Client fees being ..too cheap?

Benny

Hi Mips

I don't know if anyone else has found themselves in this position but I have been a MIP for three years and have a pretty good client base apart from one thing and that is that I can't seem to charge as much as other accountants. I started maybe a little a cheap in the first place in an attempt to gain clients quickly and that has stuck as clients refer other clients and so forth. This wasn't so much of a problem at first but with HMRC doing more "soft enquiries" these small fees are now turning into a lot of work.

what is the general feeling on fee increases at the moment has anyone successfully increased their fees in the current climate?

I just get annoyed when I see what some people are paying for annual accounts. My friends practice charges two three times as much as I can!

burg

Hi Benny,

My practice is now four years old although I have only been running it full time for one year.

I made a similar mistake at the start by undercutting others which just ends up attracting clients that only care about how cheap they can get the fees. Someone else then comes along cheaper and they jump ship. I quickly realised this and decided I needed a better business model.

I would say now that I charge around 80-90% of the fees of some of the bigger firms local to me and still attract clients. I basically offer the same service as the bigger firms do to their bigger clients but at appropriate fees for the smaller clients. They could quite happily find cheaper but they like the way in which I run my business and my fixed fee policy.

I have increased some fees this year not just to reflect growth in the work undertaken but also in the fact that I was undercharging before. Has gone well I think as nobody has left.

Out of interest - Do you charge fixed fees or by the hour? Or do you do value based pricing?. Do you keep time sheets to get ideas of recovery rates?