, me and the other guy, we kind of go out there and you just kind of listen, you know, we don't really get into conversation because you know, we just kind of, you know, listen to them.
Ivan Arroyo, CPA:So I always encourage you on, hey, you know, take a little break on Wednesdays, and I can't remember when we started this, I think we started this three, four years ago, and this goes back to what I've seen in Mexico as well. On Wednesdays, we close the office from twelve to two, so we all go out to, we either all go out to lunch together, and the office pays for it, or everybody just kind of goes you know their way, but the point is that you know they have two hours you know to do whatever they want. The other days we don't close, but you know people are free to leave for lunch whenever they want, take a break whenever they want. We're very open you know with that type of stuff, obviously what we all, you know, well you know it's only six of us, so it's easier to keep control of that. If you know, I can see how it'd be you know a little more difficult if you have more employees, I think it's doable, just you have to it's a little more work on how to keep it under control.
Ivan Arroyo, CPA:On Fridays, we decided to close thirty minutes early, 04:30. So I think all those little things that don't cost the firm a lot, I think they give you a big value with your, you know, your teams. And again, you know, I just always think, okay, what, you know, what would I want if I was working so hard? And so I think, you know, okay, you know, that two hour, you know, break pay, you know, and it's paid. It's not like, hey, before charge, you're not paid.
Ivan Arroyo, CPA:It's all paid. You know, I think that's something good. Then, you know, thirty minutes closing early, obviously holidays, the main holidays. And then another thing is like, for example, Thanksgiving. I remember working, I think when I was in college and you know, after college and having that Thursday off, but then having to come back on Friday, I hated that, to be honest, I hate it.
Ivan Arroyo, CPA:I still do, I hate that, you know, you're online and then you gotta get back into it like, man, you know, this is not cool at all. And so we decided, hey, let's close Thursday and Friday, give them the whole four days off, pay the holidays. We do the same thing with Christmas Eve and New Year's Eve, the twenty fourth and '20 fifth, we're closed. In fact back to Thanksgiving on Wednesday we closed the office at noon, and I think a lot of times people don't want to do that because they're thinking well the clients are not gonna, they're gonna be unhappy, you got snapped, but you know what, I think it's the opposite. I think most clients actually appreciate that because they're, you know, they're human beings, know, they're thinking, hey, these guys, you know, actually, you know, treat their, you know, their team, you know, good, they're like good human beings.
Ivan Arroyo, CPA:So I don't think it's a negative impact on a business, I think it's a positive impact. You know, don't think, in fact, I don't think any of those, you know, the actual days that we closed has had a negative impact on our business. So anyhow, yeah, you know, like, can't really say one thing because I I I just think, you know, the small things, you know, that that keep they they keep your team happy is what helps you, you know, keep those benches as well.
John Tripolsky:Awesome. And, Yvonne, it's funny. You know, I always joke in the show that I'm like the the conversation grim reaper. Right? I always come in at the end, and I'm like, alright.
John Tripolsky:There's the there's the hatchet. Let's kick this. And, you know, as I'm just just sitting here listening to you guys, it's it's really nice to hear that too because, like, obviously, I've been I've known Chris for so long and and a lot of his team, really, and I've seen them go through that process, you know, back to, you know, making that shift to the subscription model on the client side. Right? And so it's interesting to see it is it's awesome, I should say, for lack of better terms.
John Tripolsky:It's incredible to see other people following that because it it's a heck of a shift. Right? Like, it's it's not like you're changing your Internet provider, you know, in your office. It's there's significant there's a ripple effect that I'm sure the hardest thing and and you mentioned a little earlier on too, that one the hardest things is trying to figure out, you know, not only should I do it, but how am I gonna do it? And when I do eventually do it, how are people gonna react to it?
John Tripolsky:Because, right, it's it's kinda difficult to go back to the old way. Right? And you can't you can't wake up and say, oh, crap. I just lost all my clients. It didn't work.
John Tripolsky:Now what do I do? But I've never heard Chris or anybody even say, like, hey. We went to this, and there's been a handful. And they were shocked at how bad it was. They're always shocked at how good it works.
John Tripolsky:Right? Because there's a thought process and and really a whole process you go through just to deploy that. So I appreciate you sharing that. And I know, you know, listeners have have been on this for a while, you know, kinda chiming in, and I always think of it as, like, eavesdropping in on a conversation between a couple of guys. You know?
John Tripolsky:You guys have a had a great conversation around this, but then we're gonna have to have you back, man, and and talk on that. So when we when we do cover the topic of working with your spouse, you inadvertently signed yourself up for that. I hope you know that.
Chris Picciurro, CPA:Yeah. Exactly. That's
Ivan Arroyo, CPA:you well, yeah. That's I I we should definitely do it, but maybe we should do it in person and and maybe with a little bar saying
John Tripolsky:Exactly. You'll need a lot of margaritas and a distance from your spouse when we talk about this.
Chris Picciurro, CPA:No. That would be great. I think we, well, we'll have to check. I'm not I can't remember if we were gonna be attending any of the same events this summer, but if we are, definitely. We've we've recorded live from these things before.
Chris Picciurro, CPA:So
Ivan Arroyo, CPA:Alright.
John Tripolsky:Well well, awesome, guys. Well, thanks, Chris, for thinking of of bringing Yvonne on here with us, and, obviously, you guys have worked together on multiple projects and continue to as well as Yvonne. We appreciate you being a part of the the mastermind that we have as well too. So thank you for taking the time, man.
Ivan Arroyo, CPA:Alright. Thank you.
John Tripolsky:Awesome, guys. Awesome, guys. And, again, anybody that's listening to this, if you have any questions, you are a tax pro. Yes. But is there opportunity to grow?
John Tripolsky:Is there opportunity to shift? Is there opportunity to, we'll say, elevate your practice? Think of yourself as, you know, the not only the practitioner, but a business owner, and how would you treat it if you were one of your employees? So think about it. Maybe put yourself in your client's shoes.
John Tripolsky:Say, hey, you know, what would I do about this? What would I like to see changed? Kinda shift your, I'm gonna use a word here, Chris, that we just did a podcast on a different show. Shift your mindset a little bit, and you may completely, completely revolutionize the way that your practice will. So that being said, we'll see everybody back here again next time on the Mr.
John Tripolsky:R Show.
Outro:You've been listening to the Mr. R Show presented by the MRR Institute. For more content like this, be sure to check us out on YouTube for weekly expert tips, and don't forget to subscribe to this podcast to stay updated on the latest strategies for scaling and modernizing your tax practice. Looking for more? Contact us at mrrinstitute dot com for practice resources, coaching opportunities, and a peer to peer mastermind group. Thanks for joining us, and we'll see you next time.
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