By Allan Boress, CPA - Many CPAs get beaten up on their fees -- unnecessarily.
This happens for several reasons:
1. The client deals with the CPA reluctantly
Much of our business is created through no desire of the client, but because someone is telling them that they have to deal with a CPA, such as a bank requiring audited financial statements, or the annual 1040 or 1120 simply being too complicated and painful to do oneself.
The client resents being forced to use a CPA and then exacts retribution on us in the form of complaining about fees, leaving for someone cheaper or refusing to pay what you ask and causing you to negotiate.
2. The client sees little value in what you do
In 2008 our profession still concentrates on issues that are of utmost importance to us, not the client. We issue financial statements in a format most business people don't understand, tell them information they don't care to know, by the time they receive it, it's too late to use, and then we don't explain it to them! No wonder they resent paying for it.
How many CPAs merely input the information given by the client for the annual 1040, with little or no thought as to how the client can save tax money now or in the future?
How many CPAs brainstorm on how to save their client taxes or improve their profitability (we do at Allan Boress, CPA).
Where's the value to the client or their business? How many CPAs actually explain what they did in creating the client's tax return? Or what the numbers mean on the financial statements and possible problems or opportunities in the future? Very, very few. Most CPAs are merely glorified and expensive bookkeepers. Then we wonder why we get beat up on fees.
3. It's a negotiation tactic
Do you pay list price for cars or other major purchases? Of course not. Then why are we surprised, or our feelings hurt, when clients use the same kinds of tactics on us to simply keep more money in their pockets than in ours?
After talking to hundreds of clients a year for our own firm marketing and for this blog, I can say without hesitation that many people in business generally see us as "weenies" when it comes to fee negotiation. It's a well known fact in the business community that CPAs are easy to beat on fees.
One businesswoman told me "Sometimes I feel guilty by telling my accountant that her fees are too high, but what the heck, every time I do, she cuts some off." B.F. Skinner would call that positive reinforcement.
All too often CPAs simply refuse to stand their ground on fees, thus giving the client license to badger them in the future and insuring it will happen all over again.
4. Fee arrangements are not discussed
Some CPAs proudly announce to me at the various sales training programs I conduct across the US: "I never discuss fees!" Really? No wonder people get upset about what you charge. Do you think they like unpleasant surprises? Do you?
Not discussing fees is the result of fear and/or arrogance. It's much easier to get paid when the client knows what to expect and approves it.
5. Fees are discussed at the wrong time of the sale
Some CPAs discuss fees after they have told the client how they will remove their problems and difficulties. "No problem, Mr. Client! We can do that!" The client feels relieved that the solution is so easy for the CPA and says to him or herself at some psychological level that it shouldn't cost too much money for the CPA to do what they've promised so readily.
Ever noticed that a doctor doesn't discuss fees after they have operated? Ever observe that physicians qualify you for your ability and willingness to pay quite early in the interview? (Like right after you check in with the receptionist). Maybe they are on to something!
Next time we’ll discuss WHEN to discuss fees.
By Allan PA, CFE – author of The I-Hate-Selling Book, available at amazon.com and barnesandnoble.com