Fixed fees and price lists

I want to draw up a price list for my services and I want to be able to publish this on my website and marketing material. Previously I have quoted fixed prices to clients after a review of their records and discussing their requirements, based on the usual hourly rate x hours methodology.

I can see some firms quote monthly prices on their websites, such as sole traders accounts and tax return for £40 per month. How is this possible given that the size and nature of each business varies considerably, not to mention the quality of records?

I think such price lists can only apply to businesses who adopt a particular method of bookkeeping (e.g. online software or pro-forma spreasheets). But I really want to give this a stab. Any advice or suggesstions?

Topic: 

Comments

Rough with the smooth

girlofwight |

Basically with any fixed price work, you need to take the rough with the smooth.

My own view is keep tarriffs as simple as possible and accept that on some jobs you will recover more than others.   At the end of the day recoverability %s are all well and good, but its beans in your bucket wot count.

James Hellyer's picture

Fixed fees

James Hellyer |

One thing surveys tend to show that clients hate are surprise bills. Time based billing is te one way to guarantee those surprises, because you won't know how much a job costs until its finished. For this reason, people should like fixed fee bills.

Unlike tax advice, where value based prices are easy to quantify, its hard to allocate a value based amount to accounts or tax returns. Fixed fees do therefore seem to represent a good approach to his area.

However, you either need to accept that each year you'll "win some and lose some" (e.g. you'll have notional surpluses on some jobs and deficits on others), or alternatively you'll end up doing what a lot of fixed fee merchants do and work down to a price (which seems very common among franchises for some reason).

I'd opt for the former. Even if you make some notional losses, it still sets you up for recordkeeping converstaions with clients whereby you can fix next year's price at a similar level IF they do the following to improve their records...

I think I'd also avoid the "£40 per month" irrespective of entity type, size or complexity of records approach and make the pricing more bespoke. It would still offer certainty about what they were paying (up front).

bookmarklee's picture

Why not 'FROM £40 per month'

bookmarklee |

 And offer fixed prices on a menu/list with a caveat. 

I've seen this done before. The caveat is that the figures quoted assume that clients' present their information in an acceptable form each year. If you want to limit the prospect of prospects fearing that you always charge more than the menu prices, you could add that, "most of our clients pay no more than the menu prices". 

I would strongly discourage you from accepting a winners and losers approach.  Why should the least organised clients have their fees subsidised by the better clients? Makes no sense to me at all.

Mark

Done by band & class

zebaa |

I very much agree about customer not likeing supprises. Fixed prices are often done by a system of bands. So, for example, building sub contractors get one price and building contractors another based on turnover (with the number of bands up to you). You can set other parameters too, like when you get the records and how good the record keeping is. Clearly you can not make this too complicated and it is often disguised as bronze, silver & gold type matrix. The main problem with fixed fee is you have to know your market.  

Jason Dormer's picture

Winners and losers

Jason Dormer |

Totally agree with Mark (why isn't there a like button!) take the winners and losers approach and it will result in losers all round.  Not commercial and not fair.

zarathustra's picture

Main problem with fixed fees

zarathustra |

I think the main problem with fixed fee is customer perception. The client automatically thinks fixed fee = cheap. In reality the accountant is accepting the risk of the assignment running over, and there should be a premium for this.

ShirleyM's picture

Customer perception

ShirleyM |

I agree with previous post by Zarathustra. When I first started on fixed fees the clients assumed it to be similar to the all-inclusive holidays, where anything you want is included, at no extra cost.

I quickly realised you have to confirm to the client exactly what is, and what is not, included in the fee.

PUREaccountants's picture

Fixed fee from

PUREaccountants |

We have recently overhauled our practice 100%, out with old and in with the squeaky clean new. A lot of this is based around xero the online accounting software. 

In order to maximise our earning potential we drew up three plans, standard, premium and bespoke. Each with a starting price point. From there with each client we then assess their actual requirements and what their monthly charge will be.

With a little bit of planning we have managed to get our monthly services to reflect the three types of client we are looking to serve. IT contractors, straightforward accounting etc as standard, those who want help with bank rec, accounts payable etc then the bespoke option whereby we act as their virtual accounts dept. 

We have done the same with our tax return services. After less than 6 weeks of the "new" practice our fees are up, clients are happier and I can finally justify my iPad purchase.

Fixed fee good; published on website bad

AdShawBPR |

I think a fixed fee works well but you need to know the client, have some awareness of what his record keeping and organisational skills are like, and have an engagement letter setting out clearly what is and isn't included.

Publishing a fixed price list on a website I don't think is a good idea as my feeling is it cheapens the product.  If the client is shopping on price your quoted price may not be the lowest so he'll go elsewhere (if he's just looking at price that maybe a good thing).  If you quote an ultra competetive price, he may think you look too cheap so again he'll go elsewhere.  For the rest, you've given them all a target price without knowing anything about their business, their setup and the amount of work involved.  If you think it should be more once you've met them, you'll have to work hard to move the price up from what's been quoted on the website.

I think you're better off talking to each client seperately, taking time to understand their business then coming back to them on price.  The client may also give you an idea of their price expectations.  This way you've met them, charmed them and hopefully already got them onside.  They know you've geared your price to meet their needs and, assuming they like your offering, I think you'll be better placed to charge a full price for your service.  It must be a better way to start the price negotiation.

I'm not sure a published, fixed price list is going to get you more of the clients you really want, i.e. enjoyable, rewarding work for a sensible fee.

Bonehill's picture

Publishing Fixed Fees

Bonehill |

The last thing I would dream of doing is publish a global price list for all services - half the time you take on a new client you get more than you bargained for (literally!) when you start the new assignment and find a mess of incomplete records - it also alerts your competitors to what you are charging, encourages tyre-kickers and can lock you in to big surpluses or big deficits on your WIP ledger

Regarding accounts prep, audits, etc, I always say to potential clients that likely cost will be between X and Y, based on experience and I then invite them to call in with their records for review or arrange for me to call out to them to review - if they don't take up my invitation, they are not serious about moving to me - if they are serious, I can then review the records and give an accurate quote that I will happily stand over; if I still make a loss on the job after that, then it's my problem - I also advise them that additional work outside the scope of the exercise being quoted for will be subject to a separate additional fee

The only thing I would think of publishing in terms of pricing would be for say, standard company secretarial work (eg, processing change of registered office or directors address, etc) - that is standard enough that you know how long it will take

I know a few local competitors of mine who had fixed prices published on their websites last year - they have all, without exception, now removed everything from their websites...

transaction volumes

Countinformation |

What about basing it transaction volumes. The higher the volumes the higher the fee. That is what we do!

 

Automating your Quotes

chatman |

Presumably when quoting you go through a series of questions in your head (How good are the records? What is the transaction volume? Do they need reconciliations done? etc). Surely it would be possible to document this series of questions and turn them into a page on your web site which could automatically produce a quote from the answers to these questions.

 

Automation?

AdShawBPR |

Chatman, trouble with automation is that things can go wrong.  A bit like your email!!

Seriously though, for me it's a personal service I'm trying to give and automation or publishing fixed prices diminishes that a bit.  Also, I'd probably accept less from a client that I liked and charge more for one I didn't - makes me nice-ist I suppose!  And what about the guy who's small now but looks like a good prospect?  Not for me.

 

MartinLevin's picture

Fixed Fees - need good input

MartinLevin |

Back in 1980 I designed the ABC Accounts Book for my Practice.

I still give one free to each client a week prior to the start of their Accounting Year.  As a result, my Practice receives excellent Accounting Records, the clients get a very prompt - and economical service.  It yielded so much spare time over the years that:

a) we were able to keep fee increases down

b) our input time went down

c) our hourly rate of return went up WITHOUT having to increase it.

We could also devote more time to supporting those clients that needed additional support: we even successfully presented TWO VAT Tribunal Cases - both of which we won - and were awarded costs.

Our ABC BOOKS are still available via:

Emandee Publishers

6 Gordon Avenue

E4 9QU

 

 

Automation

chatman |

AdShawBPR - I can only assume you missed the point of my first 33 lines, or that you assumed that they were gibberish inserted by AWeb's new "improved" web site. I suggest you read them again meticulously as they were a vital part of my post.

Seriously though, I think it is horses for courses; the personal approach is right for some but not for others. I do not come across well personally, so a meeting is not much of an advantage. I am guessing that you are not burdened with a personality like mine, so meetings obviously work much better for you. That may be the case for the OP too.

To be honest, I would like to be able to do it all at an initial meeting, but I am no good at it, so I need to automate it as much as possible.

Regarding people you do not like, I can increase the fee in the second year if I don't like them, but funnily enough I like all my clients. I say "funnily enough" because I am not very sociable.

Missing the point

AdShawBPR |

I wondered if I might be missing the point Chatman.  Maybe I should think again about automation!

Jamestwd's picture

Hidden fees vs fixed fees

Jamestwd |

Our clients have always agreed that a fixed fee service is the best option. Hidden fees and additional costs can easily be the source of a problem. The only hurdle to a fixed fee service is the portrayal of a cheap service, so we have always picked defined markets and become topic experts. (Plus we have always had robust procedures to back us up).

It is obviously imperative to use the right technology to allow for a seamless service, which we have always been able to achieve.