Rise above the commodification: Differentiating in the professional services industry

By Drew Arthur

Commoditisation: it’s happening all around us. And the accounting and professional services industries are no exception, with firms increasingly facing the pressures of declining prices, reduced profit margins, growing competition, and lowered barriers to entry.

In this increasingly competitive, commoditised market you’re one of the many accounting and professional services providers that your clients can select amongst. And as one of many, it’s not enough to just be ‘one of the crowd’.

In fact, simply going along with what everyone else is doing means that there is:

  • Nothing highlighted about the unique value you can provide;
  • Little risk to customers to switch between providers; and
  • Only price to negotiate with.

Despite what the market perception may be, remember that you’re not just one of the crowd! The value you offer is unique to your business, based on your experiences and industry-specific domain knowledge, and it’s up to you to get your customers to see that.

In addition, the perceived lack of differentiation in your services forces your customer discussions to be just about price, and makes it easy for them to switch to another provider for a lower price. As a result, the pricing for your services is reduced to the lowest common denominator and the margin you earn is eroded.

If doing what everyone else is doing is not the answer, what can you do to thrive in such a commoditised market?

I’ve used the example that I’m most comfortable with – accounting and business management software – to illustrate three steps you can take to thrive in the accounting and professional services landscape of today.

  1. Differentiate your offering and define a unique selling proposition.

The kind of software you choose to partner presents an opportunity for differentiation. Essentially, the right software can mean the difference between being undifferentiated and commoditised, or providing unique value that few others can match.

For example, accounting software that integrates with inventory management technology, business intelligence reporting and / or sales tracking functionality can be a powerful value proposition for your clients, giving them access to all the information systems they need through one trusted relationship.

  1. Create a switching cost by embedding your services in their business.

You can reduce or eliminate the risk of losing your clients to lower priced competitors by embedding your unique offerings into their business. You should choose to partner with software that creates opportunities for a range of services that sit around its implementation, training, and day-to-day use.

You can provide best practice consulting, speciality training, or even use your own IP to develop management frameworks or dashboards to suit specific client needs.

Software is especially helpful to reducing the threat of switching because once your client has chosen to implement a specific software, they’ve made a commitment to it, and as a result, to continue working with you. In addition, you’re able to position yourself as a trusted partner and advisor to your clients’ businesses.

  1. Provide value that commands a premium.

The key to avoiding commodification is to prevent your customer discussions from just being about price negotiation – instead, keep the focus on the value you’re able to add to a client’s business.

With the right software partnership, you can add significant value to your clients businesses by helping them to:

  • Achieve better visibility of their business;
  • Automate time consuming manual processes;
  • Identify opportunities for cost savings; and
  • Increase the overall efficiency of their business.

And that’s still just scratching the surface. Showing your customers just how much value you can add to their business, over and above your competitors, will not only help you win their business, but retain them as long term customers into the future.


I hope these thoughts will help you as you differentiate your offerings and help you elevate your business above the commodity market. If you have any concerns about what I’ve written about above and would like to discuss, call me on 02 9542 2000.

If you’ve got some thoughts on my blog, please leave your comments below.


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