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How do you price? Fees on your website?

Thoughts and ideas

Hello

I am testing Go Proposal quotation/pricing software. The exercise has motivated me to rethink and revise our pricing. I have been meaning to do this for some time. Until now, I was procrastinating. 

At present we price by packages that are based on:

1) Structure (ltd or sole trader)

2) Turnover level of the business. It needs to change. 

My starting point is our current pricing. I would like to keep the current packages and within those packages provide further services such as management accounts and also start charging for services that we do not currently charge for. 

How do you price? Are your fees on your website? The feedback I get from clients is they prefer to see the fees before picking up the phone or emailing. Mind you, I do not know how many I have missed since clients may have misunderstood our pricing. 

Pricing is a key factor in clients decision making. It needs to be outlined on the website? I understand they are many factors that go into pricing. For compliance services, it should be okay? Subject to caveats on quality of records and how the records are maintained. 

Replies

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10th Dec 2017 14:40

We don't show prices on our website. It gives the wrong impression that accountancy and is a homogeneous product and that prospects should seek out the lowest price.

If you are desperate for more work at any price you might want to show your prospects just how cheap you are. We are not after more work, but we are always on the lookout for better work.

We have an open matrix fee schedule we provide clients with as part of our contract with them and it is something we show to prospects.

We also have an 'instant quote' facility on our website for which prospects would need to leave contact details and basic information about their business.

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By NH
10th Dec 2017 14:59

We keep it very simple and have three price bands on our website, from experience I can almost guarantee that based on the answer to a few short questions they will fall into one category or another.
Personally whatever I am shopping for I instantly dismiss anything where the price is not clear in advance, why should accountancy services be any different?
That said, we very rarely get new business through the site and we use it more of a place to point prospects to.
I have never understood firms that price by turnover, what if you are a very highly paid consultant with 12 invoices a year, are you saying you will charge more for that than a low turnover business with many more transactions?

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to NH
10th Dec 2017 16:52

NH wrote:

I have never understood firms that price by turnover, what if you are a very highly paid consultant with 12 invoices a year, are you saying you will charge more for that than a low turnover business with many more transactions?

Yes. A highly paid consultant is likely to understand your value better. However, there is more risk of remedial bookwork with a high transaction business (i.e. More opportunities for them to screw up their bookkeeping) which might, ultimately, result in a higher fee than the consultant's.

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to NH
10th Dec 2017 20:39

What Andy.Partridge said, I would also (invariably) charge the high turnover, low volume consultant more

He would probably* be happier to pay it than the lower turnover tradesman type client aswell, but that's a different matter.

*Not always though, granted.

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By NH
10th Dec 2017 20:43

You both seem to be missing my point. How can you say that just because someone has a high turnover that they should be charged more?
From my experience the cost involved in preparing accounts etc simply does not work that way.

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to NH
10th Dec 2017 21:44

Actually we answered your specific point. You just weren't keen on it. But to expand . . .

Unless you are a 1970s accountant there needs to be some transparency in your structure to demonstrate to clients that you are treating them fairly.

You seem to see 'cost' as the (sole) important factor. You must be chiefly fixated by an hourly rate mechanism. The client has no idea and little interest in how long the job takes you and should not pay more if you and your team are having a bad day and are inefficient.

They are interested in outcomes and if both parties stick to their obligations, the price should be known in advance.

Turnover can be one of several factors in the pricing structure, but it is one that the client can easily understand. I have yet to meet a client who thinks it's unfair because they don't have many transactions.

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11th Dec 2017 09:09

I must admit I don't understand why turnover is a metric for judging fees, other than it will tend to mean "stuff" business is charged more than service business but that ought to be the case anyway. I have a client with a £4million turnover but has about the same transactions as the average borderline IR35 consultant, and I price accordingly.

I price in a combination of
a) how long a job will take, which is a function of complexity and number of transactions and how its presented
b) how much I think the going rate is for a job
c) how much I think they will pay

I have some basic fixed fees for tax returns and basic company accountant and then flex those up or down as I see fit. So for let property I have a base fee and a by property fee so can price a (say) 10 property portfolio in about 30 seconds once I have asked about record keeping and if they are student HMO's or flats on AST's.

I also just don't get too excited by it, and go with what I think at the time, you can always push it up later on if you got it wrong, or discount if you have knocked off what you thought was a 2 day job in a morning.

I do put guide prices on my website, and its the most popular page by about 10 times on the site compared to anything else.

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11th Dec 2017 10:45

Blimey FT, anyone would think (by the questions you post) that you've just set your practice up.

I've recently started showing 'prices from...' for a range of practices.

Prices aren't cheap so it will discourage the tyre kickers and cheapskates. Its there as a guide as we price all work based on the clients specific requirements.

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By Maslins
11th Dec 2017 11:35

For both our Maslins and MVL Online sites we basically just have one price, clearly visible. Yes it does mean we need to be restrictive on what we do/don't take on. Not for everyone, but if you're in a niche with lots of similar clients it can work well.

I note Andy Partridge's comment re homogenous product and lowest price. Whilst some clients will see things that way, especially if they've not had any recommendations, not all will. They accept that whilst us and competitor X will both submit accounts/tax returns, most realise that it's not a homogenous service. Do we answer questions well and quickly, or will they get a poor answer a week later?

I do however agree that if a potential client says to us "how come you charge £X whereas competitor charges £1/2X?" we don't tend to win them. Most people who approach us will be from a recommendation, in which case price is less important.

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11th Dec 2017 13:53

Generally there are 2 schools of thought on pricing on websites.

If you disclose your pricing it is to give an idea of what it will cost to be with you, (using prices from means it isn't cast in stone for everyone). This should deter people who want Ltd Co accounts for £250.

If you don't have prices on your site the thinking is that people will contact you to ask but this means you will also have to deal with all the tyre kickers as well.

As you are Xero based practice and self confessed sausage factory i would suggest quoting prices will fit in with what you do.

Whilst there is no one size fits all for services like contractors you can pretty much have a fixed price for them, you should also be able to have menu style pricing for Xero based services depending on amount of invoices to process etc for. All the on line contractor have clear fixed pricing on their sites so if you want to compete you will need to do the same. From your setup i would suggest quoting prices from, would aid your offering.

If you delve into the GP software you will see how they price they flex rates for turnover, quality of records, and also quantity of paper work. they also have a charge for everything, which i found i just did a lot of things within a packaged service. You will also probably find the in built pricing of GP is way more than your fees and will need tweaking downwards quite a way.

From where you are as a starting point I would re quote all your clients for the extras you do which maybe don't charge for like annual returns, PFP insurance, ad hoc letters etc . Got to be worth £100 to £200 per client all of which is bottom line.

Then look at bookkeeping and payroll costs, consider charging a fixed fee per run + cost per payslip, charge per new starter and AE submission.

same as bookkeeping charge in batches of invoices posted or items through bank rec etc.

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By Slim
11th Dec 2017 17:03

I seriously thought about it, but there are too many variables for us.

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12th Dec 2017 16:52

We never have shown our prices and we are definitely not the cheapest.

As others have alluded to accountancy and tax are not set price items. Accounts and tax returns will continue to get cheaper so make your money from add-ons eg payroll management accounts stratedgy meetings etc. If you want more good quality clients increase your networking, local advertising in specific events eg Beer Festivale. Also work out how many new clients you want in the next twelve months - and then how many per week and then focus on this.

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By NH
to pauljohnston
12th Dec 2017 17:03

Beer Festival? Now that is a good idea, dont ask for any tax advice after the third pint though...

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By marks
13th Dec 2017 00:01

As said above there is 2 different theories as to whether you should include your prices or not on your website.

We used to have a 3 package option on our website but now dont.

We also use GoProposal and have been using it for about a year (we were one of the first firms onboard using it when it was released to market).

Although pricing based on turnover doesnt always mean that higher turnover jobs take more time than low turnover jobs it tends to be the case more times than not. In GP we price in the main by turnover but it is also flexed by business structure, quality of records, accounting system used and business sector. This means that a business turning over £100k that is a Ltd company, that has average quality records, that uses excel and is in the cafe/restaurant sector will be more than a sole trader turning over £100k, that has excellent records, that uses Xero and in the B2B sector.

As said above clients dont care how long it takes us to do something they just want us to make their life easier, take away the pain of something and make them sleep easier at night.

Had a client on the phone today that has been having trouble getting to sleep as their business is in trouble and they dont know how to deal with. They asked if I could help them through their problems. I said that I could and would cost about £500 + VAT to deal with. He said that was fine. It will only take me about an hour to deal with sorting things out. Now he didnt ask how long it would take me. He just said "I have a problem can you help me with it" when I said yes then price wasnt an issue.

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