I was talking to a broker the other day about pre-taxing benefits in a small business and he said, “It isn't 1998 anymore. Pre-tax isn't a big deal these days.” It sounds weird to say aloud, but I think he's right. If you have less than 50 employees (and 96 percent of businesses in the U.S. do), you're more concerned with benefits paperwork and administration than tax savings.
He got me thinking: Was pre-tax ever as big a deal to employers and employees as it was to us?
Last month, I lamented that too many in our business have fallen into the order taker trap. An employee says, “I like that accident plan,” and we write them up without exploring other options that may better meet their needs. I call it Order Taker Syndrome (OTS).
Putting such an emphasis on pre-taxing voluntary benefits is selling on cost versus worth, and it goes hand in hand with OTS. I think too many of us in the voluntary world got lazy, and who wouldn't? You sit down with an employer and show them how they're going to save all those taxes on benefits and they pay nothing more—free money, right? Then to the employees, “It's like you're getting the coverage for free!” (If you say it that way, you're getting sued, but you know what I mean.)
In both cases, we diminished the value of our products and services. We sold on cost instead of worth because we “created” money through tax savings. We basically sold our products and services on the premise that “You won't pay for this crap on its merits, so I'm going to give you some money that you can use to pay for it.” Who positions things in such a negative way? We did.
We linked our value to Uncle freakin' Sam. Politicians don't even do that. When you link your value to something you don't control, you're asking for trouble.
Which brings me to my point. If it's true that pre-tax doesn't have the same value to employers and employees as it once did, and we're linked to that lack of value… well, I hear the state is hiring.
But consider what happens when you start offering solutions based on the value you bring to them. That's something you control. When something has value, people gladly pay for it. You don't have to use gimmicks to get and keep their business.
A long time ago, I learned the difference between asking, “How much does it cost?” and “How much is it worth?” Your clients are asking the same questions of your products and services. Are you giving them so much value they're comfortable with your prices?
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