One of the questions accountants are often asked by their clients is â€śhow exactly do you reach a figure for the fees you charge?â€ť
In the good old days, we charged by the hour. This was fine, apart from the fact that noÂone knew just how long the job would take! And you wouldnâ€™t believe how often the hours expended actually exceeded what had been budgeted.
Today we bid on regular compliance work, such as accounts and tax returns, at a fixed fee. This is based on our knowledge of the time a certain job should take, with a proviso that if the information isnâ€™t up to the standard promised, there will be a penalty charge.
In many ways, standard accounts and tax work is nothing more than a câ€‹ommodity,â€‹and is priced as such to ensure the potential client feels they are receiving value for money.
The Other Side of the Coin
However, when one starts looking at the practice of advice, such as business development or cash flow analyses, specialist tax planning becomes more of a sâ€‹erviceâ€‹than a commodity.
And therein lies the problem when setting prices; a client is likely to try and work out the hourly cost for the compliance work and then wonder why specialist advice is more expensive.
The fact of the matter is there are a number of reasons why compliance work and specialist advice differ, not least of all when it comes to the nuances of specialist tax planning.
Yet one might argue that the runÂofÂtheÂmill offering of regular tax work can (and perhaps should) lean more towards becoming a service too. Primarily because…
People Buy Benefits, Not Features
For something like tax returns, more black and white than shades of grey, one could posit the only difference between two accountants is the price they charge. For the most part this is true, but just like other commodities, the cheaper product does not always mean the best.
Savvy consumers are likely to part with their hard earned cash when they are convinced of the benefits, rather than sold on the features, of a particular product.
If accountant A and accountant B both correctly complete a tax return in a timely manner, then the features are identical. If accountant A takes the time to communicate with the client, seeks to understand the businessâ€™s challenges, and offers a few pearls of financial wisdom along the way, while accountant B is only heard from when itâ€™s time to pay his invoice, then the benefits of using accountant A far outweigh the benefits of accountant B.
Quality & Expertise Add Value
Likewise, when it comes to engaging an accountant to provide a specialist tax service, there can be a marked difference in price. It is therefore necessary to appreciate why these differences can occur.
Some accountants and advisors might actually treat these specialist services as commodities also, which will lead to a decrease in quality as they seek to maximise their profit by cutting corners or not spending as much time on the task at hand.
Others may not be all that long in the tooth and therefore unable to charge as much as their more experienced competitors.
Either way, as is the case when faced with the choice of, for example, a BMW or a Renault Clio, quality and expertise will shine through and ultimately win the day.
With a specialist service, it is not simply a matter of charging for the hours, rather itâ€™s about calculating the value being delivered to the client thanks to the hours of research, professional training, and experience, all of which combine to help reduce a tax bill or increase profits.
Caplan Is Transparent on Cost & Time
Itâ€™s understandable that a client may be concerned about the costs involved in using one of these addÂon services, and in a competitive marketplace itâ€™s not always clear cut as to where value for money can be found.
To this end we have recently introduced software that, within a mere 5 or 10 minutes, can demonstrate to a client just what we can achieve for them, the time it will take, and how much itâ€™s likely to cost.
This is crucially important to us as we seek to ensure maximum transparency with our clients with regards to where time is being spent on their business and what they receive in return for their investment.
To find out more, speak with one of our friendly advisors today.