Properly quoting accounting fees is complicated in any industry, but establishing a pricing policy for the wily Cannabis and hemp/CBD niches can be especially challenging and overwhelming.
If you find it hard, or even scary, to price your Cannabis and hemp/CBD accounting services without undercutting your value, you are not alone.
Many accountants struggle with raising their fees beyond low hourly rates. Learning how to package your services, create clear offers to reflect your value, and develop a system for charging appropriately for cleanup, onboarding, and ongoing work will enable you to confidently set your price and find clients who will happily pay it.
Here are six easy steps you can take to make sure you're pricing your Cannabis accounting services correctly.
Stop charging for your hours and start charging for the value of your work. This is a complicated numbers game with ever-changing rules and regulations. Navigating compliance, dealing with buggy software issues, and managing cleanup are not simple tasks. Navigating these complexities requires elite, niche-trained accounting professionals.
Invest your time and resources into acquiring the knowledge, tools, and systems that help position you as a premier provider in the space with expertise in Cannabis/CBD/hemp accounting, tax, operations, software, banking, and other services. This defines your role as a proactive partner, rather than a reactive recordkeeper. By offering insight into the ever-changing Cannabis industry, as well as establishing clear systems and processes, you are serving as both an accountant/bookkeeper and advisor. This elevates your standing in the company, nurtures relationships with your clients, and increases your earning potential.
Many CEOs and business owners will tell you what they think they want (tax return filings, reports, bookkeeping, etc.), and may try to dictate your fees based on their understanding of your role. It’s important to convey to prospects the systems and processes that you have in place that will bring massive value to their companies. Also, don’t be afraid to let them know that because you bring such high value, your services will not come cheap.
I’ve worked with 100s of owners over the years, and they all want and value these key deliverables:
Improved Cash Flow: Cash can be tight in this niche. Company owners and CEOs need ways to closely monitor and predict cash flows. One of the greatest misconceptions of Cannabis businesses is that they are cash-flow positive, especially since they tend to generate such high revenues, but unfortunately, being profitable is not always the case. CEOs need your support in understanding and predicting cash flows so that they can properly manage their business.
Lower Taxes: Tax filings for businesses in these niches are complex, requiring solid cost accounting and processes throughout the year. Owners need their taxes done correctly to minimize what they owe without creating a future liability. They must also know how to do this legally so that they are complying with 280E. The only way to do this right is to comply with GAAP for inventory and do ongoing accrual cost accounting according to 471-11.
Now is the time to assert yourself. Your responsibility is to lead the client through the accounting process (not the other way around!).
If that’s hard to wrap your mind around, here’s a tip: adopt the mindset that you are busy and will only accept great clients. Interview your clients like you are hiring them, not vice versa. Bringing this mindset to your first interactions can alleviate tensions as you secure new clients, as well as increase the probability for higher pricing and smoother client servicing moving forward.
Playing hard to get, being confident, and remaining assertive will actually make clients want to work with you more. It also has the potential to earn you the respect of the CEO and business owner, as they could see you from the outset as an equal or a partner, not an employee. By taking control of your initial phone calls and meetings, you also avoid a drawn-out sales cycle. You lead the potential client into a swift “yes” or “no,” which saves you valuable time and energy.
You must ask the right questions of Cannabis and hemp/CBD CEOs and owners if you have any hope of pricing the engagement correctly.
Some of the main questions we recommend asking before you send an offer letter to a prospective client:
As your potential clients provide the necessary answers, you can build out a picture of their business, their current problems, and your initial scope of work. Their answers will also help you determine if they are a good fit for your practice. Since you are “hiring” them, are they a good client?
Ideal clients usually have seven-figure revenues currently, or will in the near future. They understand you charge a high hourly rate for cleanup to ensure they are compliant, and are receptive to answering the above questions (as well as any additional inquiries you may have). These are often the clients who happily pay higher fees in return for your niche-trained expertise.
Pricing is directly correlated to the value you provide. If you fail to offer a service that addresses the Cannabis CEO’s key needs outlined in Step 3, clients will not value you or your work. They will likely look at you as a commodity and treat you like an employee.
So how do you price your esteemed services?
Offer letters should focus on communicating the benefits of value-add services and deliverables. Your exact list of service offerings and packages should be outlined to showcase the value you will provide, along with the accompanying fee you will charge.
With the proper training, great tools, workpapers, and systems, and supportive network, you can become the expert keeping CEOs compliant and helping them sleep at night. Many of these business owners are newer to the niche or do not understand the complexities involved with proper Cannabis and hemp/CBD accounting, so you will be an essential asset and worthwhile investment.
Convincing them that you will be an asset is the clincher. When you properly explain your rationale and demonstrate your value in your offer letter, the prospective client is left with two possible answers: “yes” or “no.”
If the answer is “no,” you are saved from the headache of working for a client who doesn’t appreciate your efforts. You can move on to another prospect that will be a better fit for you and your firm.
If the answer is “yes,” it’s time to get to work! Start proving your value and earning your desired fees.
Interested in learning more about how to confidently price your accounting services for Cannabis and hemp/CBD companies? Check out our next webinar here, where DOPE CFO founder Andrew Hunzicker, CPA, will walk you step-by-step through the pricing process.