Are you thinking about switching to a framework of fixed-fee pricing? As the solution to all the word 'fixed fees' is always moved forward-the holy grail of new-age billing, or the road to happy consumers and more fulfilled workers. Our fixed fee accountants in London offer the services of taxation, bookkeeping, accounting, payroll and many other services at fixed rate to our clients.
And what are the actual advantages of entering the ranks of fixed-fee? If you have faced resistance to this model of billing, how would you persuade your partners that your accounting firm will benefit?
We asked Forsythes Accounting's partner, Ross Holding, about his firm's adoption of fixed contracts, and the pros and cons of switching to fixed-fee billing.
Why the payment with fixed fees?
According to Holding, the decision to integrate fixed-fee arrangements into the Forsythes billing system was not a difficult one, especially as this method had been promoted by the industry for some time.
Second, for our customers, we decided to build a greater sense of certainty. "The fixed fees allow them to understand their cash-flow commitment for the year in advance," he says. "Second, we can more easily market the characteristics and benefits of our range by 'producing' our service offering."
Over the past 18 months, Forsythes Accounting, part of a full-service accounting, tax, recruiting, training, information technology and financial planning company based in Newcastle and the Hunter Area, has progressively implemented fixed fees to allow a smooth transition, with the primary benefits of cost assurance and product marketability being the main drivers of the move.
The pros and cons of the arrangements for fixed-fees
In favor of fixed-fee pricing, the Queensland Law Society lists the following benefits:
· Certainty for clients of yours.
· Focusing rather than hours on value.
· Demands effectiveness of work.
· Adds a Difference Point.
· No limitations are set on your profit margin.
· Possible to charge or justify a risk premium.
It also states the drawbacks or difficulties of fixed fees with high costs of investment, the need for a clearer description of 'retainer' and the need for calculating and negotiating skills.
Holding acknowledges that the predictability of costs is the key benefit for clients.
"We have wrapped our packages with regular site visits, which gives the customer a greater sense of service and partnership with their advisor."
And the good stuff for practitioners?
"For us the benefits include less customer focus on cost and easier sales forecasting and scheduling for the practice of customer work."
With happier buyers and smoother technical workflow, the fixed-fee offering seems to have its fair share of advantages. Holding acknowledges, though, that it's not without any cons.
The biggest negative is initially attempting to price as it is difficult to determine the amount of work involved. 'Service creep' is the other threat, as it can be a challenge to remain within reach and not to charge outside.
Some of those risks are resolved by the opportunity to deliver mixed pricing models, and the trick is according to Holding, to remain versatile and adaptable to consumer needs.
"This arrangement makes all the customers surveyed much happier."
Highest recommendations
Fixed fees are a reasonable choice for a practice where the expense of the job can be accurately measured by relying on past time sheets and billing records to negotiate costs with confidence.
Holding advises that you tailor the price to the consumer, as well as the type and nature of service you are offering.
"The primary determinant is the essence of guidance. Also, higher-end and personalized guidance is exempt from packing and quotation of fixed fees. It is also easier to bundle more conventional services, such as compliance.
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