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This week's lesson on charging higher fees comes from Rolex and Ferrari.
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Boost Your Price to Boost Your Clients’ Trust

RepTrak, which brands itself as “the world’s leading reputation data and insights company,” has just released the 2021 Global RepTrak 100® ranking of corporate reputations. While most of you aren’t working to brand yourself across the globe, the study suggests one factor, well within your control, that you can use to improve your own reputation with prospects and clients.

Bringing home the gold in this year’s survey was Lego Group, the Danish toymaker. (This will come as a surprise to anyone who’s stepped on a kid’s Lego, barefoot, on the way to the bathroom in the middle of the night.) Bringing home the silver was Swiss watchmaker Rolex. And rounding out the medals was Italian carmaker Ferrari. (The rest of the top 10 included Bosch, Harley-Davidson, Canon, Adidas, Disney, Microsoft, and Sony.)

Everyone has played with Legos at some point or another. The company reports that there are over 400 billion Lego bricks in the world – enough to reach from here to the moon and back over 5 times.(Of course, your annoying little brother would knock over your stack long before it got that high.)

But Rolex and Ferrari are far less common and far more desired. Rolex produces just 800,000 watches each year, and as of June 2019, three of the ten most expensive watches sold at auction were Rolexes. Ferrari is even more exclusive, with just 220,000 produced in the company’s entire history and 9,000 new models every year. So how can such scarce and coveted goods earn such a high place among companies serving millions or even billions of consumers every year?

One factor: price. Rolex and Ferrari have both made the explicit business decision to limit production to protect their brand, their exclusivity, and their reputation. Rolex is the only watchmaker on RepTrak’s list. And while Ferrari isn’t the only carmaker, the others – including BMW, Rolls-Royce, Volvo, Tesla, Toyota (#67), Daimler, and Honda – tend to be more expensive the higher you rise.

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It all makes perfect sense. Consumers instinctively understand the truth of the old adage, “you get what you pay for.” Some companies compete specifically to offer the lowest price – and when they do so, we usually see them as the lowest-quality provider.

Some companies offer low prices while promising to harness technology to provide the same value as higher-priced competitors. You may be happy to buy – and assemble – cheap particleboard furniture from Ikea. You may even like their contemporary Scandinavian styling. But don’t kid yourself – if you had the money, you’d probably be somewhere else.

But the most expensive companies don’t apologize for being pricey. They own it. They flaunt it. They wave their ridiculous prices, discreetly or vulgarly in your face, knowing that while you won’t pay them, there are more than enough thirsty status-seekers clamoring to pay those prices for the psychological satisfaction of owning the very best.

This is true even if the product does nothing to advertise its price to anyone other than the buyer. Brunello Cucinelli is an Italian fashion designer who produces the world’s most gorgeous cashmere. He pays his employees, who make all his garments in Italy (not Indonesia or Vietnam) 20% more than comparable employees. They get a 90-minute lunch break with a three-course meal. Yet his sweaters, which start at $1000, don’t even have a logo. His customers wear them and love them to feel good about themselves, not impress you.

What’s the lesson? You don’t have to look hard to find it. Don’t be cheap. More specifically, don’t be afraid to look expensive. You don’t have to be Rolex or Ferrari to take advantage of the better reputation that comes with higher prices.

So many tax professionals are scared little rabbits, afraid that charging more will give prospects a reason to go somewhere else. So instead of even trying to defend higher prices and link them to higher value, they surrender without firing a shot.

I see this all the time on the Facebook groups for accountants I follow. Someone gets a type of client they’ve never handled before, and the first thing they do is run to the group and ask “how much would you charge?” Nine times out of ten, they’re doing it to make sure they don’t charge “too much” (whatever that means). They look for a “going rate” (which doesn’t exist), then usually drop just a little further down. It’s cowardly, and reveals a lack of self-confidence.

Fortunately, if you’re one of those misguided souls, you can fix the problem with a little knowledge, a little self-awareness, and a little bit of practice. It’s really not much harder to be a Ferrari than a Hyundai. Tax Master Network is here to help you add the tax planning that gets high-fee clients in the door, and the Financial Gravity group of companies – Forta, Sofos, and MPath – are here to help keep them. So give it a try. You might even like charging more

The Briefs is a weekly column on marketing and business planning for tax professionals and financial advisors looking to better serve clients and grow their business. 

Edward Lyon

Edward Lyon

Edward A. Lyon is CEO of the Tax Master Network, where he's coached tax professionals to add planning and financial services to their business since 2005. Go here to join the network. Go here to upgrade your membership or discuss opportunities in financial services.
Edward Lyon

Edward Lyon

Edward A. Lyon is CEO of the Tax Master Network, where he's coached tax professionals to add planning and financial services to their business since 2005. Go here to join the network. Go here to upgrade your membership or discuss opportunities in financial services.

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