What are your options if you want to charge more then your fee quote?

We’ve all done it haven’t we. Estimated (or maybe even quoted a fixed) fee for a specific piece of work and then allowed the scope of the work to evolve slightly. And then a bit more. Perhaps we’ve delegated the work and have not kept in touch with how much extra time the ‘tweaks’ have involved.

And then we see the WIP reports and realise that the cost over-runs are more than we anticipated and certainly more than the client might have expected.  So what do we do? Do we:

  1. Bill the full time costs regardless of the quote we gave?
  2. Write-off a bit and then approach the client with what we consider to be a reasonable amount to bill them on top of the expected fee?
  3. Write-off everything over and above the quoted fee? or
  4. Speak to the client to discuss what happened?

Some will say it depends on the circumstances, on the reason the work went over budget, how much of this can be attributed to the change in scope of the work and how well we know the client and can anticipate their reaction.

If we’ve taken the coward’s route we follow options 1 or 2 and then await the dreaded phone call, email, letter or visit. If we hear nothing for a few days we relax. We got away with it!  We can bill the extra and we’ll get paid.

I’ll admit that, in the dim and distant past, I probably pursued that approach.  I later learned that although a letter/email may be a good way to broach the subject it is critical to proactively follow up with a prompt phone call rather than to just wait for a reaction.

More recently I recently found myself on the other end of such an arrangement and am now more convinced than ever before as to how important is that timely follow up call.

If you’ve underestimated a fee and want to increase your prospect of recovering more than the expected amount you MUST take the initiative. Set out your justification and plan your approach to the client. Don’t just send the bill. Don’t even send the bill if you hear nothing back after sending the client a note of the proposed additional fee. Even if it gets paid you cannot assume the client is happy. They may well be looking for a new accountant.

You will only know what your client thinks if you SPEAK to them – and you trust them to tell you the truth!

I welcome your comments and ideas as to how you deal with such situations in practice.

By |2012-08-20T09:30:51+00:00August 20th, 2012|Pricing|

About the Author:

Mark Lee FCA is an accountancy focused futurist, influencer, speaker, mentor, author and debunker.

5 Comments

  1. Kim Whitaker 20th August 2012 at 9:38 am - Reply

    An interesting post. I do think it depends on circumstances but agree that one has to take the initiative, while recognising that a start up may just not be able to afford much more than they have agreed to.

  2. Jon Stow 20th August 2012 at 10:09 am - Reply

    If the client omitted to tell me something vital which I should have extracted in our initial conversation and which made a difference to the amount of work involved, I usually take the hit and stick to my original quote. Generally if I under-quote, it is my fault.

    If the client is at fault in withholding vital facts I could not have guessed, I initiate a discussion to get agreement before sending a suitable higher bill.

  3. James Hellyer 20th August 2012 at 1:17 pm - Reply

    Ideally any problems leading to cost overruns should be identified before the job is started.That way you can least give the client the option of either paying you extra to make good some shortfall in the promised records, or taking them away to fix them themselves.

    Generally a quote is a quote. Unless the client has withheld information when I give a quote, the error is my fault.

  4. Bharat Handa 21st August 2012 at 7:10 pm - Reply

    I have recently experienced exactly the same situation with a new client. I spent 2 hours in the initial meeting with him and asked him to send me the information I needed in a set format. On receipt that I realised that that previous 2 years SA returns and his practice accounts may require to be revised, hence I sought additional information and incurred some 3 extra hours in correspondence. I realised that I had already spent the extra 40% time @ agreed hourly rate to the quoted fee. I wrote to client explaining the reasons why my quote will not hold good and that I proposed to charge a revised higer fee (by writing off 25% of extra time as first year setting up cost). He grundgingly agreed to this. It is always better to write in advance of issuing an invoice preferably whilst doing the work. I would say some 75% will accept providing that there is a give and take on both parties and take a long term view in case of new client and past history in case of an old client.

  5. Hugh Dunlop ACIS, FFA, FIAB 9th October 2012 at 4:58 pm - Reply

    Like Bharat, I recently took on a new client who felt he was being charged too much by his previous accountant for the amount of work being done, plus he was getting no feedback from that accountant. I agreed a fee for his accounts, but when I got a copy of his S/A return as worked by his previous accountant, I ran through it and soon realised that this had been simply a ‘bog standard’ return and the accountant had actually cost him thousands in needless tax, which would be on an ongoing basis. I explained this to my client, told him I would put in an amended return, and advised him to contact his previous accountant regarding this. the client was happy to pay my additional fee,
    However, this was a one off. Normally if I find my quote to be under, unless due to deliberate action by the potential client, I take it on the chin. As I have been a practitioner for several years, I feel if I am not astute enough to elicit all the information required to give an accurate price, it is my fault. however, with a new business, I now always put in the proviso that if the amount of accounting work expands as the business expands, my fees WILL increase. It is surprising the numbers who feel that the quote should hold good for ever, regardless of expansion.
    But I also make it clear that any increase in price will be caused only by an increase in work done, it is as easy to process an invoice for £100,000 as it is for £100.00 .

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