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We all believe we’re empathetic, but can we really stand in the shoes of our clients?
I had a recent experience when I became a client and experienced what it was like to be on the other side of the table. It taught me a lesson about fees.
An accounting switch
I decided to update our business and personal accounting by switching to Quickbooks online. I won’t bore you with the reasons, but the benefits (particularly for our businesses) are significant.
While Quickbooks is widely used, it’s known for being challenging to get started. I researched Quickbooks-certified experts online because I knew I would need assistance.
All the people I talked to seemed competent. However, there was a difference in the way they billed. Some charged a flat monthly fee for both onboarding and monthly services. A few charged an hourly rate for onboarding and a flat monthly fee thereafter. Only two of the 10 people I interviewed were willing to charge an hourly rate for both onboarding and ongoing services. Their hourly rates ranged from $40-$70.
My decision
I decided to hire someone at the upper end of the hourly range ($65 per hour), who would bill hourly for onboarding and the time incurred each month.
My reasoning taught me something about your asset-based fees.
The person I retained had higher level certifications than her competitors. I was willing to pay for her expertise and felt she might be more cost effective because she would likely be more efficient.
I rejected a flat monthly fee because I assumed it was structured to be sure the person providing advice didn’t get burned by spending excessive time. I didn’t mind paying for actual time, but why should I subsidize those who needed more time and effort, either initially or later?
Maybe I will be able to do more of the work using Quickbooks than I anticipated, or perhaps I will delegate more to the expert. The idea of paying only for the time required, and being able to control that time, was appealing to me.
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I remember thinking, “my lawyer and accountant bill me hourly.” This was an accounting-related exercise. Hourly fees made sense. I would have found it off-putting if billing was based on the amount of my assets that are going into Quickbooks.
Another factor influenced my decision. I recognized there is a disproportionate amount of time involved in the onboarding process. It made no sense to me to pay the same rate when the work will likely be significantly less.
Questions
Would it make sense to offer your clients a choice of different fee arrangements, like hourly, asset-based or maybe a hybrid?
Do you see a marketing appeal with a fee arrangement that relates rationally to time spent and is reevaluated periodically?
Would your prospects be willing to pay a higher hourly fee (if you decide to go that route), if you can demonstrate an elevated expertise (through your credentials or otherwise)?
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