How to overcome client resistance to your fees
Fee resistance from clients is a common issue for accountants in public practice. Often, principals, partners and managers find themselves discounting the true value of services provided simply to get clients across the line.
With the increasing efficiency of tax compliance work in public practice accounting, it’s not surprising that clients are increasingly questioning the fee they are paying for this service.
This price sensitivity is also spilling over into advisory work with accountants often unable to present a strong case for the additional services they should be providing to their clients.
This issue has its origin in both sides of the relationship. However, it’s up to public practitioners to communicate more effectively what they do and what value it adds to the client.
So, what steps can you take to overcome client resistance to your fees?
- Start valuing yourself and your services
To what extent do you find yourself providing additional service and support without actually letting your clients know? The best way to value yourself and your services is to clearly communicate what you are doing and why. When scope of work changes, let your clients know up front. Learn to frame discussions around both scope and value of services and you’ll find that your clients more readily accept the true value of services provided.
- Develop a strong value proposition for each service
Do you know the value proposition associated with each service? Do you believe that this reflects the true value of the service? With increasing commoditisation of tax compliance services, it’s up to you to demonstrate value – or simply accept that this part of your business will be subject to price competition and therefore fee resistance. It’s for this reason that many accounting firms are focusing more and more on advisory services as the true value-added component of their business.
- Identify the value gap before providing solutions
As accountants, we’re quick to provide solutions, sometimes too quick! If the client doesn’t see the value in the solution, it’s more likely that they will show some resistance to the fee you propose. When identifying the value gap, you’re communicating what results the client can expect if his or her needs are met or exceeded. And you’re also showing the client the true cost to them, personally, if they don’t proceed. If this process is managed correctly, you’ll have clients coming to you and asking ‘what’s next’ rather than procrastinating over fee for service.
- Provide clients with options to help them decide
Do you give service and fee options to your clients when presenting a proposal for new work? This is a great way to explain to your clients that your services don’t come for free – that there is a fee associated with the value you add. It also gives you the opportunity to sell the link, not the chain, to clients who are fee sensitive. The simplest approach is a 2 or 3 option proposal, where you give your clients the opportunity to decide what level of service they need, and want. This process also gives you a great opportunity to tell your clients what you can do to help them in the future.
- Be very clear with scope of work and fee for service
Providing clients with a traditional engagement letter is not the same as being clear with scope of work and fees. Do your clients actually take the time to read and understand the terms of engagement? Do you communicate to your clients what they should expect from you and what you expect from them? In many cases, clients will say that they were unaware of additional scope of work until the work had been completed. By being clear up front, you’re making it a lot easier to address scope and fee issues at a later stage.
- Make the transition from commoditisation to specialisation
Do you charge true value for specialist advisory vs compliance services?
A commoditised service will always be fee sensitive. Already, many accounting firms are ‘discounting’ the fee associated with tax compliance and administrative services and focusing more on adding value through business and financial advisory services. By being specialised in your approach, you take away from clients the opportunity to say ‘I can get this service a lot cheaper from other accountants.’
- Take pricing decisions away from client managers
Often, the worst person to make pricing decisions is the person who is directly responsible for the client relationship. Develop a formal approach to setting fees within your firm and establish a value council to decide on the best pricing for services provided to clients. This may sound overly bureaucratic, but it actually frees up client managers to focus on communicating the real value of services provided whilst an independent group establishes the commercial value of these services in the marketplace.
Do you have ongoing challenges in getting clients to accept your fee for service?
On the 18th and 25th of November 2015, Training Beyond Accounting is running a special two part online program ‘Price Sensitivity Training – How to overcome client resistance to fees.’ Both sessions are 60 minutes in length.
In this two part program, we’ll provide practical guidelines on how to establish the right fee for the service provided and then how to persuade your clients to accept your fee proposal. Both compliance and advisory matters will be discussed.
We will also provide all registrants with the results of an external survey asking the principals, partners and managers of accounting firms how they currently charge for compliance and advisory services.
Director, Training Beyond Accounting and Business Aptitude