This may seem a bit odd to you but it seems many accountants can’t count.
Certainly they don’t seem to be very good when it comes to counting their fees.
I have lots of friends and acquaintances who are accountants and I did a survey of them last year. And what appears almost standard for most accountants is that they do not charge enough. An accountant may clock up €3,000 for a client but only charge them €1,800, because that’s what they paid last year.
It’s seems a bit mad to me that an accountant would put €3,000 of their time into a client and only charge €1,800. Its seems there is a ‘fear’ element in charging the full amount and an assumption that the client would leave.
Over the years I have worked with a number of accountants on various projects, including 80:20. Recently I was chatting to an accountant friend who had just completed an 80:20 analysis. As part of this exercise they realized that one group of clients were being undercharged. Like the example above, €1,600 was charged to their account and they were only invoiced €1,000.
A decision was made to increase the fee to reflect the full amount. There were 31 clients in this category and the feeling was that many of them would not be happy at a 60% increase and take their business elsewhere.
My friend got a very pleasant surprise when only 2 out of 31 took their business elsewhere. 29 clients were happy to pay 60% more.
I think this is a huge lesson for service providers. Price is not the number one factor when people make decisions. We can assume that these 29 people were happy with the service they get. Plus they did not want the hassle and risk of switching accountants.
The change if fees for this category of client was as follows:
|Old fee||New fee|
|Change in fees||31 x €1,000 = €31,000||29 x €1,600 = €46,400|
That is an extra €15,400 (€46,400 – €31,000) in fees for the same work.
It’s a great example of how most businesses can put up their prices, especially when you deliver great value to your clients.
What’s stopping you?
P.S. If you like you chat with me about unlocking the 80:20 profits in your business , you can click the link below