Billing for emails

[JohnH]

The conversations on another thread about clients taking up our time and re-running the "I'm Billing Time" YouTube video caused my mind to return to a subject that crosses my mind from time to time - billing for emails. I know that most attorneys & many CPA's bill for emails, and I'm sorting out the pros and cons.

On the one hand, migrating clients over to email is vastly more efficient that using the telephone or the terrible time-waster of office appointments, so I don't want to discourage them. On the other hand, it's still a use of resources and since our time is our merchandise, the time spent answering emails is no different than the time talking on the phone or meeting in the office.

I'm thinking of initiating a "Messaging Fee" with a sliding scale with telephone calls being the most expensive and emails less expensive. For example, teleconferences are billed at the normal hourly rate with a 1/4 hour minimum, office appointments at the normal hourly rate with a 1-hr minimum, and emails might be billed at a nominal charge of $4 or so for a simple email response on a single subject (no charge for FYI emails in either direction). Then if the subject requires research, subsequent emails would be billed at the normal hourly rate.

The idea isn't so much to make money at $4 per email, but rather to put the client on notice that ALL our time is valuable. I know this is in apparent conflict with the concept that the client pays for a reasonable amount of ancillary service in their basic fee, but on the other hand there's nothing that would prevent skipping the messaging fee for profitable clients while applying it rigorously for the PITA's (or heading off problems with those in danger of becoming PITA's)

This is nothing more than a flash in the pan idea right now, so I'd appreciate any input or perhaps a description of how anyone on this forum presently bills for this type of service.

[AuditorTurnedGood]

My billing rate is a bit more basic. If I spend more than 15 minutes on a given subject, whether it is research, e-mail or phone call, the clock is running, and starts at the beginning, billed in quarter hour increments, rounded up. The only place it gets tricky is when I do 5 5-minute e-mails for a single subject or something like that. Usually I just chalk it up to overhead. For appointments, the client pays me from the time I leave my driveway to the time I get back.

I have run into a few bumps in the road with billing for "extras", so I simply raised my per-hour fee for all clients, which was suprisingly well accepted. So now, even though they are paying for all of the service they get, they feel like they are getting a better deal.

The longer I work in this business, the more I begin to believe in the "billable hour".

ATG

[Lion]

Invoicing?

Do you actually send out an invoice after every contact? Or weekly? Or monthly? Or run a tab and add it to their next tax prep bill?

[ChEAr$]

Emails

Well, John, every practice is different as we all know. But my position is that unless the
contact, whether a drop in to ask a quick question, phone call or email requires additional research, it's free and part of my annual fee for tax clients and monthly fees for bookkeeping clients. It builds goodwill and reinforces in client's mind how much I'm worth when they write that annual or monthly check to me. Any client contact is good and opens the door for succinctly and discreetly reinforcing that I'm always available to talk to at least one more client, unless, of course, I probably wouldn't want a referral from that particular client.
Come to think of it, why would I even have that client still with me? hmmm...

Of course my attitude on this subject is colored by the fact that I'm a shy and retiring guy..
(well, one out of two ain't bad!). "Retiring" in that I'm really not looking for new business.

[JohnH]

Well, Harlan, there you go bursting my bubble. I'm here on vacation making all these great plans to "get tough with those PITA's" when I get back to the office, and you go & play the "client service & goodwill" card on me. Thanks for bringing me back to reality (I guess).

[erchess]

Extra Charges

I don't charge for emails and phone calls because I want clients to keep me up to date on what they're doing and thinking. I also when I bill by the hour I don't start the clock until I arrive at the client's home or business.

[Roberts]

I agree with ChEAr$ and the others that I don't charge separately, it's included in the original fee. I've never understand why I would want to discourage clients from including me in their business or tax situations. How much time do I spend trying to attract clients and here one is and I'm going to actively discourage this type of behavior?

Another way to look at it - I'm extremely cheap and if someone charged me $4 for an email, they would never hear from me. Maybe that's good for a year or two but it would kill our long term business relationship.

[ChEAr$]

Well, Harlan, there you go bursting my bubble. I'm here on vacation making all these great plans to "get tough with those PITA's" when I get back to the office, and you go & play the "client service & goodwill" card on me. Thanks for bringing me back to reality (I guess).

I know what you mean. Many times at a seminar, like the one in Charleston couple of months back, I get all those great ideas about what else i can charge for, and why I should charge for them, and calculate extra income to be gained by providing extra services, and
write them all down. Once back at the office I have those second thoughts, though, just like you.
sigh
GMTA.

[Black Bart]

All good thoughts.

...I'm thinking of initiating a "Messaging Fee" with a sliding scale...
there's nothing that would prevent skipping the messaging fee for profitable clients while applying it rigorously for the PITA's...

Since the problem (basic fee does/does not include all) has no completely, satisfactory, permanent solution (it was a struggle before the day of emails); I suggest the fits and starts approach (which I use). Just go along as is until the next nickel-nursing blabber makes you feel used, then immediately impose a draconian, iron-fisted price schedule.

This works fine until some poor, generous, deserving, innocent client who wouldn't dream of cheating you accidentally strays into the line of fire. Then, conscience-stricken and overcome with waves of compassion, your troubled waters are oiled and you can forget the whole thing.

Repeat as often as necessary.

[Zee]

So...maybe the answer is an "across the board" increase to everyone of 1% with an explanation that the amount of client calls via email, cell phones, and land lines has increased with the information age and the fact that to conform to documentation and retention standards each contact must be recorded (or something like that).

This is a cost of time that has definitely increased in the past few years with changes in information technology and should be recognized. A 1% increase isn't thought of as being "nit picky" for each call.

[BHoffman]

Less discount, not higher fees

I have a different policy. My fees for annual tax prep start high and I'll discount accordingly. Bunches of phone calls and emails, especially those that insist on chapter and verse on why they cannot deduct their vacation condo or timeshare as office expense, will result in less or no discount.

If a client requires some written tax research or accounting work, that is billed separately at an hourly rate.

IMHO: Much easier to start high and show a nice discount on the bill than start low and try to raise your fees, at least in this neck of the woods. I usually quote the discounted fee to new clients. I also let new clients know that I discount for various things: Paperwork received before 03/1 and paperwork received in good order are two biggies.

[Zee]

I have a different policy. My fees for annual tax prep start high and I'll discount accordingly. Bunches of phone calls and emails, especially those that insist on chapter and verse on why they cannot deduct their vacation condo or timeshare as office expense, will result in less or no discount.

If a client requires some written tax research or accounting work, that is billed separately at an hourly rate.

IMHO: Much easier to start high and show a nice discount on the bill than start low and try to raise your fees, at least in this neck of the woods. I usually quote the discounted fee to new clients. I also let new clients know that I discount for various things: Paperwork received before 03/1 and paperwork received in good order are two biggies.

That's actually a very good idea, and might even help a newbie find business

[ChEAr$]

discounts?

IMHO: Much easier to start high and show a nice discount on the bill than start low and try to raise your fees, at least in this neck of the woods. I usually quote the discounted fee to new clients. I also let new clients know that I discount for various things: Paperwork received before 03/1 and paperwork received in good order are two biggies.

And IMNSHO (!), no discounts. Ever. I charge a fair price for all.

(wink at BH!)

[Zee]

And IMNSHO (!), no discounts. Ever. I charge a fair price for all.

(wink at BH!)

If you charge by the hour (or time), most of the "discounts" suggested are simply reductions in the total cost based on time, or help make the best use of time during slower periods.

So, why not communicate the savings to customer's in a fashion they will recognize as a "discount"? It could help create goodwill and make a practice more efficient.

But, I would agree discounting can make it more difficult to establish a firm's pricing structure and create the image that fees are "negotiable" which is certainly a negative.

[ChEAr$]

On a similar subject

even though I don't hold with giving discounts for fear that clients will wonder why I'm charging so much "regularly"........

I try to miss no opportunity to tell clients just how much money in taxes I saved them.
Maybe it was a new deduction "we' discovered or maybe it was tax planning for an S corporation to find the right salary to minimize SS tax. there are a lot of opportunities for helping clients save money and this, they understand.