Should I have annual fee increases?

Should I have annual fee increases?

Didn't find your answer?

I was just thinking is it time to increase my fees? My fees have not changed since I started three years ago. I am also thinking what is my justification for the increase? Apart from greed, I dont have anything else.

I am not cheap and the fees I charge are in my opinion reflect the work I do. I do not yet have a single client where the work I do exceeds the fee level. Having said I have some clients where the work I do is less than the fees I get from them.

What is the protocal for fee increases. Are annual increases the norm? If they are to be fee increases these are best discussed in a face to face meeting rather than just a letter?

Replies (22)

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By BigBadWolf
27th Oct 2010 08:52

Inflation

 I am also thinking what is my justification for the increase?

Modest fee increases can usally be justified as inflation -  I appreciate you have low overheads - but a practice like ours has to contend with pay increases for staff, and increases in general overheads.

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By cymraeg_draig
27th Oct 2010 09:29

From the clients point of view -

Clients are in business, they know all their costs are going up, in turn what they charge is going up - if your fees dont go up something in line with inflation what kind of impression does that give?  It gives the impression that either you don't allow for inflation so your advice must be suspect, or, if you dont need to increase your fees then you must have been pvercharging them for years.

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By MarionMorrison
27th Oct 2010 09:40

Up to you

By all means, don't put your prices up, but if you leave them at the same level, make sure you do this publicly and get brownie points for doing so (we know clients might be under financial strains right now).  That enables you to put them up at a subsequent point on the back of being virtuous before.

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By cymraeg_draig
27th Oct 2010 09:45

Brownie points

...., make sure you do this publicly and get brownie points for doing so .

Posted by MarionMorrison on Wed, 27/10/2010 - 09:40

 

The trouble is you can't spend Brownie points in Tesco's.

 

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By FirstTab
27th Oct 2010 09:50

Good learning points for me

Edit

Thanks for the response all. There are really good learning points for me. I need to change.  I will reflect on this.

I like the point about earning brownie points when they are no fee increases. It did not even occur to me.

I will also appreciate any comments against fee increases.

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By Bob Harper
27th Oct 2010 16:49

Maybe you should have fee decreases

 If your aim is to create a business that doesn't depend on you then maybe you will be offering lower prices and focussing on a different type of client?

But, if you want to put your fees up then little and often usually works, that's why DD are better than STOs but I'd be interested in you adding value as a reason rather than relying on inflation as an excuse.

Bob Harper

Portfolio Marketing for Accountants

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By Jason Dormer
27th Oct 2010 17:32

Communication is key

If you don't have annual increases then you are charging less every year.  Not a good way for an accountant to operate and doesn't give a good impression.

Use the opportunity to communicate the increase whilst discussing the annual accounts,  face to face.  Much better that a template letter to all clients.  Explain that either:

1.  You are happy with the fee so only going to increase in line with inflation; or

2.  The current fee is not working due to the time taken / state of records / needs of the client - then inform that you will either need to change the scope of the engagement or increase the fee accordingly in addition to an inflationary rise.

Client won't be surprised or disappointed with annual increases so long as they are in proportion and reasonable.  You wouldnt expect any other businesses prices to remain static year on year.

 

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By cymraeg_draig
27th Oct 2010 18:13

Excuse ?????????

...... adding value as a reason rather than relying on inflation as an excuse.

 Posted by Bob Harper on Wed, 27/10/2010 - 16:49

 

Inflation isn't an "excuse" - it's reason and one that every business understands. Their gas bills have gone up and they understand that yours have too.

People are becoming more and more used to salesmen trying to push what they dont want or dont need at them, and they dont expect a professional to try to part them from their money, especially when times are hard.  Pushing "added value" and "additional services" is the quickest way to pursuade clients to move to a less pushy accountant.

When I receive phone calls trying to sell me something I always make a note of the firms name to ensure that I dont give them any business - if they are desparate enough that they are willing to waste peoples time interupting them with their pushy phone calls they are not the kind of company that I wish to support with my hard earned cash.

 

 

 

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By Bob Harper
27th Oct 2010 19:01

Yes, if that is all you have it is an excuse

CD - clients don’t care about your costs, they only care about their value.

Don't see why you are so against helping clients because that is what adding value is. It could be advice on maximising Tax Credits or helping clients implement new technology which will save lots of time. The size of the accountant’s fee is just one side of it and it is not that important if you find and help solve the clients key issues.

But, if you just do standard work is a standard way there will be more focus on the fee.

You either have a value based mentality or a cost based mentality. You and I have exchanged comments about this issue before and we disagree. I have been where you are, and I will not go back - you seem happy where you are.

By the way, I am sure the people who dare call you make a note of your name! But, I do not understand is why you are so offended at a new local business calling around other local businesses trying to launch their new business. That’s not good for anyone is it?

Just remember, without people like that and sales our economy is unlikely to get out of the mess. And, aways keep in mind that you wouldn't have any clients without someone making a sale because without sales there are no businesses. So, I suggest you show the sales profession a little more respect, you depend on them!

Bob Harper

Portfolio Marketing

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By cymraeg_draig
27th Oct 2010 19:27

.
Yes, if that is all you have it is an excuse

CD - clients don’t care about your costs, they only care about their value.

Don't see why you are so against helping clients because that is what adding value is. It could be advice on maximising Tax Credits or helping clients implement new technology which will save lots of time. The size of the accountant’s fee is just one side of it and it is not that important if you find and help solve the clients key issues.

Posted by Bob Harper on Wed, 27/10/2010 - 19:01

 

No they dont "care" about your costs - but they understand them.  They dont understand nebulous claims about "added value".

All of that should come as part of a basic service. Indeed a professional not giving suitable advice on such issues as tax credits, cash flow improvements, increased profitability etc would, in my view, be unprofessional. 

 

___________________________________________________________

But, if you just do standard work is a standard way there will be more focus on the fee.

You either have a value based mentality or a cost based mentality. You and I have exchanged comments about this issue before and we disagree. I have been where you are, and I will not go back - you seem happy where you are.

Posted by Bob Harper on Wed, 27/10/2010 - 19:01

 

Our clients receive excellent value - we just dont feel the need to charge for every little thing we do.  They pay for our services, and that includes advice, suggestions etc.

 

__________________________________________________________

By the way, I am sure the people who dare call you make a note of your name! But, I do not understand is why you are so offended at a new local business calling around other local businesses trying to launch their new business. That’s not good for anyone is it?

Just remember, without people like that and sales our economy is unlikely to get out of the mess. And, aways keep in mind that you wouldn't have any clients without someone making a sale because without sales there are no businesses. So, I suggest you show the sales profession a little more respect, you depend on them!

 

 Posted by Bob Harper on Wed, 27/10/2010 - 19:01

 

If I want to make a purchase, or obtain a service, I will go out and look for it. What people dont want is double glazing salesmen (or whatever) disturbing them in their homes.  In a few minutes I will be off to watch Newcastle v Arsenal on the TV and wo betide any idiot who rings me with a sales pitch - they will receive a firm response of **** off.

 

As for your idea that the "sales profession" is essential to business (and I would argue with the term "profession" as salemen certainly have no ethical code).  Salesmen are in fact unneccesary to any good business as good businesses will attract custom with the quality and value of their goods or services without the need for paying salemen commission to push their products.

 

 

t

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By Bob Harper
27th Oct 2010 20:04

Mindsets

@CD - a good business has sales people to a) make the purchase easy and enjoyable b) to help match the right product to the customer and c) to ensure the benefits are ultimately received.

So, a good salesman who sold financial software would make the stress of choosing a system disappear, ensure the right system was purchased and would ensure the client could use it properly. Shame more accountants are not good sales people.

Commissions are an old school method of paying a salesman, a bit like recording time in an accountancy business. It works but it is not the best.

Your attitude towards sales reveals your classic, old-school technician’s mindset. This is one of the first attitudes an accountant needs to break down to be really effective in practice development. 

Bob Harper

Portfolio Marketing

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By cymraeg_draig
27th Oct 2010 22:36

The difference

Your attitude towards sales reveals your classic, old-school technician’s mindset. This is one of the first attitudes an accountant needs to break down to be really effective in practice development. 

 

 

Posted by Bob Harper on Wed, 27/10/2010 - 20:04

 

 

Rubbish. 

6,000+ clients - nope I sure as hell cant sell.

Pursuading juries to acquit - nope - no "selling" ability there.

You push your sales patter like some religious convert who has "seen the light" but what you constantly ignore is that professions are about much more than "selling" and "making money".  That is not "old school" as you so charmingly put it - it is PROFESSIONAL - its what clients actually want.

As for practice development - now which of us has a thriving practice?  Remind me? 

Yet again you seem determined to make groundless comments in your never ending quest to score some imaginary "points" but your championing of shallow theories has more in common with "get rich quick" schemes than it does with running and building a sustainable professional practice.  The measure of a good practice is when you have clients for 25-30 years, and, when you have 2nd and even 3rd generations of the same families as clients.  That comes from the practices quality selling it - not from promises made by a saleman.

You can insult me all you like - the difference between us is that I know how to build a succesful practice - you "think" you know but you've never actually done it.

 

 

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By MarionMorrison
28th Oct 2010 00:26

Oh dear

I can only find myself agreeing with CD again (becoming quite disconcerting).  I hate the sales ethos and for me marketing is something of a dirty word.  Salesman are an unnecessary marzipan layer in the purchasing process.  It may be an odd ethos but when I'm buying clothes, electrical appliances or similar, the one thing guaranteed to annoy is when I am approached within seconds by a salesman offering to help me. 

Do I look infirm or something?  The best way salesman can help is to shut the flak up until I have a question that I need to ask to expand my knowledge.  It doesn't help the salesman's cause that they're often not even knowledgeable about their own stock (but then maybe I should stay out of Currys).

It's very simple.  You do a good job for A who recommends B who rings us up.  I explain what we do, how we do it and how much it'll cost.  I send out green light forms for if they want to go ahead and put in writing what we've talked about.  If I don't hear back, I'll follow it up 2-3 times, but I don't push it.  If they've made other choices or gone to another firm which is more sales-focussed than us, then good luck to them.  Never ever choose a service like your accountant on the basis of their sales pitch - it says nothing about the quality of the firm and its people.  Personal recommendation is everything.

And no - decidedly not old school.  I may be a cowboy but I like to think I have sufficient ethics to act as people's accountant. not their sales rep.

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By FirstTab
28th Oct 2010 07:39

Fee increases when profits are down

Getting back to the topic of fee increases. What happens if the client profits are down compared to previous year. He/she would say - "I am looking at cutting costs and you are saying fee increase!"

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By cymraeg_draig
28th Oct 2010 09:24

His problem

What happens if the client profits are down compared to previous year. He/she would say - "I am looking at cutting costs and you are saying fee increase!"

Posted by FirstTab on Thu, 28/10/2010 - 07:39

 

His profits are down - does that mean your's have to be?

Why are his profits down - is it because his costs have risen and he hasnt increased his prices accordingly? Perhaps he should do what you are doing - and increase his prices/fees accordingly.  I guarantee that the gas company, petrol stations, etc didnt cancel their price increases to help him.

 

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By Bob Harper
28th Oct 2010 09:36

Tough

CD - the issue is not if you can sell, how many client you have but your attitude towards sales with you saying “I would argue with the term profession as salesmen certainly have no ethical code”.

@MarionMorrison - it is easier to agree with CD because you probably have the same technicians mentality. Like I said, it is not personal because this mentality is rife in the profession but comments like “marketing a dirty word” reveal all.

As for hating the sales ethos you probably have the stereotypical view of what sales is based on being hit with bad sales experiences. As for Currys, this is not a good example of consultative selling - they are order takers like most accountants.

You probably read and studied a lot for accountancy. I wonder if have you read or attended a course on professional sales. If you haven’t then have a look at Trust Based Selling by Charles Green and know that a good sales person not only knows their product but they know the competition and will recommend other services providers if they believe they are a better fit.

Ethics are at the heart of professional selling.

@FirstTab - if you take my advice you would be talking value with the client and looking for new ways to deliver the service.

Maybe a price reduction is the right answer and perhaps this would improve your profits! If you agree with CD you would just say tough, my costs have gone up and by the way I’ll return your calls when I’m ready.

The other way of looking at this is that if the client’s profits are down then perhaps they should be spending more with you. But, that assumes you have the capability to improve profits.

Bob Harper

Marketing for Accountants
 

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By cymraeg_draig
28th Oct 2010 10:08

"Why do you look at the speck of sawdust in your brother's eye a

Bob, if you insult your clients like you insult others on here I'm amazed you're still in business.  You might be able to sell sand to Arabs but one thing is certain - you are far more set in your ways and far less willing to consider others points of view than anyone else in this forum.

 

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By Becky Midgley
28th Oct 2010 10:33

Getting back, and staying, on topic

Thank you FirstTab for attempting to get this discussion back on track.

Here's a little fable for you: I spent last weekend with a group of young people who have been identified as needing additional support to help prevent them from offending and getting involved with solvent abuse, drugs and alcohol, etc. Two of the boys, both aged 11, spent the whole day winding each other up. It started quite jovially, and progressively got worse, more hurtful, more targeted and personal, more gradually more violent, until by the end of the day I was restraining one of them from beating the other one up with a big stick. Remind you/me of anything?

I'm here AGAIN to tell CD and Bob to leave each other alone. Put your personal and professional differences aside please gentlemen, if you both want to contribute to the same thread then do everyone a favour and stay on topic for the thread. Leave everything else at the door and ignore each other if you can't do anything other than fall out every time!

It is getting tiresome for the community and for me and I will not allow this personal disliking spoil the tone of this community.

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By Bob Harper
28th Oct 2010 10:59

Like I said before, leave my family out of it

CD - you or anyone else can be insulted if you they want to be. Or, you can read the posts as I intend; as a challenge of mindset to help the OP and others with the same/similar issue.

This post is about fees which is a marketing issue and price is an external issue and has NOTHING to do with costs!!! 

But, comments like “marketing is a dirty word” and “sales people have no ethics” I feel deserved to be picked up. They do not insult me because I understand that you don't understand.

I do not insult clients but I do take them to and beyond their comfort zone because that is where growth comes from. Often, the internal needs to be changed before the external will be but I get permission first and only work with people that want to be pushed. That is why I will only work with a small percentage of firms.

I have considered cost plus pricing, using low overheads for cheap prices and increases in the RPI to agree fee increase but I have decided that is bullshit. There is a better way which leads to a more profitable and sustainable practice. But, the new way requires an open mind, passion, desire for a better practice, energy and skill but less hard work.

As for considering others points of view, I go out of my way to do that.  With courses, events and reading I probably invest up to ten hours a week listening to other people with new ideas, just not yours.

Bob Harper

Portfolio Marketing

 

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By FirstTab
28th Oct 2010 11:16

Thanks Becky for trying to retain the topic of this thread.

I like C_D and Bob for good contributions they make. It is at times like this when I think do not comment further just leave it or as you say go private.

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By Bob Harper
28th Oct 2010 11:17

Becky, you are wrong.

Becky - once again I missed your post but you are wrong and quite honestly I really don’t see what your problem is.

This is "Any Answers" not just what the majority or the old guard may think and what is being discussed here is the the most fundamental issues in the profession; pricing.

There are different views being expressed and there is an exchange going on. No one is using profanity and people don’t need to read if they don’t want to. Do you not want a discussion with different views?

I speak with people outside this form who think the debates and comments have value. Just yesterday a guy said he reads at night and gets a lot of useful ideas. He won’t comment here because he does not want to get drawn in.

I am happy to get drawn in because I think there needs to be balance. There are too many in the profession who share CDs views about sales and marketing, but that doesn't make them right or the best for new starts to model.

Ban me if you want but an arrogant technician is an arrogant technician - I can not come up with another way of expressing it. But, that doesn't make them a bad person. And, in the same way, a blunt opinionated marketer is a blunt opinionated marketer.

Bob Harper

Portfolio Marketing

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By cymraeg_draig
28th Oct 2010 11:33

Becky

I'm here AGAIN to tell CD and Bob to leave each other alone. Put your personal and professional differences aside please gentlemen, if you both want to contribute to the same thread then do everyone a favour and stay on topic for the thread. Leave everything else at the door and ignore each other if you can't do anything other than fall out every time!

It is getting tiresome for the community and for me and I will not allow this personal disliking spoil the tone of this community.

 

Posted by Becky Midgley on Thu, 28/10/2010 - 10

 

It also gets tiresome for me - but I will NOT be subjected to insults and comments which are, quite frankly, verging on being slanderous. Nor will I sit back and let bad advice go unchallenged.

I think the following comments show who is insulting who. An impartial read of the thread also clearly demonstates that my responses were reasoned and contaned no personal insults or unprovoked attacks. 

 

Ban me if you want but an arrogant technician is an arrogant technician - I can not come up with another way of expressing it.

Posted by Bob Harper on Thu, 28/10/2010 - 11:17

 

Your attitude towards sales reveals your classic, old-school technician’s mindset. This is one of the first attitudes an accountant needs to break down to be really effective in practice development. 

 

 Posted by Bob Harper on Wed, 27/10/2010 - 20:04

 

 

CD - clients don’t care about your costs, they only care about their value.   Don't see why you are so against helping clients.........

Posted by Bob Harper on Wed, 27/10/2010 - 19:01

 

 

If you agree with CD you would just say tough, my costs have gone up and by the way I’ll return your calls when I’m ready.

Posted by Bob Harper on Thu, 28/10/2010 - 09:36

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