Be Very Cautious About The Discount Trap
If I go on a discount fishing trip and I lose the worm off the hook of my fishing line...
Am I entitled to a rebait?
We had a vacation rental property, and folks often asked for a discount. Especially if they were booking last-minute, and they could see we had an opening. They assumed that we would want to fill the vacancy at any price, so we had at least some income. They were wrong; we didn’t want to fill the vacancy at any price. In fact, we had a floor price that we would rent for; our price was our price. A discount was only available for longer-term rentals.
The longer-term rentals meant we didn’t have to send in the cleaners as often, those renters tended to get comfortable and respect the property and our rules better, and we didn’t have to do multiple turnover meet-and-greets. But, even with the longer stays, we didn’t discount our property by much.
The costs of running the property, such as taxes and hosting the website were constant, the wear and tear on the cottage with every rental piled up, the cleaners had to be called out, the consumables got consumed, and the linens only lasted so many visits…
And the peopling, oh, the peopling!
This is not unlike pricing your accounting services. You will always have the base costs (emotional and tangible) of running your firm and of “clienting”. The mindset that it “only takes you two hours” to complete the actual client work is not reflective of what actually goes into having a client. There is the emotional and time toll of client communications, trying to get docs and info from them in a timely manner, returning financials to them, onboarding and re-engaging them… This doesn’t even cover your knowledge of accounting. Pricing should never be solely about the time spent in the books!
Like discounting the longer-term rentals, I do discount cleanups and catch-ups (if you need this kind of client work done, I am your gal. I love cooling off hot messes!). The project work doesn’t involve the same level of communications, reporting and discussing financials on a monthly schedule. You basically gather all the docs and info in the beginning, work away, head-down in your office (or in my case, a sheshed), with some client clarification along the way. Then you present the results at once, or maybe for year-over-year. The client maintenance is lower, and the stream of work is steady.
Of course, there may be extra charges along the way. Although I conduct a file review ahead of quoting the project, I may not know all the dirty details (CRA and multi-entity surprises, the need to move them into Voluntary Disclosure and the like), or I may need more meetings than I counted on. So I quote a minimum and give a few ranges (both fixed fee and, gasp, hourly) of what it may cost if X,Y and Z show up. Government audit work coming out of these projects is obviously extra as well, and that is clearly stated in my engagement contract.
For weekly and monthly clients, I have a floor price (I think of it as a client management fee), and then the work is on top of that. Even if it is a low-touch, cash coding engagement, there is a minimum of what it costs to service a client beyond just doing the work. An exercise you may want to consider is tracking the time concisely for every single little thing you do for each client that is not related to accounting work. I think you will be shocked.
And never, ever forget you have knowledge that is valuable to your clients and prospects.
Price is what you pay; value is what you get. - Warren Buffet
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