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The 2008 Fee Survey results are in - do you charge enough?
The 2008 Fee Survey results are now in, and they may cause some raised eyebrows.Did you know that for just about everything apart from audit, value-billing appears to net practitioners over 10% more than hourly billing? Or that firms with one to three partners generally tend to charge less than either sole practitioners or bigger firms? Can you explain why practitioners in the South West charge less than those in any other part of the UK? When accountants quote up front, how reliable are they?
The answers to all these, and more, can be found in our downloadable Fee Survey, which has been kindly sponsored by Sage. We will be running a series of feature articles analysing all the interesting elements of this survey, but for those who want to see the big picture, the 2008 Fee Survey is downloadable here.
National averages from the 2008 Fee Survey
Number of comments: 16
AccountingWEB.co.uk 4-Jul-2008
Categories: Practice Features
Times read: 11130
by 6 user(s)
"Conclusions
This survey not only shows what accountants are earning for their work (see 2.1), but also throws up a number of interesting observations.
• Firms with one to three partners generally tend to charge less than any other size firm for their services – including sole practitioners."
If you look at the breakdown, its the difference in Audit fees [which the majority of SPs will never do?] that makes us "more expensive" than small firms.
SPs still charge less for personal/sole trade/partnership/ company tax, which makes up the bulk of SP work.
I assume it doesn't.
Would have been nice to have a few more types of work surveyed. Missed opportunity.
Does the annual accounts fee include bookkeeping?
No it wasn't me. I'm just as confused as everyone else. Back to the drawing board for Sage on this report I think.
Ha Ha Ha! I've just noticed the Management Accounts figures on page 6 for 4 to 6 partners. There's an eyebrow raisin' difference between Scotland (£500) and Wales (£2,500). Who collates this stuff? It's as suspect as the RPI.
And are we really supposed to believe £900 for London against £2,169 for The north (sic)? I know a couple of clients with Yorkshire roots and am able to confirm that they are not naturally generous by nature, and would IMHO be unlikely to shell out more than double the London rate for Management Accounts.
The ultimate howler is the final line of the report, which confides that "A significant minority of accountants (7%) don't even know which of their clients are profitable." Hmm, perhaps they use Sage...
Maybe it's Sage's Beta version of the report.
Well spotted J Smith over the £141 management reports in the Midlands. It's not easy to notice with the columns being in non-standard HTU columns (they're all left aligned for Gawdsake).
I'm going to take a punt and guess that there was only one solitary respondent from the Midlands; and that furthermore they charge £120 per quarter plus VAT = £141. Like us, they were probably confused as to whether the figures they cited should be quarterly or annual, as well as ex-VAT or not. Elementary, my dear Smithers.
Perhaps if you were that Midlands practice you would care to confirm - always assuming you have bothered to get out of bed of course.
Re page 6 of the report:
Fee for quarterly management accounts by sole practitioners in the midlands £141 ??? Surely this must be a printing mistake otherwise it really isn't worth getting out of bed in the morning if you're a sole practitioner in the midlands - not to do some quarterly accounts anyway!
Perhaps someone in the know could publish what the correct figure should be?
On a different note
What confidence does it instill in Sage's abilities if they can't get basic information such as this (and pie charts that don't add up to 100%) right? Job here for a good proof reader maybe?
Dave, the report is littered with anomalies and nonsensicals, such as the "typical "quarterly management accounts definition.
I read this as £1,310 per annum, not per quarter. Otherwise the typical annual charge for management accounts would (at £5,240) exceed what 81% of practices charge their most valuable clients for annual accounts (per the pie chart at the foot of page 11). I suspect the VAT return fees you mention are similarly per annum fees.
As you and I read these differently, Dave, what's the betting some respondents to the survey replied in per quarter terms and others in per annum terms?
As a separate matter, the report itself just doesn't stack up. For example, check out the regional breakdown of "Typical Fees Per Area" on page 5 (item 2.2) and you will notice that the typical regional management account fees range between £999 and £1,267 which means it is unlikely that £1,310 is the "typical" fee (the arithmetic mean is £1,153). Even if you were to use the mode or the median or some sort of weighted average to arrive at a "typical" fee it seems unlikely you would arrive at a figure outside of the range £999 to £1,267.
Same applies to the other typical fees in the headline figures - they just don't tally with the regional and other breakdowns.
It's my guess that the numbers were crunched on a Sage module rather than in Excel!
Like others, I am left to guess whether all the figures are ex-VAT; and why value pricing and value billing are treated as though they are the same thing (which they are not).
Here's some further nuances: the pie charts on pages 14 and 15 each total 94% (should be 100% of course) - Sage report? The regional reports on page 6 contain omissions and duplicates ( the second table down has The North included twice, but no South West; the bottom table admits to having no Wales, but has included The Midlands twice; and why are all the regions treated as proper nouns except "the north" which has a small case 'n'?).
I'm not really surprised to hear Sage are the sponsors of this report, but I'll raise an eyebrow all the same.
I presume the fees quoted for quarterly management accounts are fees per quarter. Similarly fees for vat returns are fees per return . In other words x4 for annual charge.
Correct me if I'm wrong but cannot see a reference to this in the report - or is it stating the bl***ing obvious ?!?!
"In respect of quotes up front, 40% of accountants charged more than their initial figure.
9% charged less.
This does not reflect well on the quotes accountants give."
Actually it reflects badly on how good clients think their books are!
I can't believe the "Get Out Of Bed" figures! Who are these people prepared to do an audit for under £600 (and how can their files possibly pass JMU inspection!?); annual accounts for under £200 (client discussion/advice included!?); and quarterly management accounts for under £200 (lots of value added to client's business in that process!). If that's correct, then they shouldn't be in practice as they aren't fit to run a business and so have absolutely no right to advise a client on how to run one - and they're screwing up the market place for firms that have invested in the tools, systems and resources to look after their clients properly and not just fill-in forms in technician fashion. Get a job, or go and ask a proper firm for sub-contract work - I'll sack all my staff and give you all my work at those rates!
The use of the term "partner" presupposes that there is more than one of them. How, therefore, can you have a firm with one partner? If so, what is the difference beween this and a sole practitioner?
It would be interesting to check and find out if the 36% of firms who say they are value pricing are actually using value pricing methodology or just using fixed prices. There’s a big difference and the two systems are often confused - where these firms asked if they manage resources with timesheets?
Getting a good price is part of the challenge. But, just as important is making sure resources are allocated appropriately - turnover vanity, profit for sanity.
Our research reveals that a typical firm can increase profits by an amazing 60% by value pricing with effective pricing and resource management.
The secret is implementing strategies which enhance the firm’s service value whilst reducing the resource required. If you can increase the current price by 10% (possibly by using a fixed pricing) and reduce resources by 30% most firms would see a 60% profit improvement in the bottom line.
For firms that are interested we have a unique audio program with value pricing master Ron Baker. The topics of the CDs are value pricing, trashing the timesheet, value marketing and value selling.
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I am assuming that the fees referred to in the survey exclude VAT .
How does that give a meaningful average monetary value charge comparison between a Non VAT Registered Practice charging non VAT registered clients and a Vat Registered Practice charging a non VAT registered client.
If the survey was looking for typical clients on which to request fee information it seems strange to choose for the audit category a company which, on the face of it, has no need to be audited.
As a sole practitioner, I have noticed that my charges can (sometimes) be more expensive than other firms who have the traditional set up of 1-3 partners and several support staff. This seems to me to be an inverse of the normal supplier / customer relationship in other industries, where smaller providers of services / goods are usually cheaper.
Why is this? For some reason some clients must feel there is a 'premium' of sorts worth paying for by using a sole practitioner. Is it that the client feels more able to relate to the individual operating as a sole practitioner as opposed to larger firm? Is it that they feel they gain more 'round the clock' access to a sole practitioner rather than the traditional restricted hours offerings of a larger firm? Are they glad that they only have one point of contact for all queries?
I don't know - these are only my initial musings after having looked at the fee survey.
