Can You Value Price and Still Oncharge Software? Here Is What the Experts Say

Accounting and bookkeeping firms are facing a tricky challenge. Software subscription costs are rising, and most firms can no longer afford to absorb them without hurting margins. But if you are using value pricing, does passing on those software costs undermine your approach?

At Rechargly, we recently hosted a webinar with value pricing expert Mark Wickersham to explore this exact question.

In this blog, we share key takeaways from that conversation, including practical ways to handle software costs without losing sight of value pricing principles.

Yes, you can value price and still on-charge software. The key is doing it thoughtfully.

This blog is based on a recent webinar. If you'd rather watch, here's the recording.

What is value pricing? And how is it different from fixed or cost-plus?

Mark Wickersham defines value pricing simply. It's when you set prices based on the value or outcomes your client receives. It's not based on your costs, time, or profit margin.

Fixed pricing and cost-plus pricing are often confused with value pricing. In many cases, fixed pricing is just a different version of cost-plus. The firm guesses how many hours something will take, adds a margin, and presents it as a fixed fee.

Mark explained, "Value pricing is where we price based on the value to the customer, the outcome." Costs and hours shouldn't come into it at all.

This matters when we start thinking about software. The goal is to price the service based on outcomes for the client. But that doesn't mean we should ignore the costs of software entirely, especially when they're rising each year.

Why software costs create tension in value pricing

Software vendors are increasing prices regularly. This includes core accounting tools like Xero, QuickBooks, and Sage.

Many firms have bundled software into their pricing in the past. But if you don't know which clients are paying for what, or you're not on-charging at all, you're now likely losing margin.

Mark highlighted that bundling works well when costs are stable. But software is different. Prices change often, and absorbing those changes can erode profits over time.

That's why this issue is becoming more urgent. Firms want to honour their value pricing approach, but they also need to recover rising software costs in a fair and transparent way.

Bundling vs. itemising software: when to do each

The question of bundling or itemising software charges came up frequently in the webinar. Here's what Mark recommended, alongside insights from Rechargly's work with firms across the industry.

Bundling works well when:

• The software is integral to your service
• The cost is stable or predictable
• You want to offer clients simplicity and convenience

Mark gave the example of incorporating a company. He would bundle the formation agent fee into his package because it was a small, fixed cost that supported the overall outcome. Clients valued the convenience of getting everything handled together.

Itemising works better when:

• The software price is volatile or frequently increases
• The client chooses their own plan level
• Transparency is important to the relationship

From what we see at Rechargly, many firms currently don't know which clients they're charging for which software. This creates risk and inconsistency. Automating software on-charging and having a clear view of client-level software usage and charges is essential.

Mark summed it up well: bundling can make sense when the price is controlled and the software is part of a package. But for software with fluctuating costs, or where the client might want to see the breakdown, itemising is often a better choice.