Examples of Transparent Fees structure

Examples of Transparent Fees structure

Didn't find your answer?

My earlier thread on this subject has gone off course hence the reason for a new thread. Please, please, please stick to the subject here.

After a fair bit of Googling I found two websites that have transparent fee structure. I hope the owners of these businesses won't mind.

I would be grateful for any comments/opinions on above. http://www.conciseaccountancy.com/fixed-fees-accounts-packages.html is very much my way of thinking - make it very clear from the start to avoid problems and time wasters.

Replies (286)

Please login or register to join the discussion.

By Bob Harper
04th Jan 2011 15:56

Read carefully

@Andy - I think we have found the issue, unless there is effort you are not comfortable someone making a profit? I assume you think cosmetics and perfume providers are unethical?

@Peter - why do you feel the need to get nasty calling me a liar?

You said in your post “Somebody doesn’t know accountants” that “If you want to make a profit it will affect the price”. By “it” you were referring to cost of delivery.

I replied with “your costs will not affect what the customer is willing to pay it will only determine if you accept the engagement at the price”.

Thanks (0)
By petersaxton
04th Jan 2011 16:28

How cost affects price (not what the client wants to pay) - just

PS’s comment: <<<“The cost of delivery will come into play in this decision because the provider will want to make a profit. But, this is not a pricing decision and you do not need to record time to calculate it.”

Not a pricing decision? If you want to make a profit it will affect the price. If you don’t have a good idea of the time that will be spent how do you know the cost?>>>

Bob’s response: “Someone doesn’t understand Value Pricing

@Peter - your costs will not affect what the customer is willing to pay it will only determine if you accept the engagement at the price.”

Bob’s justification: <<<You said in your post “Somebody doesn’t know accountants” that “If you want to make a profit it will affect the price”. By “it” you were referring to cost of delivery.

I replied with “your costs will not affect what the customer is willing to pay it will only determine if you accept the engagement at the price”.>>>

You start off from a fantasy. Potential client’s don’t come to accountants and say they want to pay a price. There’s a discussion about what services can be provided and are wanted. When the accountant knows the services wanted they will work out how much it costs to employ staff to do the work and/or what the accountant is willing to receive for the time spent on the job. That will set the lowest price. The accountant will then decide whatever they expect on top of this figure. The accountant will quote a price and the client will agree, walk away or suggest a lower price.

For you to suggest that time plays no part in the pricing decision is simply wrong.

When I suggested that the time will affect the pricing decision because the accountant would consider the time and use that information when suggesting a price you twisted what I said to imply I had said that my costs would affect what my client would be willing to pay. You then said an accountant would only use the costs to decide whether to accept the engagement at “the price”. I know of no accountant who will accept “bids” from potential clients. I think the price I quote is reasonable and if a client tries to haggle I say that they would have better success elsewhere.

Thanks (0)
By petersaxton
04th Jan 2011 16:32

If the question is too hard pretend another question was asked

"@Peter - why do you feel the need to get nasty calling me a liar?"

Because you consistently refuse to answer the questions asked and issues raised. Your tactics consist of making out something else has been said and then arguing against that.

Thanks (0)
avatar
By andypartridge
04th Jan 2011 17:05

@ Bob

unless there is effort you are not comfortable someone making a profit? I assume you think cosmetics and perfume providers are unethical?

I am all for anyone making a profit. I am a product of the capitalist society and I am a fully paid up member. Do I think cosmetics and perfume providers are unethical? No. My knowledge is limited but I am aware that they sell tangible products, they may have efficient production facilities, excellent logistical and distribution networks and they satisfy demand. I daresay many of them are very good employers, treat their staff well, offer good training and career progression.

What I am against is excessive profits earned by misleading customers. If a company marketed an exorbitantly priced cream which guaranteed to reverse the ageing process and made other claims which it couldn't possibly back up, not only would that be illegal it would be unethical.

-- Kind regards Andy

Thanks (0)
By Bob Harper
04th Jan 2011 17:13

No need to make anything up

@Peter - I do not need to make anything up to have an argument with you; you are arguing for cost plus pricing I am arguing for value pricing. This is enough to have a discussion/argument!

Because you use costs plus a desired profit to calculate a price you believe time is needed to calculate the price. I disagree because I believe the price is best agreed by focusing on the value.

There is no fantasy; just a different conversation with the client where the client is involved in the design of the service and the price agree with them.

I know clients do not come to accountants with a specific price but they do come with emotional needs. And, I know that if an accountant can understand them and position their services as helping to satisfy these needs then the price and service will often be very different. 

Thanks (0)
By David2e
04th Jan 2011 17:37

Discussing pricing basis?

I don't think Peter or anyone else is here discussing basing pricing on time, costs or anything else.

I only see others putting a case forward for considering costs, including time, when preparing pricing... not neccessarily basing the prices on costs but at least knowing costs and using those to determine minimum pricing with an expected break even point.

There's been no good case put forward that I have seen to argue that any method of pricing, including value basis, should not at least consider the costs and whether or not the pricing will be profitable before it is discussed and agreed with a client.

No one has said time is needed to calculated the actual price, simply that the cost of time needs to be considered so at very least a minimum profitable price can be identified... with the actual price being calculated above that using any method at all.

The only other side to this is can be that the cost of time is not to be considered with identifying a minimal profitable price and this minimum price is essentially ignored until after a pricing based solely on value is agreed with a client.

David Toohey
The Accountants Circle

Thanks (0)
By petersaxton
04th Jan 2011 18:09

Bob keeps making it up

"@Peter - I do not need to make anything up to have an argument with you; you are arguing for cost plus pricing I am arguing for value pricing. This is enough to have a discussion/argument!"

This is another example of making it up. I have not argued for "cost plus pricing" if that means a price based on cost. I have simply said that no accountant would accept work for less than cost. How they arrive at the price is a totally different matter.

Thanks (0)
By Bob Harper
04th Jan 2011 18:23

Agreement

@Andy - personally I am against any profits being earned by misleading customers but the issue is your comment/question that you charging more is unethical. I do not think it is, I think is what you should do if you can because that is your profit.

@Peter - you said:

“When the accountant knows the services wanted they will work out how much it costs to employ staff to do the work and/or what the accountant is willing to receive for the time spent on the job. That will set the lowest price. The accountant will then decide whatever they expect on top of this figure. The accountant will quote a price and the client will agree, walk away or suggest a lower price.”

That is cost plus pricing.

@David - your last sentence tells me you get it, whether you agree is another thing but if accountants focused 100% on value in the initial discussions with clients they may be surprised what comes out of the conversation!

Thanks (0)
By petersaxton
04th Jan 2011 18:25

Agree price first?

"The only other side to this is can be that the cost of time is not to be considered with identifying a minimal profitable price and this minimum price is essentially ignored until after a pricing based solely on value is agreed with a client."

Price agreed and then accountant points out it's less than his cost?

Thanks (0)
By petersaxton
04th Jan 2011 18:29

Typical!

Bob seems to be arguing - very badly I may add - with himself. He's imagined that we are saying that price should be based on cost/time whereas we have been saying that an accountant would not agree a price less than cost and therefore cost and time had to be considered. It got funnier when Bob argued that cost was irrelevant to setting a price.

Thanks (0)
By petersaxton
04th Jan 2011 18:53

Reality

"@Peter - you said:

“When the accountant knows the services wanted they will work out how much it costs to employ staff to do the work and/or what the accountant is willing to receive for the time spent on the job. That will set the lowest price. The accountant will then decide whatever they expect on top of this figure. The accountant will quote a price and the client will agree, walk away or suggest a lower price.”

That is cost plus pricing."

No, cost plus pricing is when you use a set formula to work out the price. It's just that we say that an accountant should use a method of pricing that considers cost: Price - Cost = Profit/Loss; if it's a loss we won't do it. If an accountant estimates a cost of the job and it comes to £500 and they quote £900 then they have added £400. It doesn't mean that they've gone from £500 and added £400 to arrive at some price. Another constraint on price is that what competitors will charge. Your price doesn't have to be less than them but it won't stay a lot more for long.  A third constraint will be what the client considers reasonable. There's one upward pressure and two upward pressures. If you do more for a client it's not the same market - but does the client want more? Does your client want you ringing up with some "opportunities" every month - most likely costly and most likely however well it's explained it will appear that you are treating them as a cash cow and, anyway, why haven't you mentioned this before and why isn't it part of the normal service?

Thanks (0)
By Bob Harper
04th Jan 2011 19:49

Cost plus is cost plus

@Peter - the point about the price being agreed before the accountant considers costs is that the conversation is all about value and the client.

Working out the cost before agreeing the price puts a figure in providers head (the cost). This will be used to set the price, even if it is just used as a comparison. I am suggesting the figure used to set the fee is value and then decide if the costs create a profit.

So, yes - cost is irrelevant to setting price; it is only relevant to accepting the engagement.

Working out the cost then adding what they expect on top sounds like cost plus pricing to me.

Thanks (0)
By petersaxton
04th Jan 2011 19:58

Price first?

"@Peter - the point about the price being agreed before the accountant considers costs is that the conversation is all about value and the client.

Working out the cost before agreeing the price puts a figure in providers head (the cost). This will be used to set the price, even if it is just used as a comparison. I am suggesting the figure used to set the fee is value and then decide if the costs create a profit.

So, yes - cost is irrelevant to setting price; it is only relevant to accepting the engagement."

So you go to the trouble of deciding what the price would be and then tell the client that you can't do it?

Thanks (0)
By petersaxton
04th Jan 2011 20:00

Easy

"Working out the cost then adding what they expect on top sounds like cost plus pricing to me."

The cost is £500

They agree on a price of £900 using whatever method

So they expect £400 profit

 

Thanks (0)
By Bob Harper
04th Jan 2011 20:15

Yes

@Peter - yes, you go to the trouble of discussing value first.  If it ends up refusing the engagement that is what happens but the quality discussion is the objective.

Thanks (0)
By David2e
04th Jan 2011 20:22

understanding...

I actually think Bob's last post made things a little clearer to me, with the concept of focusing on value.

That said, I do feel accountants should be able to look at value and price accordingly even if they are aware of the costs involved.  I also feel if they are having a discussion on value with a client, such as in the initial meeting, then they don't need to discuss the actual price at this stage without giving it the attention it deserves but use that meeting to build up a picture of where the client can be offered value in the knowledge/service provided.

Surely discussing prices without considering costs and agreeing to something to only withdraw later sounds like setting things up to go bad and get the reputation that goes with it.  A possible waste of time and a let down for the client if the value pricing with no cost considerations proves to be unprofitable.

Not sure then that it really means time recording is can't or shouldn't be applied. Even if focus is given to pricing and all the other things that could be issues are there, why should it mean one should not be aware of the time cost involved in 'delivering that knowledge' for the future?

From Bob's definition of 'cost plus'... all pricing really should be this - be it fixed, value or time based. All revenue should be 'cost plus', else it would be "cost minus"!

David Toohey
The Accountants Circle

Thanks (0)
By Bob Harper
04th Jan 2011 20:55

Agreement

@David - there is no agreement to anything other than an open, value based discussion from which the budget/price and scope can be agreed. From there further discussions can take place to see if there is a match between the provider and customer.

I believe this type of conversation will only enhance the reputation of the firm because it puts the client at the centre of the discussion. The conversation is actually more of a consultation and builds trust which builds value so the conversation may result in a higher price because of the experience created.

Thanks (0)
avatar
By cymraeg_draig
04th Jan 2011 22:55

I've never read so much rubbish in my life.

 

 

Forget "value" or any other sales speak - the bottom line is that the first thing any businessman must ascertain is -

what does the customer want,   How much will it cost me to provide it (including wages = TIME)Will I make a profit

If the answer to number 3 is NO then there is absolutely no point in continuing the conversation.

ONLY when sure that the client will pay enough to make the job profitable is it worth going into further discussions with him.  I certainly have better things to do with my time than waste it talking to some potential client who in all probability is only trying to get some free advice anyway.  Thats why I automatically build into any quote enough to cover my time in meeting the client in the first place. 

I wonder how far you would get if you told the checkout girl at Tesco's that the £1 loaf in your trolly was only "worth" 50p to you because you will probably only eat half of it?  

Bob you really need to stop reading the drivel published by so called "gurus".  They are simply con artists parting the gullible from their cash in return for ill conceived theories written by people who, if they were so dam bright, would be out there running huge corporations, not scratting around for pennies writing books. 

 

 

Thanks (0)
By petersaxton
05th Jan 2011 03:26

Even if YOUR business goes bust you can still blame other people

"ONLY when sure that the client will pay enough to make the job profitable is it worth going into further discussions with him.  "

I think the difference is that an accountant can deal with complex problems and has to get them right. Bob just has to take a standard template, adapt it slightly and can always blame his customer if he's unsuccessful.

Thanks (0)
By Bob Harper
05th Jan 2011 09:05

Lesson

@CD - like I said, everything is a theory until it is done in practice and both time and value pricing are in practice. The only question is what is best for today and most likely to create profit and sustainability for the future.

My suggestion is that selling time has had its time. This is after working in practice myself, reading ALL the books, attending the seminars and working with over 200 firms. Having said that, your three steps are close to the value pricing process except in-between numbers 1 and 2 you agree a price/budget.

Asking what the customer wants is one of the first questions to uncover value but the answer is not a set of accounts or a tax return. That is the surface level need; value pricing is about searching for the emotional value. Things like keeping the kids in private school while the economy is suffering or having enough wealth to see the client through their retirement. 

As for knowing the client will pay, there can be criteria and conditions before you meet a prospect to avoid wasting time. But, if a practice owner spent their entire year meeting people (say 240 based on one a day) and only worked with 30% they would add 72 clients to the practice.

What would the average fee need to be to make this worthwhile? What would the average fee need to be to make it more worthwhile that doing operational work? With OBK at £6,000 minimum fee the add value is probably £500k. So, maybe more accountants need to waste more time?

@Peter - the personal digs seems to start when you dry up on the discussion. As regards my commitment to my clients, I look at it like this:- they are successful or I die trying. The only time I’ll stop is when they tell me they have given up.

Every strategy and tactic I have every created or recommended has worked. Some better than others and not everything works for everyone but that is not unique to any non-compulsory change initiative. The failures is what I spent most time talking about because that is where the lessons are.

Thanks (0)
avatar
By andypartridge
05th Jan 2011 09:20

@ Bob

I don't recall saying that it would be unethical of me to charge more under any circumstances. What comment are you referring to?

-- Kind regards Andy

Thanks (0)
By Bob Harper
05th Jan 2011 09:40

Charging more

@Andy - I was referring to your question/comment in your post "Resorting to your fall back position". You said “you label me unconsciously unethical and yet suggest I should be charging more. Isn't that contradictory?

Thanks (0)
avatar
By andypartridge
05th Jan 2011 10:54

Isn't that contradictory?

You didn't reply to my question - I always try to reply to yours!

Yes there are circumstances when I would increase my fees.

My point was that I don't get how you would think I am unethical if you think I am under-charging? Do you think it is unethical for accountants to charge less than the maximum fee?

Do you think discounts, special offers, BOGOF, January sales etc. for all products are unethical because they don't extract the maximum perceived value from customers?

Just as time and costs are elements in negotiating price from the suppler side, so it could be argued is perceived value from the customer side. Maybe you are so close to this you don't get the broader picture? I happen to think maybe accountants do unconsciously consider perceived value, but equally clients consciously or unconsciously consider supplier costs.

Actually I worked for a manufacturer where big retailers insisted on an open book policy on our costs in the price negotiations. They wanted us to be able to earn a profit, just not too much of one!

Interesting subject. Maybe you are ahead of your time, maybe your theory works better in a big city or with a particular sector (eg. other marketeers!). I am confident that if I were to adopt your approach in this semi-rural environment my clients and prospects might think I was a little weird. Weird is not good for business.

-- Kind regards Andy

Thanks (0)
By Bob Harper
05th Jan 2011 11:31

Weird

@Andy - I did answer your question, just not how you wanted me to; I got you thinking about cosmetics and perfume providers because that is a major image based industry and you think image-only brands are consciously unethical.

The point about accountants being unconsciously unethical is not the size of the fee but what they are doing with their client’s money. Instead of repairing client’s books they could be adding value. Don't you think it is convenient that accountants sell time and their clients do bookkeeping after 30 years or so of computers? Accountants are not committed to getting their clients doing proper books, when they are the issue gets sorted. 

Price is value based or not, there is no room for anything else. You believe you need to know costs to negotiate a price, I think you only need to be focused on the value to negotiate the price. Costs only come into it when you know the price so you cab decide if you will do it. This is how IKEA develop their product range; they start at the end and work backwards. What will someone pay for a table? Then they turn to the designers and ask if they can make it with a profit. 

Maybe you have done this so long you struggle to take on new concepts and perspectives, I know it took me a while. but, why is telling your clients that you want to focus on their results rather than your effort so weird?

Thanks (0)
avatar
By andypartridge
05th Jan 2011 12:01

Old ground

If you think that accountants set out to ensure their clients' books are messy so that they can charge for fixing them I am afraid you lose my confidence again. You old cynic. Seriously, I have never met an accountant with that attitude. I am sure there are a few around but to suggest that it is endemic is plain wrong.

Accountants are in general committed to helping their clients keep better records. However, there needs to be equal commitment from the client. Some clients are great at book-keeping, some are OK and some are dire. Some of the dire ones have no time or aptitude for it and so they recognise that it will cost more to do their accounts. There is nothing wrong with that interaction of supply and demand. To suggest otherwise is plain mischief-making.

Your views tend to suggest that that suppliers and customers are all hard-nosed. That is not my experience. Business trade is done by people dealing with people, and people will do business with people they like.

I appreciate that you are not looking to appeal to me, but to a very particular type of accountant/firm. However, I think it is naughty of you to present an offbeat opinion as fact. This is the very approach that I see in the type of accountancy firms you seem to approve of.

-- Kind regards Andy

Thanks (0)
By petersaxton
05th Jan 2011 12:20

Being honest

“the answer is not a set of accounts or a tax return. That is the surface level need; value pricing is about searching for the emotional value. Things like keeping the kids in private school while the economy is suffering or having enough wealth to see the client through their retirement.”

There’s a limit to what an accountant can do for a client. Promising the earth to get high fees will result in the client judging you a fool.

“@Peter - the personal digs seems to start when you dry up on the discussion. As regards my commitment to my clients, I look at it like this:- they are successful or I die trying. The only time I’ll stop is when they tell me they have given up.”

I’m just trying to understand why you think your ideas are right when your own company went bust. Did you implement your ideas? Or were they somebody else’s? If not your, why not?

None of us are saying that we are selling time. What we are saying is that we will only do work that is worthwhile to us. You seem to be saying that you will discuss the price without any reference to the cost and only consider that later.

Thanks (0)
By petersaxton
05th Jan 2011 12:40

Beware of possible damage

“Interesting subject. Maybe you are ahead of your time, maybe your theory works better in a big city or with a particular sector (eg. other marketeers!). I am confident that if I were to adopt your approach in this semi-rural environment my clients and prospects might think I was a little weird. Weird is not good for business.”

Adopting Bob’s approach wouldn’t get an accountant anywhere in any area. The potential clients I meet would show him the door very quickly. I have one company client which had very complex accounting needs and took on a bullshitting accountant part time rather than provide what was needed – an assistant to support the very knowledgeable and efficient but overworked Accounts Manager. For a couple of months they lapped up all of her rubbish but then they realised she didn’t know what she was talking about and the Accounts Manager got her assistant. Unfortunately, the Accounts Manager is not impressed and may leave. Some people can damage a business irretrievably.

Thanks (0)
By petersaxton
05th Jan 2011 13:02

Believe real life rather than Bitter Bob

“Don't you think it is convenient that accountants sell time and their clients do bookkeeping after 30 years or so of computers? Accountants are not committed to getting their clients doing proper books, when they are the issue gets sorted.”

You obviously don’t know accountants very well.

1.       Accountants don’t sell time.

2.       What’s computers got to do with anything?

3.       Accountants want clients to do bookkeeping if they are capable, if not keeping spreadsheets is an alternative, if not handwritten books, if not keep paper records. Different clients have different abilities and interests.

Thanks (0)
By Bob Harper
05th Jan 2011 13:04

Honest

@Andy - I have never said accountants set out to ensure their clients’ books are messy but most are a long way away from committed to sorting them. If there were 80% of clients would be doing bookkeeping properly rather than 20%.

If messy books were made an offence and accountants were accountable like Money Laundering they would soon be sorted.

@Peter - who said there is a limit on what accountants can do? The only limit is the individual accountant’s passion.

I happen to believe accountants are best placed to help business owners. What is the alternative? Bank managers or government appointed coaches?

What will happen if accountants do not accept a new definition of what an accountant is? The advisory work will be picked up by others leaving accountants to carry on counting what happened rather than helping shape it.

Value pricing is not my idea and the issue is not the software company for me but is the experience of the accountants that used the software I created for them. You have a telephone number to call, have you used it yet?

What you wrote above was very year, you know your costs and price with something added on. Yes, using Value Pricing means the costs are considered after the price is agreed.

Thanks (0)
By Bob Harper
05th Jan 2011 13:21

Your client

@Peter - your client that took on the bullshitting part-time accountant, did you advise them that they needed an assistant to the Accounts Manager?

Thanks (0)
By petersaxton
05th Jan 2011 14:00

Bob doesn't know who to blame

“If messy books were made an offence and accountants were accountable like Money Laundering they would soon be sorted.”

No, they would just not take on clients with messy books – either because they felt the particular client couldn’t change or the client wouldn’t be willing to pay the fees involved.

I have a client who has six years of paperwork piled up. I explain how I could get it dealt with by having somebody come over and sort it and file it but he can’t decide. No amount of passion will help him. The same client wants me to set up and run a costing system but I tell him I will need to receive the information very regularly. He’s given no indication he will do it other than say he will. He wanted my wife to project manage a building improvement scheme and he said he’d give her a list of work to be done. A month later there’s still no list been produced.

Some clients just cannot do anything well. He’s paid me good money to do the best I can for him. Should I just walk away, sacrifice the money and leave him to some predator who will take him for a ride?

Thanks (0)
By petersaxton
05th Jan 2011 14:02

Clients are responsible

"@Peter - who said there is a limit on what accountants can do? The only limit is the individual accountant’s passion."

I said there is. Sometimes clients have to take responsibility for their own life.

Thanks (0)
By petersaxton
05th Jan 2011 14:10

Sensible and gullible

“I happen to believe accountants are best placed to help business owners. What is the alternative? Bank managers or government appointed coaches?”

Accountants are best placed but that doesn’t mean they can perform miracles. Some people may say they can perform miracles to get the work but they usually end up as a failure.

“What will happen if accountants do not accept a new definition of what an accountant is? The advisory work will be picked up by others leaving accountants to carry on counting what happened rather than helping shape it.”

Sensible clients will continue to use sensible accountants. Bullshitters will step in and get work from gullible clients and lead them both to bankruptcy.

“Value pricing is not my idea and the issue is not the software company for me but is the experience of the accountants that used the software I created for them. You have a telephone number to call, have you used it yet?”

Not yet. Can you send me a trial copy of your software?

“What you wrote above was very year, you know your costs and price with something added on. Yes, using Value Pricing means the costs are considered after the price is agreed.”

The thing between cost and price is profit. No sensible person agrees a price without knowing the cost.

Thanks (0)
Teignmouth
By Paul Scholes
05th Jan 2011 14:13

Room for a little one?

It is interesting to note the lack of women in this debate, maybe it's because they can't use rulers like the men do?

Ignoring those who merely record time, multiply it by £X and blindly charge the client with the result, the opposing approach to fee determination, ie cost up or fee down does I think get to the heart of the matter but, for me, just evidences that for most of the time, if we do it properly we will all end up in the same ball park making much of this debate a point-scoring waste of time.

If you can calculate a cost for a service (eg using salary + overhead) then the natural inclination I suppose is to estimate how long the job is likely to take and multiply that by your cost per time to arrive at a figure.  You might then use a rule of thumb to say that you'd want to recover 2 to 4 times that and then turn to look at the client to judge what s/he would be happy with.  If you are wed to your methodology you might feel uneasy when you discover that the client would be OK with 5 times your cost but in theory this shouldn't matter.  At the other end, if you ascertain that the client would only be happy with 1.5 X the cost figure then you may have wasted your time but, again, this shouldn't matter if you feel that the client will add to your business in other ways (eg as an introducer or as a training case for junior staff).

With my employees and even main subbie as a fixed cost it's pointless for me to treat salary cost as a variable in this way, ie I'll pay £2K to her this month whether she works on 0, 10 or 20 clients and so I can ignore the cost bit and spend more time in judging what the client will be happy with and, unless I have to buy in extra resources, I don't need to consider cost on a client by client basis.

Having used both systems the main difference for me is that the second "client value" approach has helped me identify additional work for existing clients and has cut down dramatically the amount of time I spend on admin.

CD I think told us to ignore "value" but clients would be daft to.  Maybe "value for money" rings a bell?

Thanks (0)
By petersaxton
05th Jan 2011 14:14

No

"@Peter - your client that took on the bullshitting part-time accountant, did you advise them that they needed an assistant to the Accounts Manager?"

No, I didn't know about it at all until the Accounts Manager told me. The client had come to me with some weird ideas and when I showed them what was wrong with them - which was similar to the advice the Accounts Manager had given independently - they started seeing the bullshitter in a new light.

Thanks (0)
avatar
By cymraeg_draig
05th Jan 2011 14:41

@ Paul & Bob

CD I think told us to ignore "value" but clients would be daft to.  Maybe "value for money" rings a bell?

 

Posted by Paul Scholes on Wed, 05/01/2011 - 14:13

 

@ Peter

I didnt say ignore "value" - what I DID say is that the first thing that has to be established is how much you can afford to do the job for.  If a job is going to cost me £500 in wages alone then I couldnt care less if its "value" to the client is only £300 - I simply wont do it.

Only after you have established what a job will cost (in rough figures) to do can you reasonably start to assess how much you should charge, and in the current climate those figures are going to get much closer together.

 

@ Bob

As for your ideas about bookkeeping - it has nothing to do with "ethics".   We should NOT be forcing clients to do bookkeeping that they dont want to do, even if they are capable of it. Most clients are too busy running their businesses, and many prefer to simply leave the paperwork to someone else.

I am more than capable of rebuilding an engine, for years I modified & tuned my own racing bikes including reskimming cylinder heads, regrinding crankshaft, stripping & rebuilding gearboxes to change the gear ratios, fitting modified suspension etc.  I worked to tolerances of less than a 1,000th of an inch. But guess what ? When I want my car serviced I simply dont want to do it - so I pay the local garage to do it for me.  Just like a lot of clients pay their accountant rather than do it themselves.

 

Thanks (0)
By Bob Harper
05th Jan 2011 14:48

The difference

@Peter - you need to ask yourself the question if you should keep money. If you cannot deliver what the clients wants there is a good argument to tell him to find another accountant. What I would say is that if you did send him a cheque with a resignation letter you may be surprised what happens.

You keep telling accountants what they cannot do; I’ll carry on encouraging them to do more.

We do not do trials of software unless we have worked out the cost of not having the software first. Then we assess the firm’s sales and marketing capability because to be successful with the software a firm need to be good at marketing. Often we provide the software for free while we help them get their marketing sorted. But, we are not taking new orders at the moment, I let you know if and when we re-launch later this year.

The thing between price and value is the customer’s profit. That is what helps set a fee, the accountant only needs to agree to it afterwards. That is when costs are considered.

@Paul - even if you end up at the same price the journey/client experience is very difference. 

Thanks (0)
By Bob Harper
05th Jan 2011 15:20

Time and fees

@CD - you are the same CD who said why should we cut our own throats by improving our client’s books?

It is not a case of forcing clients to do their own bookkeeping or not but being committed to using the clients money the best way. Most firms are not committed to this; they just repair and carry out the same work year in year out without actively improving their client’s bookkeeping. The reason is because it would reduce the time and fee.

Thanks (0)
avatar
By andypartridge
05th Jan 2011 15:22

I smell sophistry

Bob, you are actually trying to get accountants to do less, not more. You are encouraging them to do less for more £s by repackaging services in order to make the client believe they are getting more for their money. Am I getting it now?

We do not do trials of software unless we have worked out the cost of not having the software first. Then we assess the firm’s sales and marketing capability because to be successful with the software a firm need to be good at marketing. Often we provide the software for free while we help them get their marketing sorted. But, we are not taking new orders at the moment, I let you know if and when we re-launch later this year.

You must have had a tough time keeping a straight face when you wrote that. I tried and failed.

-- Kind regards Andy

Thanks (0)
Teignmouth
By Paul Scholes
05th Jan 2011 15:45

No Cost & Experience

@CD (please get my name right) you use system 1 and are happy with it but have missed the point, I use system 2, I don't cost each client (in £s).  The next new client that walks through my door will, in real terms, cost me maybe £20 a year in increased electricity from running the computers a little bit longer to do their accounts & tax return and answer their phone calls, ie I won't have to pay my employee (or me) £500 more to service them.

 

@Bob - yes of course the experience from each system/method is different but (fortunately) so are we.  I enjoy operating under one system and someone else enjoys operating under another...so why should me shift from where we are?

Thanks (0)
By Bob Harper
05th Jan 2011 15:48

Fun

@Andy - I am suggesting accountants spend less time on low value work and more time on high value work.

When applied to a small compliance based services using the MORE free bookkeeping software strategy the time drops away at the year-end and some is given back to the client during the year. Clients value the time they get as well as the software and do not care that the deal is also better for the accountant.

What made you laugh:

Not wasting time with early trials of softwareWorking out the value of the problem before looking at the solutionAssessing the ability of the firm to implement based on the experience with over 200 firmsOffering the software for free while the firm grows into itNot taking new orders at the momentOffering to let Peter know if and when we re-launch

Only one strikes me as funny.

Thanks (0)
avatar
By cymraeg_draig
05th Jan 2011 15:58

The customer is always right ............................

It is not a case of forcing clients to do their own bookkeeping or not but being committed to using the clients money the best way. Most firms are not committed to this; they just repair and carry out the same work year in year out without actively improving their client’s bookkeeping. The reason is because it would reduce the time and fee.

 

Posted by Bob Harper on Wed, 05/01/2011 - 15:20

 

At what point in your strange world does the customer's wishes come into it?

Firstly you are not as far as I know in practice, so how do you know what "most firms" are committed to ?  I would suggest that "most firms" are committed to doing the best they can for their clients at a fee which is fair to both parties, and, that "most firms" appreciate that clients have very different priorities to accountants and see bookkeeping, tax, VAT and the rest of it as a dam nuisance that gets in the way of them getting on with what they want to do, which is run their businesses.  

Perhaps if you actually worked with real acountants, and not "get rich quick" merchants, you might understand the difference between real professionals, and those who simply want to make as much as possible for the least effort - who cannot be described as professional at all.

 

Thanks (0)
avatar
By andypartridge
05th Jan 2011 16:12

A louder laugh!

You are a funny and clever man, Bob, but we will have to agree to disagree on this subject - but not all subjects. I particularly liked your idea on the late paperwork issue today.

And at least you get free market research for your ideas on Aweb.

-- Kind regards Andy

Thanks (0)
By petersaxton
05th Jan 2011 16:24

Value

"CD I think told us to ignore "value" but clients would be daft to.  Maybe "value for money" rings a bell?"

There's different opportunities and different clients. Some clients wouldn't use an accountant at all "because they cost money" if it wasn't for the fact they need us to produce accounts and tax returns. Other clients may look at things differently. Bob seems to think that we all chase the clients who believe that accounts are really useful and want us to change their lifestyle for the better. Most clients are not like that and most accountants understand that.

Value is difficult to quantify. Bob's methods are not realistic. Most accountants know that if they get too greedy their clients will leave for another accountant. If we do a good job we can raise prices to a certain extent with the client not wanting to leave us. This means that the price we will charge is limited by what makes us a reasonable profit and that which takes account of what other accountants in the area charge. Considering tax savings over several years is ridiculous in trying to set a price.

Thanks (0)
By Bob Harper
05th Jan 2011 16:26

Long hours doing something that should not exist

@Paul - I think you use the client value to price approach and enjoy the benefits with your clients. The only shift I would consider if I were you would be a gear in the same direction so you and your clients get more value.

@CD - poor bookkeeping means clients:

Are exposed to tax investigations, fines and penaltiesDo not received best advice because the information is not availableDo not have reliable management information

Is that what clients want?

If a firm has a policy of properly advising clients and getting a signed declaration that the client is fully aware of the costs then fair enough. But, I know that does not happen in the vast majority of accountants.

If I were back in practice I would not know what other firms are doing because I would not be speaking with them. I have just noticed a few patterns from speaking with a couple of thousand over the last five years. 

There are some get rich quick schemes (tax schemes seem to do this) but they are not my thing. All I see is a slow drawn out death of the profession. 

Anyway, on one hand there is your approach for accountants which is to questions improving client’s books for the fear of cutting your own throat and mine which is about accountants making a commitment to more profit by delivering more value. 

Which is more professional and ethical is a matter of judgement. All I know is that making money with little effort and a lot of knowledge is something I think is good for the profession. Does professional mean working long hours?

Thanks (0)
By petersaxton
05th Jan 2011 16:28

Bankrupt garage owner

"I am more than capable of rebuilding an engine, for years I modified & tuned my own racing bikes including reskimming cylinder heads, regrinding crankshaft, stripping & rebuilding gearboxes to change the gear ratios, fitting modified suspension etc.  I worked to tolerances of less than a 1,000th of an inch. But guess what ? When I want my car serviced I simply dont want to do it - so I pay the local garage to do it for me.  Just like a lot of clients pay their accountant rather than do it themselves."

Can you imagine going to Bob's garage and have him insisting you attend a training course on car mechanics?

Very soon you'd have one bankrupt garage owner.

Thanks (0)
By petersaxton
05th Jan 2011 16:35

Does anybody know a good charlatan?

“@Peter - you need to ask yourself the question if you should keep money. If you cannot deliver what the clients wants there is a good argument to tell him to find another accountant. What I would say is that if you did send him a cheque with a resignation letter you may be surprised what happens.”

The point I am making is that no accountant would be able to help him as much as me. I don’t want him to end up with one of these charlatans who promise him the earth and end up taking him for a ride. We have all seen them.

“You keep telling accountants what they cannot do; I’ll carry on encouraging them to do more.”

I’ll keep saying that they can’t fry the Channel unaided and should get a train or a plane and you can carry on telling them to go for it. All it needs is for them to pay you something up front before they set off!

“We do not do trials of software unless we have worked out the cost of not having the software first. Then we assess the firm’s sales and marketing capability because to be successful with the software a firm need to be good at marketing. Often we provide the software for free while we help them get their marketing sorted. But, we are not taking new orders at the moment, I let you know if and when we re-launch later this year.”

All I want to know is whether it is any good. All the other bullshit is irrelevant in this case.

Thanks (0)
By petersaxton
05th Jan 2011 16:36

Peter, Paul and Mary .... sorry, Peter, Paul and Bob

"@CD (please get my name right)"

Paul, wouldn't you rather be called Peter?

Thanks (0)
By petersaxton
05th Jan 2011 16:43

Slack and lifestyle

“The next new client that walks through my door will, in real terms, cost me maybe £20 a year in increased electricity from running the computers a little bit longer to do their accounts & tax return and answer their phone calls, ie I won't have to pay my employee (or me) £500 more to service them.”

If you have a certain amount of slack, that’s fine. I can just work extra hours and a lot of times I do but eventually I would want more than my usual rate to justify the effort.

 “@Bob - yes of course the experience from each system/method is different but (fortunately) so are we.  I enjoy operating under one system and someone else enjoys operating under another...so why should me shift from where we are?”

That’s a very good point. I do what I do because I think I do it well. My clients want and appreciate me – well most of them. I wouldn’t try to do anything that I was uncomfortable with unless I felt I was the one who’s wrong and the one who should change.

Thanks (0)
By Bob Harper
05th Jan 2011 16:43

Profit Ability

@Andy - I’m glad you like the late paperwork idea; use it because it will work really well. These ideas are the little things than make a big difference and they come from having a value based approach.

You have two specific strategies today, the late paperwork email and getting clients to sign a declaration if they keep poor records!

@Peter - your profit ability is determined by your ability to capture some of the value you create. It has nothing to do with what the competition are doing, the economic climate or the legislation.

Thanks (0)

Pages