Successfully implement a fee increase in your small accountancy firm with these 4 foolproof methods
One of the quickest ways to increase cash flow and profitability for your small accountancy practice is to implement a fee increase. This may sound obvious, but many firms put off having the fee increase conversations for fear of losing clients. No more! It’s time to stop procrastinating and avoiding these conversations. Here are 4 foolproof methods, based on an extract from The Accountants Millionaires’ Club book, to help you successfully implement a fee increase for the benefit of your practice.
The most successful accountancy practices are the ones where their clients expect an annual increase in fees
In any business, a consistent and healthy cash flow is essential.
Whilst winning new clients is always a great method to increase your cash flow, increasing the fees for your existing clients is another method to use. Is there anyone more willing to pay more for your services than your loyal clients who already benefit from it?
The most successful accountancy practices train their clients to expect an annual increase in fees. This ensures a very healthy cash flow and a consistent increase in profitability. To be able to do this with your practice, you need to ensure that you have these 4 methods in place.
4 ways to implement a fee increase in your accountancy firm
1. Decide what to charge
Deciding on your fees can be a difficult task. Once you were a sole practitioner with no staff members working from a home office. Now you are employing staff to accommodate the growing software subscriptions! Our advice? Make it easier on yourself by carrying out these three actions first:
Benchmark your fees with local competitors - remember that fees stated on a website won’t disclose everything that is included in a service, Just use them as a comparison.
- Review your fee structure every 12 months - your cost base will increase as your practice grows and evolves, so you must make sure that your fees are increasing so you're still profitable.
- Buy or build a quoting tool for your practice - this will be invaluable when it comes to quoting for new clients and you will ensure a much more consistent fee structure.
If you don’t know what to charge, you can use our simple profitability calculator at https://accountantsmillionaire.club/club-resources/ to model the impact on your profitability of putting up your fees.
2. Identify who needs a fee increase
Now you have a new fee structure, who will you apply it to first? Will it be just a handful of clients or your whole client base?
You can use your Client Portfolio Analysis to identify which clients need to have a fee increase. If you use this alongside your quoting tool, you can also work out what their new fees need to be.
3. Start using your quoting tool and new fee structure for all new client enquiries
It is much easier to get new clients on board with the fact that your fee structure includes an annual increase than it is to negotiate fees up from a low starting point, so set the basis of the relationship you want right from the get-go.
Many accountants make the mistake of needing to win any new client, whatever it takes. This often leads to deals or offering discounts, which leads to the client expecting to negotiate all the time. Instead, focus on winning the right kind of clients.
Remember what we said about the most successful accountancy firms training their clients? This is what you need to do. Use your new fee structure and quoting tool to show your new clients how their rate is worked out. Don’t even let them think that there is a deal to be done. You will soon be getting more new clients paying the right rate for you.
4. Prepare for your fee increase conversations with your clients
This is the hardest part of implementing a fee increase in your accountancy practice, so be brave, don’t procrastinate, and prepare as much as possible for your face-to-face meeting.
Prepare for your conversations by:
- Creating an action plan once you’ve decided what clients will have their fees increased - this should include who is going to speak with each client and when it will take place.
- Have a brainstorming session and role-play typical objections and responses - everyone who will be having the fee increase conversations should be involved in this.
- Pick clients who you don’t mind losing as your first few conversations - consider these practice for your bigger clients.
- Review and improve on previous conversations - this will help you to better present the reasons for fee increases to clients in the future.