How can anyone quote such low fees?

The tax returns season has produced a steady stream of enquires through my website. Unlike last year my success rate at getting these clients is 0%. This is because the fees I quote are not competitive.

I have not done a fees survey in my locality. The feedback from potential clients is a clear message I need to change my pricing to keep up with the competition. My fees are about 30% to 50% higher.

I am shocked how my competitors can justify such low fees. Does the low pricing mean they have to work so much harder to get a reasonable return? How can you afford to give clients the attention when requested?

Am I missing something here? Do I need to think more about efficiencies? To make massive improvement in compliance work assembly line to halve the time it takes to complete the work?

Worse still a quick search on the net depressed me even further. The fees for sausage machine tax returns were far lower than I expected. How do they make money? The fact they are in business means they do make money.

What is it that I am missing? If I were to match those fees, it just would not be worthwhile to be in practice. 

Comments
petersaxton's picture

Low or high?    1 thanks

petersaxton | | Permalink

What are these fees?

I can't really comment unless you quote amounts.

How much is low    1 thanks

Peter Kilvington | | Permalink

What are you calling a low fee?

Some aren't in business...    1 thanks

wilcoskip | | Permalink

Every tax season there are classified ads in my local paper from people offering what I see as ridiculous prices.  Around £100 or less for a self-employed SA return, or under £400 for limited company accounts.  These aren't a big scaled-up operations or businesses focusing on a specific sector.  I suspect they fall into 2 main categories:

1) Retired accountants who bring in a bit of cash to supplement whatever pensions they have, and keep a hand in the game.

2) Hobby-practices, in the same way you get hobby-farms.  People who have the luxury of running their own 'business' with no profit pressures, as their partner is the (well-paid) bread-winner and they're looking for something to fill their time.

They're not charging prices that would sustain any real practice, and yes, in theory, they're stealing a bit of business away from you at a particular time of the year.  HOWEVER,

- the type of people who go to these businesses only want the bare basics at a rock-bottom price; and

- are so price-driven they have no loyalty.

They're not the kind of clients you want to drive forward your practice.  You're offering a highly personal, high-quality, tax-minimising, advisory service (aren't you?)

Offering and delivering more is the only way, I think, to compete with these people.  Delight your customers (a trite phrase, but it works) and they won't be interested in saving a couple of hundred quid elsewhere.  Show prospects (real prospects, not low-price-chasers) what you can do, and they'll be impressed.

You can't, and don't want to, compete with the very low pricing in the industry these days.  Not just the two situations I mentioned above, but also some of the franchises and internet-based options.  So why bother trying?  Accept that you offer something different, price and market yourself accordingly, and trundle on forward.

WS.

MissAccounting's picture

I agree with wilcoskip points    1 thanks

MissAccounting | | Permalink

I agree with wilcoskip points and would also add that I dont think I have had one "good" client from our website, most definitely not in January!  We have had some reasonable ones don't get me wrong but my A+ grade clients have come from referrals from existing good clients and also netwokring with the right people.

FirstTab's picture

WS

FirstTab | | Permalink

Thanks a very helpful response.

what looks as a low fees is    1 thanks

Monas | | Permalink

what looks as a low fees is not low fees in the end. Our Ltd company has got external accountant who is very good by the way. When we started with him we agreed on doing only final accounts for reasonable price. Following year he suggest doing payroll for us as he got much more better software than us. All for good price as well so we agreed. And now he would like to do our subcontractors agenda as well. I am sure he will come with very good price. So in the end our total accountancy fees growing every year....

James Hellyer's picture

Sell the benefits    1 thanks

James Hellyer | | Permalink

The prospects are choosing on fee level alone because that's all they have to compare between firms. You need to sell the benefits that come with your higher fees. People think accountants are the same and a tax return is just a tax return unless you tell them differently. What will they get from you that they won't get from the cheap accountants?

£400 for some limited companies could lead to a nice profit    1 thanks

ringi | | Permalink

£400 for some limited companies could lead to a nice profit.   When I was a contractor I only had about 60 transactions in the year, all in the correct columns on a spreadsheet.    I would expect that someone that knows what they are doing could do all the account and returns in half a day.

However I can’t see how many sole traders are simple enough for £100 to cover the costs of a set of account and a tax return.   Personally I have never understood way a limited company costs more than a sole trader, as once the number are understood and typed-in the software just outputs all the additional paperwork for a limited company.
 

Paul Scholes's picture

What is low/high?    1 thanks

Paul Scholes | | Permalink

FT the 2 Peters asked, as do I, what do you regard as low or high fees?  Wilcoskip quotes what he thinks as rediculous rates for a SA return or set of Ltd Co accounts and a few years ago I would have agreed with him however, as James points out the £s aren't everything.

Wilcoskip suggests there are 2 main category of accountants who are able to operate at this level however there is a third, those who make a reasonable living from their clients and still have spare capacity for more, if they want it.

At the moment for example, I'm sitting here with hardly anything to do and so, if it wasn't for all the personal to-dos, would not turn away an extra £100 or £400.

In general, this is not the time of year to be picking up new clients as they will tend to be the ones who have left it till the last minute and I've spent a long time getting rid of those.  However there could well be some gems in there, potentials for bigger & better things, who, if just starting out, might appreciate a "special offer price" year one to get them up & running.

 

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