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Why do accounting professionals give away so many services for free? It makes no sense.

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Why do accounting professionals give away so many services for free?

It makes no sense. It’s actually a form of scope creep.

Scope creep is when the work we do for a client ends up taking longer than we imagined, and therefore we end up spending more time, writing time off, and ultimately making a loss on the job.

One of the issues we worry about is having the scope creep conversation with a client. We are worried that we will get a negative reaction from the client, because we are uncomfortable with pricing.

We are scared they will say something along the lines of:

“I wasn’t expecting that. How dare you charge me for that.”

Very often we worry about the worst case scenario. But, that is unlikely to happen because it’s not in most people’s nature to react so harshly. But more importantly, people expect to pay for extra work because that’s how it works in other industries.

Manage the client’s expectations

You need to make sure you manage the client’s expectations upfront.

Once they have chosen their package, you should make it clear that anything extra will fall outside of that package and therefore have its own price.

It may be useful for you to make a list of extras that you often find yourself doing and show this list to the client. Tell them that these are the optional extras that are available to them should they want them, but they will be charged separately.

You could attach this list as an appendix to every single fixed price agreement or proposal you create. It may be that you’re pricing bookkeeping work, but in the fixed price agreement you might say:

“If you are ever interested in us helping you in other ways, for example, by setting you up on a cloud accounting system, in the appendix at the back we list other things that we can do to help you if the need arises.”

When you do that, firstly it helps you to cross-sell those other things, because they might not have known you even did them.

Secondly, you’re managing their expectations so that if at some later date they want one of those things, they’re already expecting a separate fixed price for it.

Your script for raising the issue

Now let’s look at what we do when a client does then ask you to do something extra.

Perhaps there’s a client that you’re doing bookkeeping for, but they want some extra training from you on how to use the TSheets app.

When a client asks that, you need to have a system or a form of words of what you might say. For example:

"Hi there, Mary. Thank you for your email asking us to give you some training on how to use the TSheets app. I'm sorry, but I'm not able to do this based on the current fixed price agreement that we have in place, since this is outside the scope of the agreement that you signed, and this project is separate and subject to a separate fee. I'm certainly happy to extend the scope and do this extra work for you. Is this something you'd like me to manage, and if so, I'd be happy to go through some options with you and agree a price with you."

All you need to do is explain it to the client. No one’s going to object to that because it’s not a big surprise. As a customer, we expect to pay more for additional work.

But sometimes customers will try it on. They ask for things and hope that you'll just do it for free.

The trouble is, the more you do this, the more your clients are going to start expecting you to do stuff for free. They'll start just taking advantage of you.

We have to stop making excuses

So many accountants and bookkeepers have this mentality:

“What a great client. I like this client. They’re paying us for this other piece of work. We don’t want to upset them. It will only take a couple of hours. We’ll just go and do what they’ve asked.”

You are using this excuse to justify the work you are giving away for free. It’s probably also very likely that you come up with this excuse because you don’t know how to price these small tasks.

One of my student Sophia Botchway used to set up her clients onto a cloud accounting system for free. But, after we worked together to create a system to price this service, she generated £7,000 in total fees across 5 clients over just 2 months.

I’m going to give you some techniques to help you price those tasks. But first let’s identify some common tasks that get done for free to give you a sense of what to look out for.

What are those simple tasks?

If you have an existing client that asks you to perform a small task that you don’t normally do for them as part of your service, that would usually be considered a simple task.

Here are some examples:

  • In the UK we often get asked to do mortgage reference letters. If the client is looking to get a mortgage to buy a property, they’ll go to the bank and then usually write to the accountant to ask for some information. That’s called a mortgage reference letter.

  • Also in the UK, if you’ve got a limited company, a corporate that doesn’t trade in the year, you can file dormant company accounts. They are really simple to do because there are no transactions.

  • Many people will set up a client on a cloud accounting system without charging them anything.

  • There are other cloud technologies that you can set up for a client, which we often do for free. Tools like TSheets, for example, or tools to create reports, manage projects, or stock inventory.

  • Sometimes clients want some training. That may take up several hours of your time.

You should look out for tasks like these. Don’t give these valuable services away for free. It doesn’t matter how easy or quick it is for you to do. What matters is how much value the client will see in the service. You should be pricing based on value.

Techniques for pricing simple tasks

Bob Hurn, a forward-thinking accountant that I’ve known for years, found a great way of pricing simple tasks and also making the client feel valued at the same time.

In 2016, brand new legislation came in for UK companies, requiring companies to complete new form called a PSC form, or Persons of Significant Control. Bob knew it would take 10 minutes per client to do this form.

That’s the kind of task he might have previously given away for free. But here’s what he said to his client instead:

“Normally, I would be charging £75 for this, but because you are a valued customer and your particular PSC is relatively simple, I will do it for just £35 subjected to being instructed by the 29th February.”

Bob made a reference price of £75, making his price of £35 look even cheaper, despite the fact he would have done it for free. He also scheduled his work for February, which is clever because February is traditionally quiet in the UK as it’s the end of the tax season.

After a few weeks, 50% of his clients had requested this work be done, and Bob made £3,000. Incidentally, he and also believes he probably left money on the table because of how quick the uptake was.

That’s £3,000 which most accountants would have foregone because they fail to charge for value.

Another option when pricing small tasks is to use menu pricing. Create 3 option for the client to choose from.

You may think that because the task is so small you can’t possibly add any more value, but there is always value to be added.

Think of why the client is asking for that particular service and what it means for them. Is there any advice you can give them? Are there any extra reports you can include? Could you add expedited services to increase value?

There is always something you can do to add value.

You could even take this to the next level and use a sophisticated system like Cloud Pricing so that you could give the client various options and really involve them in the pricing.

The right way to do work for free

Beware of ‘nickel and diming’ the client.

Giving stuff away for free is not totally necessary, but there are occasions where it may be appropriate.

Say you’ve got a project with a client and they’re paying you, say, £30,000 for the year, and because of the way you value priced it, you know they’re one of the most profitable clients that you’ve got.

You should, of course, go above and beyond for these top clients. But you need to make sure that you are definitely earning enough money from that client to genuinely justify doing things for free. Otherwise, you will be taking on too much work for not enough money.

If you really feel the need to, there is a right way to do work for free.

There may be cases where you can do these small tasks for free. You should have a system and a script prepared. Something like this:

“Hi Mary. You’ve asked me to help you set up this app for you to help you save time. Just so you know, when we do this sort of work for our clients, we normally charge £750 for doing this work. However, because you’re such a great client and we love working with you, this time we’re going to do it for free and not charge you.”

By telling them what you normally charge you are showing them the value of what you are doing for them. If they didn’t know the price, they may not really appreciate your generosity.

As part of the script, you are also telling the client how great they are. People love to feel special, telling them that you enjoy working with them will make them feel good.

You may also have noticed in the script I said ‘this time’, to ensure the client understands that this is a one-off thing and that it won’t always be free.

Start charging for your small tasks

Now that you know how to have the scope creep conversation with your clients, you should start trying to value price the small tasks that you keep getting asked to do.

Make sure you have a system in place to charge for the common small tasks, and use a script to explain to the client why they will be charged.

Don’t be scared of a negative response. If you phrase it properly, you will find your client is willing to pay the extra amount required for the extra services they have requested.

You need to view every simple task as something that will provide value to your client. You also need to remember that if a client is asking for extra services, they will expect there to be an extra payment.

You don’t need to try and keep the client happy by not charging them. You should keep them happy by adding value, not reducing prices.

If you have any questions for me, or want to learn more about value pricing, join my Facebook group, “Value Pricing with Mark Wickersham” and sign up for my monthly free training here.

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Published 25 Apr 2019 Last updated 19 Mar 2024