Am I overpriced?

Nine times out of ten I get told I'm cheap, which, as I have low overheads, I don't mind.

Sometimes though you find the reverse is true.

Met a local guy (in employment) who owns and rents out 3 buy to let houses and is buying more - current est profit is around £750 per month. He has never had a business bank account so all transactions have been through his personal account. He keeps a folder on each house but all it consists of is scraggy receipts, tenancy agreements, complex bank documents etc etc. He's been renting out for over 3 years but has never done a tax return or registered with HMRC so needs to catch up.

He also obviously enjoys to have a lot of ongoing advice as he has been contacting me quite a bit.

My quote, based on the time it will take to construct working papers from scratch, was £50 pm. Or £600 for the year - this included adding as much value in ensuring he claws back all reliefs etc also includes any catch up outstanding returns but this would be the amount per year going forward. He was happy.

He's now cancelled with me. He's found another accountant who willl do the job for £300. I told him for that amount it's not worth my time and that whilst I wish him the best he needs to make sure the job is done properly.

Is my quote too high? I don't enjoy losing a new client but I am not lowering myself to something which is less than minimum wage. And I think I know the accountant too - he's an institute of financial accountants member who always quotes next to nothing for accounts work and, having met him, appears to be quite dim when it comes to tax but clearly not so dim when it comes to pricing!

I'd appreciate any thoughts. Am I too high or just right?

Comments

  • jamesm96
    jamesm96 Registered Posts: 523
    No you're not and you've got to stick to your guns too (which you have!)

    Did I understand right that you agreed to do all three returns in the first year for £600, and then £600 per year going forward too? I'd say that's extremely reasonable. I had a very similar client a couple of years back who I quoted £550 per year to for her tax returns (no records to speak of, and employment income), but I charged her 5 x £550 in the first year because she had 5 returns to catch up on.

    As far as I'm concerned, competing on price is not the way to go with accountancy. There will always be someone cheaper and if your only USP is your price then your client turnover will be very high; a client who comes to you because of your price will leave you as soon as he finds a cheaper offer. It's just not worth it. Much better to offer a quality service at a price that allows you the time to provide such a service.

    I think your price is fine, don't be put off by one negative comment mate; he'd have been a BMW client anyway (after all, you said he'd already been on the phone loads!)
  • paulstafford
    paulstafford Registered Posts: 126 ? ? ?
    To prepare each tax return my quote would be nearer £300 than £600. Half a days work for each return maybe?

    If he is looking for additional advice on top I would quote a separate fee.
  • stefanboro
    stefanboro Registered Posts: 187 ? ? ?
    Thanks Mike. Confidence boost much needed. First time this has happened. And I need to try charging new clients for all previous years - I'm too nice with this. I must have missed out on few £k on this since January.

    I honestly think it will probably take more than that time Paul - even so, for only 3 houses I still question my pricing. I still think it's right for me.

    Hey ho -I'll politely tell that the door is always open if they want to come back and then cry myself to sleep haha
  • Newbie
    Newbie Registered Posts: 229 ? ? ?
    I think your pricing is spot on I would not have gone any lower than this, I think pricing competition is damaging the profession
  • jamesm96
    jamesm96 Registered Posts: 523
    Newbie wrote: »
    I think pricing competition is damaging the profession

    You're absolutely right, among some circles, at least. You just have to get past the mentality of winning a client by any means, and not reduce your price lower than is sufficiently profitable for you (there's no harm in a bit of flexibility, of course). Win a client based on the service level and value you provide, not price.
  • stefanboro
    stefanboro Registered Posts: 187 ? ? ?
    jamesm96 wrote: »
    You're absolutely right, among some circles, at least. You just have to get past the mentality of winning a client by any means, and not reduce your price lower than is sufficiently profitable for you (there's no harm in a bit of flexibility, of course). Win a client based on the service level and value you provide, not price.

    The saga continues.

    He had another guy quote them £150!! As I said though, the documents and records are all over the place - there's quite a bit work to do.

    His missus rang me tonight - after much thought they are finally sticking with me. They think I will do a good job and have been worried by the estimated tax bills of the other guys. Funny thing is I have never told them what I think there bill would be. I reminded them that accountants are just like plumbers etc - you get some really good ones who charge a fair price and you get cowboys who charge next to nothing but leave you with a mess to tidy up down the line.

    Victory is mine!
  • jamesm96
    jamesm96 Registered Posts: 523
    Nice one, well done mate. I'm impressed too... usually a client who does that much shopping around is just looking for a short-term saving!
  • stevo5678
    stevo5678 Registered Posts: 325
    I have to say that £600 for a rental I & E is on the heavy side, although not out of the ball park.

    I'd say anything from £250-600 for most but we have a big one with 3-4 properties who gets accounts drawn up for £600 + extra for any adhoc advise.

    We are a Chartered firm and very profitable, but I imagne it depends on your set up.
  • BlueGoddess
    BlueGoddess Registered Posts: 3 New contributor ?
    Makes you wonder if they were just trying it on to get a cheaper price - I've had a couple of clients say they could get the service cheaper and when we've not budged they've stopped with us :001_smile:
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    Newbie wrote: »
    I think your pricing is spot on I would not have gone any lower than this, I think pricing competition is damaging the profession

    This.

    Someone will always do it cheaper. Doesn't necessarily mean it's good value for money. It might be - but often it isn't.

    Your pricing is spot on - and congrats on getting the client!

    Stevo, £600 isn't on the high side if someone has a decent portfolio. I have someone with 35 properties and their last accountant was charging over £1500 (with bookkeeping too). I charge about £600 for this (no bookkeeping).
  • stevo5678
    stevo5678 Registered Posts: 325
    I agree if someone has 35 props I would expect fees of at least £600 :001_tongue:
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