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Lifetime value of a QuickBooks Enterprise Solutions Client

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I think a lot of you want to see my numbers before I explain more about this market, so let me show you my example calculations. Here I've prepared examples comparing the value of three sizes of QuickBooks® Enterprise Solutions clients with a traditional client who uses QuickBooks Pro or Premier. In this example I'm using a five-year client lifetime- obviously we all hope clients stay with us much longer — for comparison purposes only.

So where did I start with these numbers? Over the years Intuit has taken a look at the overall lifetime value of the QuickBooks client using QuickBooks Pro or Premier (the "QuickBooks" column above).

I used my own experience to suggest levels for the three sizes of clients shown above. I should explain that I became interested in QuickBooks Enterprise Solutions some years ago because I wanted to pursue technology consulting to businesses in the $1 million to $15 million range. From that experience I now know that Enterprise clients can be categorized by size and source.

Size. The difficulty with such a comparison is that Enterprise clients come in different sizes. The best way to approach this issue is to develop some profile of a "smaller", "medium" and a "larger" Enterprise client.

Source. An additional issue is that many Enterprise clients may come from an upgrade from QuickBooks. If that is the case, then, many times, the incremental income from an upgrade client may only be five to ten percent.

Enterprise Clients New to QuickBooks

Enterprise clients that come new to the QuickBooks software (and not from QuickBooks upgrades) are generally much more profitable. Typically these are growth companies or generally larger clients that need more services.

• There are more users, so there is more need for training.
• They are more growth-oriented or generally larger, so the business process routines are more demanding.
• They have more employees, so payroll processing costs will be higher.
• In the first year, the design and implementation will be more involved.
• In subsequent years, there are many times other business consulting needs that require attention.
• Income tax returns will generally be more involved as a company gets bigger and has more complex issues.
• The value of referrals is ongoing. The best clients will provide the best referrals. (For planning and budgeting, it may be reasonable to estimate one good referral for each ten clients to produce revenue at the Enterprise Solutions "lower" level.)

Your Planning

You can plan your path to the Enterprise client by taking the following steps:

1. List all service offerings in your practice.
2. List general pricing for each of these services.
3. List your existing clients and note what you have done for them and will continue to do for them. This will include system type (QuickBooks version, etc), annual sales, number of employees, and other characteristics.
4. List the fees that existing clients are paying.

This provides the historical background of your practice.

As new clients are added to your practice, then gather the same information as noted above.

As your practice develops, you will be able to begin to identify clients that fall into various profiles.

Use This Excel Workbook to Get Started

To help you get started, I prepared an Excel workbook with two worksheets.

The first worksheet is called Quick Client Value 1 and follows the format shown above. The second worksheet, Client Value 2, provides more detail and allows you to calculate more specifics of the engagement.

Background: Some of these numbers derive from figures that were originally suggested for the non-Enterprise editions of QuickBooks by Intuit's Steve Blundell, CPA, several years back. The figures have been reviewed and updated variously by Certified QuickBooks ProAdvisor Doug Sleeter of the Sleeter Group and Sandi Smith, CPA.

Disclaimer: Of course, these numbers are estimates only, and you are encouraged to substitute your own fees in the calculation.

Bonus Excel Workbook

Click to open the following spreadsheet; or, to download and save to your hard drive first, right-click and then chose Save Target As from the popup menu options.

• Value of the QuickBooks Enterprise Solutions Client [Excel] (31KB)

Bruce Andersen, CPA, is a Certified QuickBooks ProAdvisor in Los Angeles. He is also a faculty for University of Phoenix, School of Business, Southern California Campus, teaching accounting, finance and management. He can be reached at BruceA@BTACT.com.

Last Updated: 01/29/2007