Potential new client says I'm too expensive. Am I?

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I had been asked to look over a Guest House's bookkeeping and bank reconciliations foe the year before they sent their accounts to their current accountant (big firm in the town). The accountants were charging £4011 per annum for accounts (the client tells me £2k of this was for the purchase of the business) but the clients were to do they're own monthly bookkeeping and bank recs on excel.

I recently quoted £2400 to do his bookkeeping, accounts all in. He works fulltime and has a cottage he rents out, the guest house is a partnership with his wife so have taken all this into consideration. I reckon the bookkeeping will take maybe 5-6 hours a month. 

He came back to me to say I was a lot more than he'd expected and didn't think he could go ahead at that price.

I replied to his email listing everything I'd taken into consideration to make his quote, and said if he was happy to drop the monthly management accounts and I send his paperwork back to him for filing then I could reduce the quote to £1920 pa. 

He has now come back to say the figure he had in mind was £1500 pa and upon checking with other guesthouses in the area he found this to be reasonable.

I'm not sure what to do from here, I'm not too long in business and have not been put in this situation as yet. I could do this work at that cost but fear I'd look like a chance if I agree to drop my price by almost £1000 from my original quote!

Any advice would be much appreciated!! 

Regards

HBS 

 

Replies (15)

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By possep
05th Jun 2017 17:38

It really depends on how much you want the work or need it. Are you saying £2400 / 66 hours = £36 per hour? That's not expensive but on the basis of the Big 4 net quote £2011 / 66 = £30 it is. Personally I think the guy is at it as why would he leave a Big 4 for £91 being the new net quote against the original fee net of the business purchase element. If he is lying at this stage he is probably not worth taking on.

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By A_P_1980
05th Jun 2017 17:43

Thanks for your reply, please bear in mind that they are getting all there bookkeeping and monthly bank reconciliations done by me which h they did not get from their previous accountants.

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By A_P_1980
05th Jun 2017 17:43

Thanks for your reply, please bear in mind that they are getting all there bookkeeping and monthly bank reconciliations done by me which h they did not get from their previous accountants.

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Replying to A_P_1980:
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By possep
05th Jun 2017 18:00

That's not helping the argument as you are doing a lot of work. Ultimately up to you to find your own price structure.

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By ireallyshouldknowthisbut
05th Jun 2017 17:49

If you dont want to do the work at that price, dont do it.

I must admit i never understand why accountants (assuming you are one) undertake bookkeeping work.

If you can do year end, do year end and charge properly, dont muck about with bookkeeping. .

If you cant, stick to bookkeeping.

They are not the same things, indeed I think there is significant benefit in the person doing the year end NOT doing the bookkeeping. Two pairs of eyes and all of that.

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Man of Kent
By Kent accountant
05th Jun 2017 17:51

You're far too cheap.

Monthly bookkeeping, annual accounts Pship tax return, 2 SATRs - £3,500 minimum.

Then again I wouldn't be interested in this type of client...

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Glenn Martin
By Glenn Martin
05th Jun 2017 18:08

Must be some confusion. If the going rate is £1500 that must be with the client doing all the bookkeeping and accountant is just providing a compliance based service.

If current accountant is not doing bookkeeping why did you offer to do it. Surely the client cannot expect twice the work he is currently getting for half the price.

If so what are you going to do next year when MTD starts to bite.

These type of clients are often difficult to look after as the businesses are just lifestyle things which make little no money and therefore expect you to work for a pittance also. Stick to your guns.

If others are doing that all in for £1500 tell him to go there, but be quick as there is likely to be a queue.

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By marks
05th Jun 2017 23:54

As others have said you are too cheap.

We use a piece of software to price up and have thrown into assuming the following

Partnership
Turnover 40k - £80k
We do the bookkeeping

Services include;
Preparation of annual accounts
All bookkeeping based on between 25-50 sales, purchases and bank transactions per month
Monthly mang accounts
Tax investigation insurance
One meeting a year to discuss accounts
2 x PTR and 1 partnership tax return

Works out at £651.79 + VAT per month.

If they wanted quarterly mang accounts works out at £425.96+VAT per month.

The benefit of using the software is that you always get to a price they can afford.

If they just wanted annual accounts, 2 x PTR and 1 x partnership tax return then assuming the books are in good order works out at £128.33 + VAT per month so not far of £1500 + VAT which others have said.

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Replying to marks:
By JCresswellTax
06th Jun 2017 09:25

what software is that you use for your quotes?

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Replying to JCresswellTax:
Man of Kent
By Kent accountant
06th Jun 2017 14:28

Sounds like AVN

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Replying to JCresswellTax:
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By marks
06th Jun 2017 21:12

JCresswellTax wrote:

what software is that you use for your quotes?

Its AVN times up software but it can be customised to cover all your services which i have done. I have been using it for about 18 months and you consistently get people signing up for higher prices than what you would have quoted when I did it before.

I am also looking at the moment at pricinginthecloud and goproposal that do the same thing but in slightly different ways.

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By mrme89
06th Jun 2017 09:45

£2400 for all that work? You are working at bookkeeper rates.

I don't see how it can all be done for much less than £4500.

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PJ
By paulgrca.net
06th Jun 2017 13:02

You dictate the price not the client just move on and forget it - never met anybody who got 100% of the work they quoted for unless of course you are desperate for the work!

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Stepurhan
By stepurhan
06th Jun 2017 14:20

It's a hard thing to do when you are just starting out, when any money coming in seems like a good thing.

But, as others have said, you need to set your limits now. Get known as the accountant that offers low fees, and you'll be working all hours for no profit.

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Red Leader
By Red Leader
06th Jun 2017 21:25

A few points:

1.Have you actually met the prospect or has it all been phone/email? If the latter, I don't think the prospect has been warmed up enough.

2. Management accounts for most small businesses like this would be - how shall I put it? - pearls before swine.

3. I agree with other posters: bookkeeping work is probably best avoided.

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