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Estimating fees

Many prospective clients will not appoint us unless they have a fixed fee. It is claimed that fixed fees are the way to bigger profits. In practice I find it more or less impossible to estimate the fee, unless it for the likes of building s/c, and so do not take on some clients.

Can some of my fellow small practioners comment upon how they take on new ( not recommended) clients when they demand a fixed fee.

Also what rule of thumb do practioners use to set their estimated fees?
Robin Stewart

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The way I do it ...
The previous advice definitely helps where a client has a history with another accountant, but less so when they are a new business. I'm not saying mine is a great method, however my approach is to have a checklist with the services available - go through with the client which they require and then create a schedule based on the number of hours estimated for each service x hourly rate, plus time for meetings etc. This schedule is sent to the client with a covering letter detailing the meeting then (hopefully) agreed as a fixed fee payable by monthly standing order.

I would however love to know where I could find the 'market rate' that was referred to - since that would certainly make my system less full of holes!

Caroline

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I don't do fixed fees
and i can see the problem. I think unless the job is clearly structured, fixed fees are impossible. I suggest the positive response to fixed fees is to obtain payment by STO. Also to fix the exact nature of the work so covered. Otherwise it is open-ended, on one side only.

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Ask to See The Records Beforehand
I agree with a lot of what has been said previously but it is worth seeing the accounting records before quoting. You may be stumbling into a brown paper bag scenario with too low a fee. Also, get to know who keeps the records and their experience and whether they can be used to provide basic information.

Also, a clear statement of what the fixed fee covers is needed so that there are no misunderstandings after the event.

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Set an upper limit
I believe the best approach with clients is to be honest!

Tell them you don't know how long it will take and therefore how much it will cost but set an upper limit above which (barring exceptional circumstances) you will not charge them. This allows them to feel that they have not signed up to a completely open ended bill. It still leaves you with the task of 'guessing' the initial fee but it does give you the leeway of setting it a little higher than you would otherwise have to.

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