Conversations about fees can still be tricky for lawyers and accountants. Are we seen as too expensive? Will we upset our clients? Will we jeopardise our client relationships? However, as every business runs on profit, we thought it’d be worth sharing a few thoughts that will help lawyers and accountants charge what they are worth.
Why do you want to talk to your clients about fees?
The first step is understanding why you want to talk to clients about fees.
Do any of these situations look familiar?
- You have a long-time client who’s paying what they’ve paid for years and you think trying to bring your fees into line with today’s rates will rock your relationship
- You feel uncomfortable requoting fees or discussing pricing in any detail
- You tend to err on the low side in your quotes to win the work
- You are reluctant to charge for add-ons when the scope of work increases and tend to add these extra bits in for free as it’s easier
- You readily accept that writing off some time is just part of the job
- You feel that being highly competitive (or ‘ to give it its proper name – cheap) is of paramount importance in these uncertain and challenging times
If any of these are a bit too close to home, it’s time to look at the bigger picture.
The truth is that low or even negative margin clients are eating dangerously into your firm’s profit and, over time, keeping fees too low will also throw up more threats.
Servicing your low margin clients will impact on your time to find and look after more profitable clients and create the level of profile required to convert more new targets and being seen as cheap will damage your brand and your market reputation.
From a more practical point of view, you also need to remember your clients are also facing similar cost pressures and they will be increasing their prices accordingly so why shouldn’t they expect you to do the same?
Lawyers and accountants charge what they’re worth if they focus on value not price
If you’re going to be paid what your worth, you need to change your mindset and think about the value your clients receive because of your work, not the price at the bottom of the invoice they receive after your work.
As you calculate the cost of each piece of work ask yourself these crucial questions:
– What is the financial value of your advice to the client?
– How will the outcome you achieve benefit your client?
– What is the potential cost of finding a cheaper alternative given the quality of their work will likely be lower and the person doing is likely to be less experienced?
– What is the value of reputation, your experience and the reassurance these offer?
– Why do people choose to buy more expensive brands when they know there are cheaper options?
– And what is the emotional value of the advice you provide your clients?
When you have the answers, you can focus on the outcomes you’ll achieve for your client and on what these outcomes will mean for your client.
For example, for private clients will it bring forward their retirement? Will it give them more time for their family, travel and hobbies? Will it allow them to give their children a bigger inheritance? Will it prevent an HMRC investigation?
Or, for business owners will it increase their size, reach and turnover? Will it allow them to ask for a larger price at exit? Will it prevent a costly and reputation damaging court case with an ex-employee or supplier?
If you can articulate the value of your work on a personal or commercial basis, you can be much more confident when you put your price forward. You will also be able to support and defend your proposal if it’s challenged.
Always communicate pricing in person
While many lawyers and accountants still think pricing will give clients an excuse to move, it is far more likely that the reasons clients have moved in the past is that the personal relationship isn’t as strong as it should be.
We have produced an awful lot of stuff about how to build and strengthen key client relationships elsewhere so we won’t go over that ground again here (but please contact us if you want us to send you some tips to save you having to look). Instead let’s look at the best ways to personalise the way you communicate regarding pricing.
Here are our top tips:
- Always talk in person before you make any changes (on the telephone if face-to-face isn’t possible)
- Avoid any unexpected and unpleasant surprises – don’t let them find out on receipt of your invoice!
- Be ready to be flexible in your payment terms and give clients options as to how and when to pay
- Create a win/win scenario by offering different payment terms, e.g. a discount for paying in full upfront
- Know your clients so you can tailor your terms to them, for example by billing at the points during the year that suit them best
- Presenting a few different service options they can choose from
If you’d like to discuss running value pricing, relationship development or any other type of BD training, please get in touch today and we can find a convenient time to talk.