And the reason they hadn’t done it, came down to three limiting factors.
But before I tell you what THEY are, let me tell you the four HUGE reasons why you MUST be increasing your client’s fees on a regular basis or you will be leaving a lot of money on the table. And by regular, I don’t just mean every year….. I mean as regular as you need to, which might be as much as every quarter!!!
So these are the four reasons why you must increase your fees…
1. You Do More Than They Pay You For
As you service your clients, additional services always creep in. They will have asked you for this or for that and through a desire to give value, you will have completed the work and you will have likely done one of a two things from a charging point of view.
- Charged them a high, one-off fee for that service (which I assure you they will have hated you for and ranted to their friends about.)
What you should have probably done is produce them a new proposal which included an additional monthly service that includes this type of work. So your “Business Growth Service” for example, which is perhaps a £50 a month service and for that they can call your team whenever they like for entrepreneurial advice (limited to a maximum of 15 minutes a month.)
Bottom line on this one, if you provide something extra, charge them for it, but in terms of a higher monthly fee. That way everyone wins.
2. Their Circumstances Have Changed
So as your client’s circumstances change, you need to be charging them more.
Maybe their Annual Revenue’s increased, in which case, Year End Accounts, Management Accounts and VAT Returns naturally take longer to produce. So as they’ve moved up an income band, maybe each of these services cost an additional £10 per month to deliver….. that’s all. That’s £30 extra a month.
Maybe they have more staff, in which case you should be charging more for doing their Payroll. So let’s say they have just two more members of staff, that could be an extra £20 a month.
Maybe as part of your Bookkeeping service you produce invoices for them, chase debts and reconcile their bank transactions. So let’s say that’s 20 extra invoices a month (at £1 per invoice), 5 extra that need chasing (at £2 per invoice) and therefore 20 more bank transactions that need reconciling (at 50p per transaction). That’s an extra £40 per month.
So altogether, this client’s circumstances may have changed very subtly and you have to do more work for them.
They’re making more money, so you’re doing more work for them and you’re still charging them the same.
If you don’t adjust their fee, you’re leaving £90 a month on the table.
3. YOUR Circumstances Have Changed
When did you last increase your prices, because this is the easiest way to boost your profits.
Now I know you KNOW this, because you’ll be telling your clients to do it, but are you DOING it yourself.
And if you ARE doing it, how well and how often are you doing it?
I bet you’ve taken on more overheads over the last 12 months. Are they being passed on to your clients through increased fees?
I also imagine that you’re massively undercharging your clients for certain services, compared to what they’d be paying elsewhere.
And you’ll also know that you could increase fees by 10%, lose 25% of your clients as a result and STILL be making more money, with less effort and less stress.
Now I know you love those clients who might leave if you were to increase your fees, but you know what…. they don’t love you as much as you think they do. And at the end of the day, your business is designed to give you the life that you want.
Increase your fees and charge more.
4. They Need More From You
Now I know that you won’t be doing enough for your top 20% of clients.
There are more services they need from you. But they probably don’t know about them because you haven’t had they time to sit with the client, learn about their challenges and goals, and then offer the services, which will help to get to where they’re going… faster.
And there is also a massive danger that you may lose these clients to someone who DOES offer those additional service, and you’ll be like…”Be WE do that. Why didn’t you ask us?”
NO….. why didn’t you tell them? Why didn’t you offer those services? Moreover… why didn’t you INSIST they they take these additional services to grow their business faster?
So let’s say you have 250 clients and you took the top 50, and you sold them additional services that allowed you to increase their fee by 20%. How much additional income would that mean for your firm?
The Bottom Bottom Line
So if you take a client who’s currently paying £300 a month and you JUST add on the new Business Growth Service and start charging them correctly for their bookkeeping, then you’d be up to £440 a month without even blinking. That’s over a grand’s worth of additional income this year.
So why hadn’t these accountants renewed their client’s fees?
Well I believe their are FOUR main reasons which accountants struggle to increase their clients fees. And these are…
- They don’t carry out regular reviews of their client’s circumstances (because they don’t have time.)
- It takes too much time produce Renewals and new Letters of Engagement (unless you use GoProposal.)
- Accountants don’t particularly like selling (who does?)
- They don’t believe their clients will pay more (they will.)
I’m going to break each of these down for you and show you how to remove these limiting factors…. but not now… next time.
But between now and then, if you want to do ONE thing that will start making a difference in your firm, just pick up the phone to your top five clients and arrange to see them. Understand their current circumstances, their greatest challenges and their goals, and simple explain how you can help them to get their faster. That’s it.