What is a fair fee?

Jan 24, 2008 | Pricing

Imagine a client has accepted your fee quote but that the work takes you less time than you had expected. Would you reduce the fee to be ‘fair’ to the client?

If you find yourself in such a situation only you will know what is the right answer in those specific circumstances.  Only you can fairly anticipate your client’s reaction and the longer term consequence of your actions.

Many accountants still charge clients a fixed hourly rate for the time they spend on the client’s affairs regardless of whether they spend the time researching advice that will save the client money, or a simple administrative task. Clearly the former is far more valuable to the client.

Many traditional accountants then tie themselves in knots when they realise that the time records reveal that more time has been spent than had been budgeted. Often the excess is written off if it can’t be shown to relate to additional work that the client will value. This is one of the arguments used to highlight the fact that time records do not determine the bill.

An increasing number of accountants quote a fee and simply use their time records as a management tool – to identify how much time they have spent on each client. Others don’t even bother to do that. The fee is the fee is the fee. Sometimes they will have underestimated the time that the work would take. Sometimes they will have over estimated. On balance they hope that these occasions will balance out.

The key (usually) is whether the client was happy with the original fee quote AND if the service they have received matches up to their expectations. If it does then very few accountants would offer a refund or a reduced fee.

What matters is the client’s perception of the value of the work and the service you have provided. That is all that ever matters and it’s only when the accountant tries to charge more than this that there’s a problem.

Bottom line:
If you choose to apply some arbitrary hourly charge-out rate to your services that’s your business. It’s not a reflection on what it has ‘cost’ you to do the work. It’s not even a reflection of the value of the work. Does it result in you charging ‘fair’ fees? It may do.

What is more important – that the fees are fair to you or to your client?

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