Client wanting me to change my fees structure

I need some advice please

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Dear Aweb community,

I am facing a connundrum yet again and since you've been so helpful in the past with my other connumdrums I was hoping I could bounce this off you.

I have been using the same fees structure for years and so far my 80+ clients have never questionned it. This is I think because my fees are fair. But there is one client who argues each and every single year. He thinks that my fees are too high and threatens to go and find more competitive accountants if I don't lower my fees. Because I don't want to lose him I end up having to let him pay what he deems is a reasonable amount to pay by giving a discount.
I tried to explain that cheaper accountants will probably not be members of an accounting body, probably not be insured and probably be quite hasty in the way they prepare the statutory accounts but he's telling me that's porky pies, that it's easy to say that other accountants are cow boys.

In the end, he's asked me to create a new fees structure and he presented it this way: "Some accountants do it in bands.  I.e. up to 100k turnover = x price, up to 250k turnover = y price, up to 500k = z price..."

My fees are worked out in bands too, but they go up every £10k, which means they go up very gradualy, which I believe is as appropriate as it can be since closely in relation to the turnover.

I am at a loss as to how to handle this. It doesn't feel right to let a client decide how much he should pay me. It would feel doubly wrong to use the fees structure that he wishes me to use. But at the same time I don't want to lose a client. 

Any ideas?

Replies (58)

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By PChapman
18th Jul 2023 10:18

I price according to the work involved not turnover

Never engage in a race to the bottom!

Highlight the positives of what you are not the negatives of what someone else may or may not be.

Let them walk, There will always be someone cheaper!

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By towat
18th Jul 2023 10:26

It's a no brainer, he can like it or lump it, if you concede to him it will be the thin end of the wedge, he will then demand that you include non business expenses or suppress his profits in some way.

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By Ammie
18th Jul 2023 10:48

It is dangerous to let clients dictate to you. You need to set out your terms and fees and it is either agreeable or not. Simple. If the client insists on manipulating you and you allow them to then you have become their "puppet" and who's to say what they will try next.

Trust me, if they think you are too expensive and that there are better deals elsewhere they would have left long ago. They are calling your bluff and its working.

The changes in our profession will and is resulting in certain clients struggling to find a good professional to act for them as more good accountants are becoming more selective and not taking any "flannel" off anyone.

I appreciate the fees may be valuable to you, but you also need to protect your integrity and dismiss charlatans like this client. If you did I anticipate the client would be in no hurry to leave and stand down. The client has most certainly done their homework on alternative advisers and found that the the grass is no greener elsewhere and would really prefer to remain your client, albeit they haven't admitted it!

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By ianthetaxman
18th Jul 2023 10:58

I agree with most of the sentiments voiced so far on this.

One thing puzzles me a little - if he has been a client for several years paying the same but discounted fee, why would he expect to have the same service but pay less for it now, when all around us everyday cost of living and services have increased massively?

Surely he must be in the same position if he is in business? Perhaps he has been hit by people not paying him what is due and so he is taking it out on you (and probably anyone else that he can).

Either way, we provide a service for a cost. The alternatives are as others have set out, and while I can appreciate that the fee may be important to you, surely the thought of not having to deal with this sort of petty minded controlling client would be in your own best interests?

If you are keen to keep the client and this is important to you but want to retain a decent fee for the work, have a go at breaking down what services you provide into separate elements, like accounts prep/tax computation/tax return/VAT/payroll/telephone calls/emails and so on and allocate an element of the fee you would wish to charge against each. Tell the client this is the breakdown of your fee, and if he would like to reduce the cost, tell him you'd be happy to cut out whatever elements he doesn't wish to pay for, or to reduce the level of precision applied/required on those areas.

As others have highlighted, turnover isn't always an indicator of complexity or time costs, and we all have our own hourly rates, whether employed or self-employed, to consider. Just think, at NMW levels a £600 fee is approximately 58 hours of work, but at say £20 this is 30 hours. You run your own business so have your own costs as he does, so say it was £30 per hour and you're down to 20 hours to complete the work. If it takes a couple of days to do the accounts and another day to deal with the returns and any queries to finalise everything that is more than 20 hours already, not including all the other work you are doing.

Value what you do and let him see that!

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By ianthetaxman
18th Jul 2023 10:58

.

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By Husbandofstinky
18th Jul 2023 17:43

Have trawled through all of this and can only echo what other's have said already.

The clincher for me was easily that £600 fee. Not because it was cheap (it is) but for your pure sanity of not having deal with this ball ache EVERY YEAR. Personally I thought you were going to come up with some major fee (in relation to your turnover), but for just £600, sorry he can poke it big time.

I am at the bottom end of fees and can do as above (mates rates only) for £600, but with that comes my terms big style. Like it or move on. Nowadays I am putting out £800-£900 bottom end for something like that with the same principle as the mates rates (like it or leave it). Obviously geography affects a lot of quotes but I am pretty good value locally.

Like yourself, I am totally word of mouth and do not advertise. One man band with very little spare capacity (6 days per week to 7pm is the norm excl January). Not proud of it and I know it should be cut back - client cull/raise fees etc.

However, virtually all clients are in the A category as per table above, No 'C's (no chance) and probably only a few 'B's. It has taken me quite a while to get to this (all Cat A's - almost). The customer at the bottom of the current pile has had his fees raised by 20% from last year and I have told him a further 20% next year. Limited company, immaculate books but a PITA with the questions (EOY). Very time consuming on the admin front and that's all it is. In short, he either pays for it or I give him 10p to go and call someone else who cares. It is getting to that now as I just don't have the time for it. I apologise as I am not exactly an avid poster unlike many others here (respect). Time.......

Still thems are the rules imo (my way or ta da). As mentioned countless times already.

Finally, just as a matter of course, I am not a fan of the tournover/price structure policy. Purely old school at this end and amount of work involved. (roughly speaking of course as quotes even with decent experience can be a little variable sometimes).

Above all good luck

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By Husbandofstinky
18th Jul 2023 18:24

I'm sorry but for a £600 fee, tell him to poke it.

You will then avoid this debacle EVERY year.

Even with your currently agreed fee there will be this encounter year on year. Move on as it is just not worth it imo. For the record this is a very low fee (for which he is receiving the benefit of) and because of this they should on your terms only.

Will £600 be that much of an issue going forward?

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By Mark Lee
25th Jul 2023 18:41

So much great advice here. Key point is why you are not prepared to be assertive instead of seeming to roll over. You're not alone and I suspect it has something to do with fear of not being able to quickly replace the fees in question.

May I offer a suggestion?
1 - Promise yourself that you WILL part company once you have replaced the fees in question.
2 - Draft your break-up email (without putting their email address in the 'To' box until you are ready to send it). Enjoy the feeling of writing it and think about how good you will feel when you can send it.
3 - Think about what YOU can do to secure a new client(s) that will compensate for the loss. And then start doing what you need to do to make this a reality.

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