Fixed Fee Billing Fever May Soon Invade CPA Firms Too

Here’s an interesting article from Gary Boomer that I spotted online at WebCPA. About halfway down he argues that CPA firms should be offering value and fixed fee billings to their clients.

Gary’s a pretty widely used technology consultants. One of my prior employers used him to come in and make all sorts of recommendations regarding their technology.

It’s interesting that he previously touted what was termed “hotel billing” and that most fo the CPA firms he serviced naturally built their technology to deliver based on his recommendations.

I wouldn’t be terribly shocked to see a renewed interested in fixed fee pricing take off in the CPA world.

Here’s the article from WebCPA – http://www.webcpa.com/news/Emergence-Firm-53651-1.html

In the past month or two I’ve focussed on getting fixed price billing up to speed for my client activities. I’ve written a short post on the top 10 things that I’ve learned – http://erplife.com/2010/03/14/10-secrets-to-making-money-of-fixed-fee-erp-consulting-projects/

So long as you’re realistic in how you price — and the quotes that you provide are attached to a scope document – fixed fee pricing can provide for a higher billing realization – and greater client satisfaction largely because the client is no longer watching the clock and you are no longer reluctant to be on-site for fear of driving up the bill.

As an example — my last upgrade quote (fixed) encompassed these components:

1. Quote preparation time (scope, initial client discussion, discovery)

2. Actual work

3. Project management

4. “Sage factor” – the estimated amount of pain and suffering I’d endure while dealing with Sage on a technical issue or some other (formerly uncompensated) client problem

One upgrade quote that I think is about to be accepted will cost a client about $14,000 to upgrade 4 companies from version 3.70 MAS 90 to version 4.3.

In the past when I’d quote work — I’d be quoting only item #2 above. So instead of fixed feeing the quote at $14,000 I may have quoted “about 40 hours” with the promise that if it were less that they’d pay less.

WHOA – wait — if I’m more efficient because I’m smarter than the next guy and have better industry and group contacts to solve technical questions faster — under hourly billing I give ALL of that to the client for FREE?

See anything wrong with the hourly pricing rules that used to be in play?

Come in under budget due to efficiency, skill and wisdom – and don’t charge for that.

Come in over budget — and struggle to get the client to pay. If the over-run is too large – the client either leaves or you’re forced to forgive the extra cost.

Sounds like a lose lose.

The other items generally were “off the clock” and therefore not recoverable via billing

Another thing that I love (so far) about fixed fee bills — is that clients can’t play the “what’s you’re rate” game — because you aren’t quoting them based on an hourly rate (at least not publicly).

Fixed fee billing is also useful when you plan to “Brand” your company and distinguish your company and work from that of other competitors.

My goal with fixed fee is to gradually have clients realize that they’re contracting with Schulz Consulting for their overal financial software consulting needs — and not some inexpensive hour by hour day labor.

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Comments

  1. no name says:

    “WHOA – wait — if I’m more efficient because I’m smarter than the next guy and have better industry and group contacts to solve technical questions faster — under hourly billing I give ALL of that to the client for FREE?” —

    No, if you are THAT MUCH BETTER than the other guy, you charge more PER HOUR. Why some attorney charge $1500/hour, verses some one charges $150/hour?