Name your price service disrupts accountancy fees

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“There are a huge number of people doing their accounts themselves,” said digital practice owner Elaine Clark. That’s why she’s now asking prospective clients to say how much they want to pay.

Never one to shy away from market disruption, Clark has launched a ‘name your price’ service in response to a debate on AccountingWEB over whether accountants are charging too much.

Rather than setting out a fee structure for clients, the service, offered in addition to the firm’s low fixed fee pricing, invites prospective clients to suggest how much they want to pay and to outline the services they require.

With cloud accounting spawning more sophisticated clients, Clark concluded: “If clients are becoming more informed and more knowledgeable and able to do the accounting that they need to do, then how much support do they need from an accountant?”

Pitched at microbusinesses that may not have the budget to spend on expensive accountancy fees, Clark said the people who use the service are those who may need an accountant to get them started or into a routine, and then only require an accountant’s service “from time to time”.

According to Clark, cloud accounting has demystified what accountants do, prompting more people to question their accountancy fees: “People are much more aware and familiar with what accountants do, so it gives them the opportunity to get value for money.

“It puts the value where it should be: in the skills and knowledge of the professional they input from; the rest of it they can do themselves,” she said.

Prospective clients have to be realistic, which opens the door for a bit of negotiation. “That’s an opportunity for us to sell them the service that they do need.”

The future of the traditional way of doing things

This begs the question: can traditional practice pricing models survive? Clark doesn’t think so. “I don’t think there is a traditional firm in the country that has not seen some squeeze on their fees right now,” she said.

She equates the situation to that of estate agents, where low-cost online players such as Doorstep and Purple Bricks have undercut the commissions and margins of the high street agents.

“I think there’s a view that we’re not a business at all and of course, we charge these fees in the same ways that lawyers have charged those fees in the past.

“What we have to look to is how much the market has changed over the last 10 years, particularly with the introduction of iPhones and mobiles. It’s blown apart all the traditional business models.”

The numerous pricing conversations on AccountingWEB compound the idea that fees are squeezed at the moment. In a recent Any Answers thread started by a sole practitioner who needed advice on pricing, AccountingWEB member Matrix commented that fees were stagnating among startup clients: “As a result, these are no longer my ideal client and I have stopped targeting them on my website.”

What do you think? Has the current climate forced you to rethink your fees? Are you ready for a professional marketplace where clients are empowered to name their fees?

About Richard Hattersley

Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.

Replies

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By DJKL
27th Oct 2017 20:29

Well, one could always develop a niche representing all the DIY taxpayers re their enquiry cases, catch usually is by the time they appreciate they need help they have probably already seriously damaged their case.

This should be less price sensitive as once people appreciate they are in real trouble price sensitivity seems to reduce; price of everything value of nothing syndrome gets replaced with HELP!!!

If the article is correct I suspect, in the fullness of time, Enquiry work will be a growth industry, especially if some of the DIY questions on here are a reflection of how many people mistakenly believe they can DIY compared with their real ability.

However I think I am more likely, in a chase to the bottom environment, to pack in my part time smaller client work and instead concentrate on up to 3-4 in house employed roles with larger entities (Part time FD/Comp Sec positions etc) where my input is more valued and better rewarded.

I got approached this week re one which, albeit more an MD role with finance responsibility ,would, together with my existing three day week part time role, likely take up most of the rest of the working week. I might couple it with holding on to the work I do for my largest client and get them to take me on via payroll, thus removing the hassles of registration etc under MLR as an ASP, PI cover, CPD and all the rest of the baggage.

I must admit with all the likely MTD c**p to come, and given my age (57), possibly an easier route to gliding into retirement over the next 5-9 years.

If I was younger I might more embrace the streamlined, tech led, churning of low cost work, but it is pretty alien to my career up to now, and it really does not appeal.

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By NH
30th Oct 2017 08:36

stupid idea, we thought of this a few years ago and instantly dismissed it, you are only ever going to get a very poor quality of client and no matter how well informed clients are they are never going to offer to pay a decent fee - Elaine you are simply devaluing the service you provide.
If I was a small company startup and asked for quotes I know from recent market experience I would get quotes ranging from £200 to £2000, What price would I then name if I went to your 'name your price' service?

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30th Oct 2017 19:05

Another business policy closely aligned to Elaine's business model - cheap.

Well she's welcome to the type of client this campaign will attract.

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31st Oct 2017 10:20

Been at this end of the scale and working too cheaply for clients who do not appreciate you.

This is akin to cafés and restaurants who don't have menu price for their food an people pay they feel it was worth. They rarely last longer than a few months.

What happens if 2 clients speak to each other and they are paying different fees for similar type of job, do you think the higher one will talk the other client up or just want to low fee his mate gets.

She will end busy but stressed to hell, and MTD will swamp her.

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By djn24
31st Oct 2017 10:20

I can see the idea behind this but ultimately I can't see this working.
Low fee and huge client numbers will be difficult to manage and the quality of these clients will be poor.
You will be competing with Mr Jones who does this from home at a rock bottom price, which you won't win.

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31st Oct 2017 11:38

Cloud accounting has given users the false impression that they don't need an accountant. Those that only come to me after the year-end show me bookkeeping that ranges from mediocre to awful. They have no idea their records are less than perfect until it's pointed out.

Fixing accounts that are broken commands a higher fee so accountants need not despair over the cloud suppliers' promotion of their products.

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By chatman
to andy.partridge
31st Oct 2017 13:28

Agreed for those that get found out, Andy, but I think some will go on forever submitting rubbish and never get found out.

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to chatman
31st Oct 2017 15:31

True, but for those subject to enquiries there are easy pickings for the HMRC vultures. That should help to redress the 'promotion bias' of the software firms.

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By KH
31st Oct 2017 11:18

I did this once and it worked, but I wouldn't do it again ... a prospective client approached me, saying their accountancy fees had rocketed over the last three years, whereas their business hadn't changed much ... so I asked her to name her price, did the work, and then took her on as an atypical client ... she really appreciated this, didn't mind my fees rocketing over the next ten years, and is still very happy using my services ... but this client is unusual in that she actually appreciates the work and advice ... I certainly wouldn't adopt this as a business strategy going forward since most people want nothing more than cheap cheap cheap

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to KH
31st Oct 2017 11:37

KH wrote:

most people want nothing more than cheap cheap cheap

True, but not only that they are often unwilling to make changes in the way they do things in order to make it viable.

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to KH
31st Oct 2017 11:53

Yes client appreciation is key.

I've just seen a client where I have agreed a £4k fee increase. They really value my input, advice,support.

I'm about to see another this afternoon where they will quibble about even a slight fee increase. The reality is their accounts are a mess and unless they agree to my (very reasonable) fee proposal they will become an ex client.

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31st Oct 2017 11:44

This sales gimmick should interest Bob.

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to johnjenkins
31st Oct 2017 12:17

You have mentioned his name, so now he will pop up and take over the thread.

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By DJKL
to Glennzy
03rd Nov 2017 23:08

Surely three incantations are required?

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31st Oct 2017 11:54

Not a new concept. It will NOT disrupt the market. Just another approach to sell. As it is Cheap fees are low (cheap). Maybe, pay what you think is right for Elaine and it may lead to a more reasonable fee levels. Good luck.

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31st Oct 2017 14:25

Nothing new here.
Fixed fees have meant happy clients and a profitable business for me . As long as both parties understand and adhere to the engagement terms - no problem.
Calling ''fixed fee arrangement '' is tantamount to ''name your price service'' whichever way you look at it. Only dumb stupidity would fail to consider the anticipated time on a client's affairs before venturing into the pact.
However , have I missed the evolution of a a new Frank N Stein type of client with expressions such as :-
''.......with cloud accounting spawning more sophisticated clients .....''
and
''.....cloud accounting has demystified what accountants do......''
MTD has a lot to answer for.

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31st Oct 2017 15:19

Firstly, with the high cost of running a accounting practice e.g. training, IT and software and compliance reporting who can afford to work for next to nothing for clients with no money? Secondly is it true that clients will do everything for themselves using cloud accounting? Most clients can just about upload from the bank let alone code and reconcile? So I will leave it to Elaine to run a Purple brick practice.

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By mrme89
31st Oct 2017 16:58

With respect, I get the impression that Elaine has worked on the business instead of in the business for too long.

She doesn't seem to grasp the distinction between clients banging a load of data in some bookkeeping software (not accounting software) and producing accurate, compliant accounts and tax returns.

I don't think most clients are any closer to understanding what we do than they did 10 years ago.

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to mrme89
31st Oct 2017 17:30

Indeed, they might be even further away! It's a bit like when Derren Brown tells his audience how he did the trick, but you know the genuine explanation is omitted.

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01st Nov 2017 06:57

I read about the "Name your price" service on Cheap Accounting's website and its not as mad an idea as it looks. Firstly, it is clearly stated that Cheap Accounting don't need to accept your proposed price. They even point you towards their standard fee ranges for you to base your proposed fee level on.

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01st Nov 2017 10:14

Not the strategy for me, Ive spent a lot of time and money getting qualified and keeping up with CPD and I have years of commercial and practice experience, I'm, certainly not putting myself on the Poundland shelf!

In my history of being a sole practitioner for 18 years, when I have gone against my principles and agreed lower fees, those clients have turned out to be dreadful and some I have had to chase through the small claims.

Blimey, I am fortunate that my clients value my service and pay the fees and those that aren't, well I wave them goodbye but if I gave them the option to name their price...them being tradesmen, well you know the answer to that one :-)

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01st Nov 2017 10:37

You're on a hiding to nothing. Some practices have always been involved in 'bottom fishing' as I call it, where they will try and be the cheapest.

Asking clients what they might want to pay is cheapening your service before you even start, then when you want to charge extra for all the additionals they keep asking for at a reasonable rate, you'll end up in dispute or minus a client.

There is a space in the market for this type of service, as there is a space for mine (which isn't cheap, as I don't compete on price, I compete on quality), but beware clients who use cloud apps and think it means our job is simple and we have nothing to do...in my experience a little knowledge is a dangerous thing and most of the mess is created by them.

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03rd Nov 2017 13:06

With respect to the smaller practices which deal with mainly smaller businesses ( and I know that everyone has to start somewhere) it is quite ludicrous to imagine that (a) computer software firms actually know or understand what is required if the accounting process & tax is to be simplified (b) flashy dashboards impress accountants as much as they seem to impress the clients (c) clients using the software are actually capable of doing so properly and understand the consequences of getting it wrong. Having been in practice for over 40 years I have developed a realistic attitude to the client who walks into my office & says " I use eg;Xero, I do everything as I go along so everything is always up to date, my current accountant understands what I do but they are just too expensive". I apply the pinch of salt test which says that quoting fees on the basis of what the client tells you is a disaster in the making. You look quickly at the trial balance and see that the bank is not reconciled, there is no share capital or the profit & loss reserve is a million miles from reality. It does not tie up to the last years accounts because the user doesn't understand double entry so never writes off bad debts etc. But the user says he loves the coloured graphs and pie charts etc. The quoted fee if one was stupid enough to do this would be absorbed by sorting out the inherited mess and leave you with a big fat minus figure on your costings sheet when you finally write out your invoice. Some would argue that you might just extract the primary figures and submit them whether they are right or wrong and insist that all clients subscribe to your fees protection plan for the HMRC enquiries which should follow? This is a business model I have seen quite a lot sadly but it diminishes the concept of being professional in my view. I cannot see my position changing on this as feedback from our client database shows over 96% very good or excellent in terms of service and price value. At the end of the day cheap gets what cheap should expect.

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03rd Nov 2017 15:21

Well considering most of what is given is not right. I don’t think I will go down that road.

I do not overcharge.

It is a race to the bottom. Personally I value myself and employees. When we use suppliers we do not undermine their skills and pay a fair price.

Any business worth it’s salt will pay for the service to have their accounts right.

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03rd Nov 2017 15:23

Double post

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03rd Nov 2017 15:52

I must be atypical of small practices inasmuch as I never have problems with fees, pitching them as I do somewhere between the cut-price brigade (who likely don't have the requisite technical expertise) and the high street (higher overheads) practices.

I must confess that I'm not clear how the hypothetical conversation would go.

Prospective client: "I'm a plumber turning over £55K. How much would you charge to keep me legal"?

Me: "How much would you like to pay"?

Prospective client: "Well £100 per year would suit me fine".

Me: (Gulp) "Er, I don't think I could manage that".

Prospective client: "Well, you did ask".

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