Am I the most stupid accountant in britain today?

James that one has got to be the biggest wind up today.

Accountants are in business to make LOTS of money thats how we all afford our nice plush offices, our big houses, our flash cars...not in business you ARE JOKING!

Anyway that just brightened my day, must get on and charge some more huge fees - kids school fees will be due soon after all.

When asked for a fixed fee I would never quote what I thought was unreasonable and I certainly wouldn't take advantage of those that make life easier for me or pay well.

What I do now agree with is that when I expected a job to take so long and managed to do it faster than expected why should I not take the benefit when I would take the loss if the situation was reversed. What is a profit on a job anyway? An hourly rate is not a scientific cost, it's what the market accepts to pay - what am I supposed to take as salary/profit in a year, how do I guarantee what hours I will have work for? I definitely do undercharge based on what I charge per hour and what I was charged out at in practice.

I have no doubt that some of those now criticising me will be charging their clients far more than I am in the first place.

...but the poster did not exceed his fixed price, and the client fulfilled their part of the bargain.
I'm not an advocate of Fixed pricing particularly - but when you do fix a price and agree it with the client, why should you feel guilty when you make a decent profit? Its as if you're saying 'I'm sorry that my years of study for professional qualifications, continuing CPD and overall ability has enabled me to do a good job for you at the price agreed - have some money back'

Do you regularly refund money to clients when you spend an hour less on a job? We're are 'selling', to a certain extent, 'knowledge' (!) and this has a value to a client
I do not accept that anyone in this profession (accountancy, tax) can honestly say that do not price work, either hourly or at a fixed price, without reference to previous successful pricing structures, for a particular client or your whole client base.

Are you that transparent - to me that means that your clients must know what 'profit' your making from them to accept whether or not your price is reasonable. Or is transparency agreeing a fee and sticking to it - which is my point.

Must finish last Tax Returns today!!! SUPER PROFITS!!! (only joking! - these are my least profitable laggard clients)

Sometimes it is better to swim against the tide and to stand out.

I am not interested in what every business is doing, I have my own mindset and am happy to go against the grain.

Of course you need to make a profit, but I prefer to make a profit from ALL clients, not some at the expense of others.

If you have a fixed price agreement then you define the scope of the agreement and the respective responsibilities of both parties. If those responsibilities are not met by the client, resulting in increased time then you bill the extra and still make your profit.

In this instance then I would guess that the OP spent much less time than he first thought as a result of the unanticipated systems and cooperation of the client and therefore priced it incorrectly in the first place and is simply making an adjustment the other way, whilst still retaining his desired profit level.

A fixed price does not always have to be set in stone - if the terms are not met, or exceeded, by either party then it can and should be adjusted, and that fact should be included in the FPA.

There has to be incentive for client co-operation and responsibility, I simply do not buy into the argument that you win some you lose some. I'm personally am only interested in win-win engagements and this belief seems to work very well for me, and gives me the profit I require, the service my clients require, and is price transparant.

We're in business to make a profit!!
Example, when you go to the petrol station, Esso are offering you a fixed price. You agree to pay it when you fill up. You agree the bargain. They make a profit - you receive the fuel.
No forecourt attendant has ever run out to me as I'm driving off to say that, 'actually,we managed to buy a few barrels of oil cheaper this week and here's a tenner as a refund!' Or 'we overestimated the overheads this week - and we feel bad about it, here's some cash'. Why would they? - we've agreed to buy - and they've sold it to us.

This query isn't about ethics, as some have argued - its about pricing your whole business model to make a profit. Jason, EVERY business subsidises profits and losses across its clients or customers - if you don't make a profit on one job, if you're going to survive, you have to make sure to make a profit out of the next one - thats the REAL world.

'Anon' isn't stupid - he's done a nice, kind thing, BUT I personally feel he was swayed in this case by non-business motives.

If I were the client, I would accept that, by instructing an accountant on a fixed fee basis, the fee is never going to exactly equal their costs. I might win, I might lose. For the benefit of knowing exactly what I am going to pay when the job is done, that is the chance I am happy to take.

You want your driveway done - a reputable guy quotes you a price (not the cheapest, but not the dearest) & says it will take 2 days. You are happy with that. He makes good time & finishes in one & a half days & does a very good job.

Do you expect him to reduce his price? Would you still recommend him?

I'd say - No & Yes.

End of story.

Your last para seems to advocate that you take the money from this client to balance up the losses from FPA's on the others.

One question:

How would you feel if you were the client and became aware that you were subsidising the losses from other clients?

Initially I agreed with "am I stupid" that if I had unintentionally over-quoted would be happy to charge less than the fixed quote and show honesty.

But the discussion really has changed my mind. It is true if it took longer than expected we would not be able to charge more. It is true that there is no guarantee you will be referred as someone who is honest rather than someone cheap. Clients are always trying to beat us down on price, quibbling about the fee because they half prepared their accounts (with mistakes that needed ticking up) and paying late. I guess we do need to take advantage when we have agreed a fixed fee that at the time of fixing seemed fair. We're often wasting time when clients have intentionally mislead us as to the work invovled and usually losing time (and an unwelcome client) in the process.

Often we under-value ourselves. Fees are a very tricky area and more clients want fixed fees. I think most of us tend to lose out with fixed fees so we have to take avantage of those that are beneficial and shouldn't feel guilty as long as we didn't deliberately over-budget.

Just in case anyone didn't see it:

The client is happy with the price!
If you deliver and meet their expectations, they will be happy with the service.

If they are happy with both, they will refer you as an accountant who provides a good service at a fair price.

If you give them such a large discount, they will recommend you as before and mention to their friends that you cut your price. Their friends may (will?) expect a price cut.

Do NOT be fooled into believing that giving a client a discount will result in MORE referrals. It is good service that results in more referrals. Giving a discount means that you could end up picking up clients who are price sensitive.

The client is happy with the price!

If you deliver and meet their expectations, they will be happy with the service.

If they are happy with both, they will refer you as an accountant who provides a good service at a fair price.

If you give them such a large discount, they will recommend you as before and mention to their friends that you cut your price. Their friends may (will?) expect a price cut.

Do NOT be fooled into believing that giving a client a discount will result in MORE referrals. It is good service that results in more referrals. Giving a discount means that you could end up picking up clients who are price sensitive.

As a new partitioner in the colonies (Canada) I've seen far too many cases of ineptitude & greed by follow accountants. I left the corporate world to avoid this behaviour.

I've frequently bill at lower rates yet still make a decent living & I sleep well at night. I always try to pass on a portion the savings from my skills (done quicker & more accurately) to ensure clients see the our value.

What will happen is your clients (at least the "A" clients) will stay loyal & gladly & frequently refer you . So you may have given up £400, but it will pay dividends.

My clients always know I put their interests first. It's always easier to keep an existing client than find a new one.

Short term thinking leads to long term pain.

Personally I think you are crazy, unless you are trying to sell something else to that client, like a referral. I would be interested to know if you achieved your time saving through the hard work of your client, OR the systems, knowledge and technology you have developed to build efficiency into your practice? Accounting costs are all about perception, if the client is happy and tells their friends you are great, then what do you care? You are not over charging, you are meeting expectation. If you wanted to exceed expectation, then do the job a week earlier than originally agreed, but still charge them the same agreed fee....

If you have an issue with charging the full amount you could give the client something else that they are not expecting such as some general business advice or a systems review etc.

The client would then think that you were great and you get your full fee.

There is clearly no contractual or even moral requirement to charge less than the agreed fixed fee.

You should regard any reduction as a promotional expense for the reasons given by Shaun. Your measure of the "excess" profit may not be accurate as it is based on a charge out rate that may be innaccurate, but it serves as a guide to the maximum you might spend for promoting your services. Again, I agree with Shaun that a reduction of £150 would be appropriate. The particular client is not impressed by the size of the reduction, provided that it is not a paltry amount (say, less than £100) - it is the fact that you did not charge the full agreed fee which will stick in his mind. Because of that, he will think that you are a good accountant and will recommend you to other potential clients. If, in a future year, you find that the fee you have agreed does not cover the time you have had to spend, the client will remember and be prepared to pay you an extra amount.

And you will also have pocketed excess profits of £250 this time!

To answer the question what would you do if you'd under quoted - ask for more?

A fixed fee is a fixed fee, and I think it undermines your creditability if then seek to increase and equally reduce the fee.

Accountants have a nasty habit of forgetting they are in business - what other business would issue a refund - not many that make money.

I agree with those who say 'you win some, you lose some'. Maybe the next client will be of the 'pesky' variety who likes nothing better than ringing/writing/emailing once a week when totally unnecessary. You can hardly double the fee once you realise what he is going to be like. I always stick to my quotes, but it is hard to get them spot on for a new client anyway.

I have a similar situation where a clients fixed fee is too generous!
I intend to reduce the fee by a nominal £150 but believe I will gain more than this from him telling other people. And I will ask for a referral a few months after this too.

How often do you hear of anyone saying "my accountant REDUCED my fee"

Great PR and great karma;)

Charge the agreed fee and you won't be so concerned about charging for the odd extra such as a mortgage reference or tax query in the future.

Surely if you deliver a great service at the price agreed, you will get referrals.

There is no guarantee that reducing your fee will increase the referral rate.

Unless you plan on turning it into a USP!

I think there is a great danger of you being known as "the accountant who gives discounts".

Cue a client referred from this lady - you quote £2,500 to the new client, the new client knows that you gave "a discount" to the referror - would they get a discount? Or if it took longer than expected, would you charge them more?

As I suggested before, treat it as a contingency.

I would send a cheque back for £250.

Probably be the best £250 you have ever spent in terms of building trust with the client and opens the door fully next time there is an over-run.

It doesn't have to be much to be noted.

Well done Anon

You've done the right thing, something which it seems, disturbingly, the majority would not have been prepared to do.

Personally for a new client, I give a quote based on my estimate of the time it is going to take. If having done the work it is clear that it took more time than anticipated, I stick to the quote and say that it took more time than anticipated and that next year (given the same circumstances) the bill will be £x more, alternatively there may be better ways for the client to keep the books ect so that the price can be kept lower.
If the work took less time than anticipated, then the bill gets lowered.

I think you are ripping off your client! I have never charged any client more than £2000! I charge most clients less than £1000.00!! Many of my clients are charged less than £500.00!!
I do tell my clients that I am probably the least expensive accountant in the UK. ! Now they will believe me! I still make a good profit, but just enough to make a living, 98% of new clients come to me from recommendation, so that helps. I do not need to advertise, so save on advertising costs.
Is there any other accountant charging such low fees?
My basic starting fee for doing a self employed sole trader self assessment tax return is £85.00 plus vat. can anyone beat this?

I would charge the £2,500 but advise the client that you are prepared to charge the same amount for the following 1 or 2 years, subject to an exceptional charge in the event of unforeseen circumstances at a specified rate per hour.

That way you should get the best of both worlds. You should have a satisified client who should be happy to budget at least one cost with some certainty, and you have a buffer to offset against any cost inflation.

Hi Anon,

I think you should put in your contact details/URL as a fair accountant like you would have attracted lots of interest !

I suppose it all depends on people, some people never appreciate even if you are fair to them.

Some will, and to thouse, £400 is well refunded. Once the trust is there, if you had to charge more fees because the work is more complex then initially received, you would be well received.

Anon

This gesture will ensure more introductions from your existing clients, as your clients will look upon you as a fair guy a recommennd your services. Your £400 forgone may come back to you by way of another introduction worth £2,100!!! Also perhaps you should consider our services which will enable you to grow your business without worrying about staff. visit our site www.giinfosys.com for more information.
rgds. Arun

Well done in opening a great debate and also well done to all those different comments.

So here is mine. It has been suggested that it is good PR to reduce and tell the client. Would the client think that all though you are a good sort you are not running your business very well because you were not able to quote accurately?

If she tells her friends will this mean they will all look for a reduction?

If you conscience feels that some recompense is necessary I feel the suggestion to give something free in return is the way forward. How about bookkeeping software. What ever you do make it look as if it is something special for new clients.

Good Luck what ever you decide and do let us know.

I'm amazed at the level of angst described in the comments, even though the majority seem to favour retaining the fee at the quoted level. Value is subjective but not to the point where it cannot be evaluated.

I suspect that what is happening here is that having discovered the predecessor was 'ripping the client off' they now feel as though they are at risk of being considered in the same light.

Wrong way to look at this.

Each client relationship is different and it is therefore part relationship and part service that people pay for. They don't pay for your time, they don't care about that. They care about what was done and whether that represents good value.

If you can demonstrate for example that you have saved them money or that you can help them earn a better profit then you are doing your job.

Never feel guilty about doing a good job and being rewarded accordingly. Goodness knows there are enough cowboys out there as it is,

obtained a new ltd co client yesterday, simple cash book verification/bank recy and then straight into final accounts/corp tax comps.

quoted my standard £500+vat package fee (includes self assessment on the director/shareholder, payroll and year end filing) - client extremely happy. when i analysed the previous yrs accounts he had been charged £650+vat by his previous accountant when the company was virtually dormant and only turned over £900!

I will reduce my fee and also consider that the £150 or so reduction will be well worth it in the form of the new clients introductions over the coming months, not to mention this client's ongoing relationship with my firm.

Many of those in support of 'stupid' seem to think that it is a fantastic piece of self-promotion to discount the fixed fee on the basis that client will blow their trumpet in the city centre and get heaps of new clients. Uh?

My view as posted earlier is that it is money down the drain, but indulging the supporters for a moment, shouldn't they consider
1. the quantity and type of contacts the client has, and
2. how influential the client is (with said contacts).

OK, twist my arm and there may be an exceptional case to merit the discount, but surely in most circumstances it's futile. It might make you feel good for a moment, but would your partner/children thank you for giving away their pocket money to a virtual stranger?

So, 'stupid', you may not be the most stupid accountant. There appear to be quite a few vying for the title.

Im not sure why im bothering to answer that at this hour but your abrasive post irritated me.

Of course these factors have to be taken into account if you are considering it purely from a marketing point of view.

What also has to be taken into account is the principles of the original poster who clearly wants to charge a fair and reasonable price which satisfies both him and the client.

This is clearly a man who lives and works by values and good for him in not taking the option that the majority in every trade and profession would take.

I personally used a firm of architects recently, we agreed on a price, they done the work (excellent job) and then under no obligation whatsover they discounted the price by 20% as the job did not take as long as expected. Will I refer them? Yes. Will I use them again? Yes. Will I remember them every time I want an architect? Yes Do I want to deal with people who can do business like this? Yes. Did I consider why they got the original quoute wrong? Yes and their explanation made sense.

Personally I think that the best advice given on this thread to date has been to provide an additional value adding service to the client.

I want one of those T-shirts "I'm with stupid"

If the fee estimate was based on chargeable time, then it is right to reduce it to costed time.

However if it was a fixed fee quote for the job, the costed time is irrelevant. The enquirer says that the client was happy with the fee quote so to reduce the fee in those circumstances would be unnecessary and not in accordance with what had been contracted.

It is becoming more and more common for accountants to charge on a value basis rather than costed time. In this case the client's perception of the value was clearly positive.

I with you on that one Dave.

I am one of the business people!

Good job were not all the same.

'Stupid' (that sounds so awful wish you had a name) my last word do what YOU feel is right.

Firstly I am not from theaccountantscoach.com!

Secondly, I did try putting a reply together, which is obviously based on my opinion, but after I had put a few bullet points differentiating the two groups, I considered that it may offend some of the contributors to this excellent thread. So I’m leaving it at that.

some of the responses here prove that there are accountants who are accountants and there are accountants who are business men.

Andy - fair do's, for me it was that time of night at that time of the month at that time of the year.

This has been an interesting thread, lots of opinions and like an ar$ehole everyone on AWeb seems to have one.

Despite the wide range of opinions there is no 'right' or 'wrong' answer. Only the OP can choose what fits in best with his own thinking and I see that he has already done so.

.

1

Somewhat off topic, most of the work I do as a forensic accountant in criminal cases is funded by the Legal Services Commission (LSC) - it used to be referred to as "legal aid".

The LSC are encouraging experts such as myself to quote fixed fees. Being a helpful fellow I quoted, let's say, a fixed fee of £900 for a particular piece of work.

The LSC response was that they would agree the fee, but only when I told them what my hourly rate was so that they could confirm it was not excessive!

Well I said, it's a fixed fee. So if the work takes me 6 hours it is £150 an hour. If it takes me 9 hours it is £100 an hour. If it takes me 7.5 hours it is £120 per hour.

Back came an approval for "7.5 hours at £120 per hour". So much for a fixed fee !

David
www.AccountingEvidence.com

Going back to the start of this debate, anon (assuming this is the original poster) stated that the client (they? in his question) is a woman. He seems to be a man, and admits to be gullible in dealing with the fairer sex.
Um.....
Seems to me you can dress it up (excuse the innuendo) as good PR, or marketing, or being a nice guy, or even some would say, stupid, but he should ask himself 'would I be planning the give the fee back if the client was a six foot 4, 18 stone, heavily bearded fisherman, who stank of haddock'. If the answer is no, then then there is an emotional not business reason for the gesture.

Personally, I try and make clients happy. if I 'estimate' a fee, I try to come in on target - if its a little lower I make sure the client knows I'm under estimate. Good PR. If I fix a fee - its fixed. Both parties get what they bargained for. On a £2.5k annual job, at some time in the future you are going to have a problem which may cost and you will have a problem billing the broad, sorry, woman, sorry, client. What will you do then?

I had a client that I quoted a fixed fee for. Later she didn't want to pay because the problem wasn't as complicated as it first appeared. I said - but if it had been more complicated and cost more - would she have accepted the extra. No she said. It's a FIXED FEE! Its fixed both ways. However, I then explained that to be fair, I had actually done more work than agreed under the fixed fee agreement (ie an additional task) and eventually she was happy. Some people, though, just don't get it.

Perhaps the poster would keep us updated on the new clients that come by her referrals.

It would appear some people are . . . .!
The 'PR' bit is grossly over-rated. You don't get brownie points because you admit to your client that you can't price a job properly. Provide a great service. That's what sticks in their mind forever, and that's long after they've forgotten what the price even was.

Jason - Sorry, mate, but I was in an abrasive mood myself. Still am, actually. It's that time of the month and that month of the year.

Dennis - Oh Dennis . . . . . silly self-promoting Dennis. Let's all rush to look at your website.

You agreed a fixed fee with your client - they were happy and so were you, so what's the problem with actually charging it? Pricing a job is difficult enough - you will have plenty of clients over the course of time that you lose out on, take this gain whilst you can.

A couple of other points to other posters.

To those who suggest now offering a 'free' value adding service on top - if you give something free to this client now how will you ever get them to pay for additional services in the future? - people do not value that which they get for free.

As regards the PR bit of reducing the fee - I think you have already done your good PR job by winning the client, giving them a fixed fee they were happy with and finally getting the job done in good time to a good standard. Do you really want this client reffering all her contacts to you because you're cheap? Clients who join you on price will eventually leave you on price.