Fee rates: Communicate your value
Mark Lee challenges accountants to charge more rather than less and to focus on the value that they provide to clients, not the work they do.
Don’t worry. I know there are plenty of articles on this site and elsewhere on the subject of value pricing. I’m not going there now. And I’m also not going to add to the numerous articles encouraging you to ditch timesheet billing practices.
This article will take a different slant. Rather than focus on the manner in which you determine your fees, I want to suggest that you consider how you communicate them to clients.
When I launched the Successful Practice Pack for accountants last year I asked subscribers to tell me what made them unhappy at work. There were many answers but a couple stood out to me. They stood out because I remember feeling that way myself when I was in practice.
The challenges causing unhappiness included:
- “Meeting someone and putting a lot of time into persuading them to become a client. And they say my fees are too high”.
- “Clients refusing to pay fees I have worked for and billed”.
There are two separate but connected issues here:
- The first relates to whether and how you pre-qualify prospective clients. And also how desperate you are to take on a new client, regardless of whether or not they can afford your normal fees and are willing to pay what you are worth.
- The second is often a function of how much focus you put on the value to the client of your work, rather than the time you spent on it.
I have often asked accountants whether they offer free initial consultations and how long they allow for these. Invariably the answer to the first question is yes. The replies to the second question vary and often include: “as long as it takes”. The implication being that the accountant would spend as long as necessary to get the prospect to agree to become a client.
I suggest that some pre-qualification work would help reduce the time spent with prospects who have no intention of paying anything like the fees that you normally charge. Often your fees are not too high. They just seem high to a novice client who doesn’t understand the value of the service you will be providing for them.
If you focus simply on the bare facts about completing and filing tax returns and accounts, of course your fees will seem high. Clients neither know nor care whether it will take you two hours or 20 hours to provide your service.
I was talking to an accountant I mentor last week. He now knows to gather some information on the phone before agreeing to visit prospective new clients. He asks if they’ve used an accountant before, what did they do, what did the client like or dislike and what did they charge? If the prospect hasn’t had an accountant before the questions are more focused on what has prompted them to want an accountant now?
Before referencing fees the accountant talks about the levels of tax that could be payable, the penalties that arise and the successes he has had in the past when helping clients to reduce their tax bills. Referencing these big numbers helps to put his fees into context. He doesn’t quote specific fees before meeting prospects but he ensures they are aware of the range of fees that other clients, like them, pay him. If he senses resistance he allows the prospect to think things over before fixing a meeting.
Describing the work you do
There have been plenty of discussions about fees on Any Answers. Mostly these summarise the work done or to be done for clients and the fees to be charged for preparing accounts, quarterly VAT returns, small payrolls, tax returns and so on.
To an extent that is fine for conversations among accountants. But what language do we use when talking about our work with prospects and with clients?
When I quote a fee for speaking at an event I always make clear what my fee covers: liaison beforehand, tailoring the presentation for the audience, assisting with promotion and publicity, networking with delegates, on site preparation and presenting my talk. This helps reduce any concern about how much I am being paid for a 45-minute talk. My commitment is so much more than the ‘stage time’.
Equally accountants do much more than simply collate data and enter it into tax, accounting or payroll software, push buttons and send stuff to clients.
I don’t care what you feel about formal engagement letters. One key benefit of these can be that they set out all of the elements of the services you will be providing to the client. You may know it all backwards but clients rarely appreciate this until it is spelled out to them. You should be able to do this when talking about key elements of your service when talking with clients.
Beyond this you should be able to relate the work you do to the value that the client gets. The value isn’t always financial. You provide peace of mind, confidence and assurance. You provide protection from heavy penalties and you provide protection from the nastier side of HMRC.
If your work extends to giving advice then you should be able to articulate why clients find this of value too. (Otherwise why do you do it?)
What about when you have to do some extra unbudgeted work for a client? Why did you do this? What value did that extra work provide to the client. Stop thinking in terms of how long you had to spend doing things. Clients don’t care about that. They care about the value they perceive they have gained from your work. If you can’t help them to appreciate that then they will continue to think your fees are too high.
Are your fees really too high? Or are you not yet able to evidence the value you have provided to your clients?
Mark Lee is consultant practice editor of AccountingWEB and helps individual accountants who want to be more successful in their practice or career.
These days Mark Lee focuses his business actiities on two key activities:
1 - He loves being engaged to speak on stage to audiences of accountants in all size of firms. His latest keynopte talk is: The rise of Robo-Accountants - and how to beat them. He is an accountancy focused speaker, futurist and influencer with a positive reputation...