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Unhappy client over fees

Unhappy client over fees

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I have client who is not happy.

I had signed engagement letter with client back in 2011 when the company had a turnover of 33K.  I had charged around £1,500 for the Annual Accounts and CT600. Turnover suddenly jumped to 1.4m in 2012 and had a transactions with its group companies overseas.  .

 I did state the charges in an email before I had completed the Accounts and Corporation Tax Return via email but received no reply.  I had charged £2,200 last year - turnover was 1m which he didn't complain and charged the same this time round.  Its not that I was trying to hide anything from him

I had sent my invoice last week and he said I should go by the old engagement letter so charging £1500.   

Always had a good relationship with the client and had gone out of my way to help them and they have been extremely happy.   For example we had filed the accounts this time around on the deadline day at 11.45pm due the client being slow to respond and have calls with them quite often around midnight due to the time difference,  

My concern is two fold A) I might lose this client which will be an almighty blow (as it is my biggest client)   B) He may have lost trust with me going forward as the plans was to give me more work and have new engagement letter signed with agreed fixed prices.

I have written trying to justify the charges and have offered to go by the old engagement letter even though I have spent a lot of time on the accounts as my focus is to retain the client not the money really. 

Replies (101)

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By memyself-eye
12th Oct 2015 18:51

So,,

Your fees have gone from £1500 to £2200 and his turnover has increased 42 fold...Sometimes you have to accept that clients will never be happy with increased fees you have to be prepared  and walk away.

Autrefois he'll walk all over you.

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By hje
12th Oct 2015 19:09

Agree

stick to your guns, and don't go beyond justifying it. Your partnership needs to be mutually beneficial, and if they have any sense your client should appreciate that. You have proved your professional commitment to them on multiple occasions, but if they are querying your fee despite knowing it in advance, their sense of fair play is in question.

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By cheekychappy
12th Oct 2015 20:13

Your client is taking the [***]. You know it and he knows it.
It will continue as long as you allow it to continue.

If the client respected you, and the work you have done, he would understand the increase and pay you with a beaming smile.

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By ShirleyM
12th Oct 2015 20:40

I can't understand why you want to keep them

I have written trying to justify the charges and have offered to go by the old engagement letter even though I have spent a lot of time on the accounts as my focus is to retain the client not the money really. 

You want to keep an unappreciative unhappy client? 

Is there something special about this client, eg. lots of referrals from him? If so, a referral that says you'll bow under pressure may not be worth having.

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By cheekychappy
12th Oct 2015 21:11

Well said Shirley.

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By Manchester_man
12th Oct 2015 21:44

Arsehole client
Can't add any more to what has already been said really.
It seems like you have agreed to revert back to the 2011 fee.
One thing I can add, however, is that you must not under sell yourself. It can be difficult and I have done exactly the same thing in the past. It comes down to confidence. Have confidence in yourself and in what your services are worth. If you undervalue yourself, your clients certainly will follow suit.
I understand he is your biggest client, but it is true that there are plenty more clients out there, most of which will be happy to pay you a mutually fair fee.
And remember, you can always tell him "On reflection, I am sorry to say that I won't in fact be able to reduce the fees in line with the 2011 engagement letter. I have carried out a cost analysis and even the £2,400 fee comes in below my standard minimum charge out rate, however I was and am willing to keep the fee at last year's level, in view of our [previously] good working relationship".

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By Ruddles
12th Oct 2015 22:02

A practical point
Why specify fee level for annual compliance work in the engagement letter? That is asking for trouble. At the very least it ought to have stated that fees would be reviewed annually but preferably dealt with outside the EL.

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By taxwizard
12th Oct 2015 22:26

Need the client

Actually what happened this was first client. I started as a sole practitioner back in 2011 and being a novice issue an engagement letter with fixed fees without a clause that fees would be reviewed annually.  I have learnt the hard way.

It is disappointing as I have been upfront and not hidden anything and feel charges are fair in the circumstances.  In addition, the fee was same as last year which he didn't question.   Only a couple weeks back had received an email from the client (first time ever from this particular client) thanking me for the excellent service.  

Afraid I am not in a position to say goodbye to clients especially I lost a client last week as his English wasn't that good and wanted someone who can speak his native language which was understandable but frustrating to lose another client,  

Thanks for the advice but I think I will to back down in this instance.  I have just offered to go back to the fixed price basis as per the engagement letter.  I am also trying to get more work from them which I desperately need.

 

 

 

 

 

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By cheekychappy
12th Oct 2015 22:32

Are you mad?

All that hassle for those fees? You could get two contractors that are hassle free and make up the fee.

You really are making a rod for your own back.

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By taxwizard
12th Oct 2015 23:33

Not quite loony

No not mad but pragmatic. Something is better than nothing

 Two contractor would be very nice but thats' not going to happen. I must have picked up one contractor in four years.

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By tanvir
13th Oct 2015 00:23

Just an idea... may be focus

Just an idea... may be focus on marketing and getting more clients to cover the lose rather than gettting worried about losing clients. Clients will come and go for various reasons. If the client don't appreciate the service that you're providing them then they'll complain. Alternatively it may be that they don't understand the work that you put in to provide the service to him.

I had an experience where the client questioned the monthly fees that he was paying us. He needed to be explained clearly numerous times all the service that he will be getting and when the month we do CT600 and accounts the charge is still the same.

All the best...

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By Matrix
13th Oct 2015 07:21

The fact he paid you the increased fees last year shows he accepted the new terms.  Is there other work which you have carried out during the year which you could add to the bill?  There must be loads of tax issues if there are transactions with overseas group companies.

Make sure that you charge for everything else at your hourly rates. Or have you already billed for this and that is why client is being difficult?

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By jon_griffey
13th Oct 2015 08:21

Be pragmatic

You should not allow yourself to be pushed around by clients. Be firm when you need to be or you will ended up being bullied and working for nothing.

Having said that you don't want to cut off your nose to spite your face so you need to be pragmatic. As this is a valuable client to you the way I would play it in your shoes would be to perhaps take it on the chin this year, but spell out exactly what you do, why the existing fee is unreasonable and your proposed fee structure moving forwards.

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Stewie
By Stewie Griffin
13th Oct 2015 09:55

Next Year

And what will you do if he comes asking for a fee reduction to, say, £1300 next year?

 

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By Howard Marks
13th Oct 2015 10:09

Be honest - is this REALLY working for you?

You've obviously been trading a few yrs now as your first EL was back in 2011.  With that in mind, is business really progressing as it should if the loss of a £1.5-£2k client is going to hit you this hard?

 

I kinda get where you're coming from but 3-4 yrs in I think you should be in a better position by now, £50-75k fees where you're constantly gaining more new clients than you're losing.

 

If that's not happening, which it quite clearly isn't, i'm not so sure you're cut out for running your own practice.

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By bernard michael
13th Oct 2015 10:10

I doubt he'll get anyone else to do the job at that fee rate. Tell him to seek an alternative and wash your hands of the ungrateful pig. Also after this you will not trust him going forward which would destroy the mutuality essential for a accountant/ clieent relationship

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By taxwizard
13th Oct 2015 10:20

Is the price right.

I agree to an extent that I had already emailed what the fees were going to be and they were the same as last year so they maybe should have just paid and next year get an engagement letter signed at a higher fee with additional services.  All my concern is now just to retain this client at all costs.  

While Turnover has increased substantially from 2011 thought the company is still small and a 1m turnover (4 bank accounts  including Euro currency account).  Only a couple of employees, 10 customers and they got most of the work done offshore in India so there is a couple of intercompany invoices.  They are a IT consultancy company

While they are disappointed I moved away from the engagement letter. From their point of view they may be thinking is £2,200 fair for a small company for CT600 and Annual Accounts.  I just don't want them to try to get other quotes so they can throw this at me as well.  Would like to know if the charge is reasonable in the circumstances.

 

 

 

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By cheekychappy
13th Oct 2015 10:26

Looking at your previous questions, you don’t seem to have attractive clients. Each time this has been pointed out to you, you say that you are not in a position to pick and choose.

Bad clients will attract more bad clients.

You really need to look at what is attracting these poor quality clients to your practice.

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By ShirleyM
13th Oct 2015 11:38

Even your 'higher' fee is very low

I doubt anyone else would touch the work for that fee, so you have nothing to fear from your client getting alternative quotes. It may make him more appreciative, too.

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By BananaMan
13th Oct 2015 11:42

I think your uplifted fee is reasonable.

 

Especially when you throw in the Euro account and the trade via India.

 

Personally, I wouldn't even entertain letting them wind me up.

 

Get your cash - Disengage - Put your feet up

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By brian-scholar
13th Oct 2015 12:03

I feel your pain

It is a difficult situation to find yourself in. All the above responses are probably correct but may be easy for them to say as they are likely to have established practices but when you are fairly new and especially as a sole practitioner trying to build up a practice you need to have the confidence to stand your ground. Maybe as an interim measure you could offer to compromise and split the difference for this year on the understanding that future years will be charged at a rate more commensurate with the work that is needed.

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By Andp
13th Oct 2015 12:17

show the client the door, never be afraid to do this. You are at a low ebb - the trust and respect is decreasing . Overseas transactions - that's £3000 fees all day long . 

Believe me , its very difficult to motivate yourself and remain 100% focused on the job , when deep down you know you are being underpaid. This compounds itself and gets worse as the job will take longer.

I rattle out jobs for clients that appreciate my efforts, professionalism and pay me well.

 

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By taxwizard
13th Oct 2015 12:32

difficult clients

I seem to be continually getting clients that are just difficult. Actually I wouldn't consider this client as difficult compared to others I have had.  I must get everyone's rejects.

The problem is I am currently not in a position to kick any clients into touch.  I would love to be in a position to pick and choose clients but I am a long away from that.  Sometimes in business you need that little but of luck but that really hasn't happen as yet.    Though I am sure it will go my way one day as have put a lot of effort in trying to drum up business.

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Stewie
By Stewie Griffin
13th Oct 2015 12:51

Most of us have been through it

I do understand your position @taxwizard.  Most of us on here have started practices from scratch and been through times when all we've seemed to attract are the fee cutters and timewasters.  I did it too!

When I first started I went to visit a very well respected friend of mine who'd grown a practice from nothing into a substantial firm.  He offered me loads of advice and I remember him telling me "Don't underprice or undersell yourself.  Clients actually won't appreciate you, you'll hate working for them, they won't respect you, and then they'll leave when someone else does it for less."

He was right...but guess what?  I ignored the advice.

A few years later I was scrapping around for bottom end clients who wouldn't pay for anything or who insisted on rock bottom fees.  They were an awful bunch to deal with.

Then there was a straw that broke the camels back, I grew a pair and it's all changed for the better (mostly)

I guess what the other commentators on this thread are doing is helping you learn from their mistakes.  Most of us have made them all and I often think "what if I'd listened to my friend at the beginning"

Your lack of confidence will come across to clients, they'll know you are desperate for the work and will do it at any price.

Learn how to be more confident and learn how to price properly and stand up to fee cutters.  I promise you, you'll thank yourself for doing so in a couple of years

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By taxwizard
13th Oct 2015 13:59

wise words

Stewie Griffin wrote:

I do understand your position @taxwizard.  Most of us on here have started practices from scratch and been through times when all we've seemed to attract are the fee cutters and timewasters.  I did it too!

When I first started I went to visit a very well respected friend of mine who'd grown a practice from nothing into a substantial firm.  He offered me loads of advice and I remember him telling me "Don't underprice or undersell yourself.  Clients actually won't appreciate you, you'll hate working for them, they won't respect you, and then they'll leave when someone else does it for less."

He was right...but guess what?  I ignored the advice.

A few years later I was scrapping around for bottom end clients who wouldn't pay for anything or who insisted on rock bottom fees.  They were an awful bunch to deal with.

Then there was a straw that broke the camels back, I grew a pair and it's all changed for the better (mostly)

I guess what the other commentators on this thread are doing is helping you learn from their mistakes.  Most of us have made them all and I often think "what if I'd listened to my friend at the beginning"

Your lack of confidence will come across to clients, they'll know you are desperate for the work and will do it at any price.

Learn how to be more confident and learn how to price properly and stand up to fee cutters.  I promise you, you'll thank yourself for doing so in a couple of years

Thanks for the input - wise words indeed.  I actually feel guilty for charging for certain small tasks as do not want to be seen as too greedy. Back of my mind with increasing competition is will the client leave if I charge for this or that.  I know I need to change my mind set but at the moment its a case of beggers' cannot be choosers.

Price wise yes I had to resort to charging less than my competitors in some cases to survive but these are not the difficult clients.  Again I will to be in a position to have fixed and competitive prices which I don't stray from.    

Appreciate all the support from everyone

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By young ronaldo
13th Oct 2015 16:16

Take the £1500

& invest it in a good website & SEO (borrow a bit as well as you will probably need £2.5k to nail it). Get yourself into the top 3 for google maps in your area. In 6 months time you'll be able to TELL him it's £2.5k and if he doesnt like it he knows what to do.....

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By taxwizard
13th Oct 2015 18:08

Not so easy

young ronaldo wrote:

& invest it in a good website & SEO (borrow a bit as well as you will probably need £2.5k to nail it). Get yourself into the top 3 for google maps in your area. In 6 months time you'll be able to TELL him it's £2.5k and if he doesnt like it he knows what to do.....

Unless you are on the first three spots on google spending money on SEO is pointless.  There are over 50 accountancy firms in a radius of around 10 miles so unlikely its going to happen unless I use google adwords.

Don't have the money to spend thousands in a very competitive market. I am trying other ways through referrals etc.  

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By young ronaldo
13th Oct 2015 19:02

If you use somebody who knows what they are doing

it is easier than you think. I spent less than £500 and went from page 5 to top spot inside 6 months. Im in a large town in the North West and probably have 50ish competitors in the same radius. Have now slipped to 5th on google maps and will be addressing it again shortly to get back in the top 3.

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By taxwizard
13th Oct 2015 22:09

like know how

[quote=young ronaldo]

it is easier than you think. I spent less than £500 and went from page 5 to top spot inside 6 months. Im in a large town in the North West and probably have 50ish competitors in the same radius. Have now slipped to 5th on google maps and will be addressing it again shortly to get back in the top 3.

[/quote

Like to know how it is done. I think I am probably somewhere on the 10th page

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By bernard michael
14th Oct 2015 10:02

Non productive

taxwizard]</p> <p>[quote=young ronaldo wrote:

it is easier than you think. I spent less than £500 and went from page 5 to top spot inside 6 months. Im in a large town in the North West and probably have 50ish competitors in the same radius. Have now slipped to 5th on google maps and will be addressing it again shortly to get back in the top 3.

[/quote

Like to know how it is done. I think I am probably somewhere on the 10th page

 

Don't worry I've been top in my town for years and got Nil from it. I always ask new clients "why me" and 99% are from referrals or reputation ( they really can't believe it so want to check if I really am that bad)

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By young ronaldo
14th Oct 2015 10:17

For the brief period that i "topped the charts" in Warrington Bernard i was getting 3-5 enquiries per week. Whilst in the top 3 then 2 enquiries per week was probably standard. Currently ranked 5 on Google maps and web page comes up independently on page 1 and im getting 1-2 enquiries per week. Re-jigging planned for the next couple of months to get back in the top 3.

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By bernard michael
14th Oct 2015 10:51

Possible answer

young ronaldo wrote:

For the brief period that i "topped the charts" in Warrington Bernard i was getting 3-5 enquiries per week. Whilst in the top 3 then 2 enquiries per week was probably standard. Currently ranked 5 on Google maps and web page comes up independently on page 1 and im getting 1-2 enquiries per week. Re-jigging planned for the next couple of months to get back in the top 3.

 

Pehaps it's another example of the North South divide

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By HeavyMetalMike
13th Oct 2015 16:27

Or set aside 5-10K and pay for cold callers and then you really will be rich?!

 

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By bernard michael
13th Oct 2015 16:35

Don't

HeavyMetalMike wrote:

Or set aside 5-10K and pay for cold callers and then you really will be rich?!

 

BUT

Hated and clientless

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By HeavyMetalMike
13th Oct 2015 16:46

Noted Bernard.

I was merely offering an alternative to "get a website and some SEO".

 

Cold calling is horrible for the recipient. But for Mr Wizard (I'm not going to be personal but comments above include lacking confidence and low-end clients) well then it might work.

I started with nothing and just two years later, or was it three, was losing interest in going to potential meetings as I was too busy with the clients they found me........

It's an option to building a client base that's all............

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By petersaxton
13th Oct 2015 18:01

Desperate?

How can being worried about £1,500 make sense? Just eat £30 worth less of food in a week. Use your spare time on marketing. 

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By taxwizard
13th Oct 2015 22:12

update

Just received a email from client he wants to review all the invoices I issued this year and review them if they were pre-approved or not. I already stated I would go by the previous engagement letter so not sure why this is necessary so annoying

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By ShirleyM
14th Oct 2015 10:37

This client is leaving anyway

taxwizard wrote:

Just received a email from client he wants to review all the invoices I issued this year and review them if they were pre-approved or not. I already stated I would go by the previous engagement letter so not sure why this is necessary so annoying

He wanted a get-out so demanded a reduction in fees, but as you've bowed to his demand he now needs another reason to get out. This is it. You can go on forever trying to hold onto him. Get rid now, before he ends up owning you.

EDIT: on reflection, he may want to stay ... but maybe he's a sadist[***] and takes pleasure from making the people who help him totally miserable, unhappy, and feeling like *!*!?

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By taxwizard
13th Oct 2015 23:57

doom and gloom

I have just replied to him with a strong email reminding him of all the work where I have not charged and undercharged. - looks like I may ultimately end up losing my biggest client :-(

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By tanvir
14th Oct 2015 10:31

change of approach and being strict and biting the bullet helps!

taxwizard wrote:

I have just replied to him with a strong email reminding him of all the work where I have not charged and undercharged. - looks like I may ultimately end up losing my biggest client :-(

 

I feel for you! I had a couple of clients who were complaining. Learnt a lot from that experience.

One of the things I do is that even if I do something for no charge to clients, I tell them clearly it's free for goodwill and also try to raise invoices and giving the full discount so that they know I'm actually writing it off my books, not just some marketing words that I used. Obviously I don't raise invoices and discount it for £10 worth of work!

What do others do re work that they don't charge for/ goodwill builders?

I have a very good client who regularly wants to go through invoices, but I always have it pre-approved and I understand that he genuinely wants to understand. The problem usually occurs when you let the fees build up. I've allowed this to happen on another occassion (dealing with it currently) to help the client and no doubt we'll have a meeting to go through all the invoices which wastes my time obviously.

I hope the above helps.

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By petersaxton
14th Oct 2015 00:33

I'm glad for you

You don't want this person. You seem to be desperate to keep him but he is destroying your practice.

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By cheekychappy
14th Oct 2015 07:48

I would start reviewing the work you have undertaken and your engagement letter and see if there is any scope for you to raise additional invoices.

Being a wimp has led to this situation. You need to stand firm now.

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By Alastair Johnston
14th Oct 2015 10:00

Biggest client?

... in what sense?

Turnover?

Fees?

Time spent?

Hassle?

Empty promises of more work?

Whichever it is, shouldn't you try to get two small clients who will take less time to deal with and generate the same profit, or more?

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By taxwizard
14th Oct 2015 17:21

Biggest client in terms of fees

Alastair Johnston wrote:

... in what sense?

Turnover?

Fees?

Time spent?

Hassle?

Empty promises of more work?

Whichever it is, shouldn't you try to get two small clients who will take less time to deal with and generate the same profit, or more?

Biggest in terms of fees - I wish I could get two smaller clients so easily

They seem keen to want someone to take over the book-keeping,VAT returns and payroll etc

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By lesley.barnes
14th Oct 2015 10:41

Stand firm

I wouldn't waste any more time on this client you really don't need the aggravation. It sounds to me like he may have been getting quotes from other accountants or speaking to the man down the pub to find out how much they pay. As we know this is only as good as the information the client gives. No matter how much you reduce the price he doesn't seem to be happy, reviewing invoices that have already been pre approved to what end? He was happy with the work you did and the price you charged at the time. How would he feel if his clients did this to him? It sounds like he doesn't trust you so wave goodbye to him your not his employee and find someone else to fill the space. Make sure you keep all your records of conversations, emails, letters etc so if he tries to complain or claim from you insurance you've got your evidence. 

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By gwilkinson
14th Oct 2015 10:47

Solicitor fees

@taxwizard

If you want a lesson in what greedy looks like, have a look at solicitor fee models!

Had a bill come in last week from a solicitor charging 6 mins (0.1 hr) per email from my boss - many of which were one line long and would take all of 10 seconds to read!

 

 

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By SHIVKRUPA
14th Oct 2015 11:08

Can your client do better?

Given the work you do, your fees are already very cheap.   Your client probably knows this also.  Is he really going to be able to find some to do all the things you do for less?    I reeeeeally doubt it !      I can come down to you saying something like this to client (of course say it politely)

     

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By taxwizard
14th Oct 2015 16:59

He probably could easily find another accountant

SHIVKRUPA wrote:

Given the work you do, your fees are already very cheap.   Your client probably knows this also.  Is he really going to be able to find some to do all the things you do for less?    I reeeeeally doubt it !      I can come down to you saying something like this to client (of course say it politely)

     

He probably could find lots of accountants to do it for much less but he is based in the US west coast with an 8 hour time difference and he won't find anyone submitting his accounts at 11.00 on deadline day or having calls with him at 1.00am.

 

 

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By Tim Vane
14th Oct 2015 11:09

How can you be sure where you are ranked on google? (You know that you can't just put the search terms into google, right?) Is there a reliable independant ranking source?

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By young ronaldo
14th Oct 2015 11:18

Google ranking

Hi Tim - by searching "accountant warrington" both myself and getting friends to do it independently (so no search history). At present i come up 5th in the google maps list (- which isnt great as they now only list 3!!!!)

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