Poll on the poll

[Black Bart]

Now there was an eye-opener. 2/3 no-charge, 1/4 sock-it-to-'em, and a couple in the middle. All kinds of methods are being used. Wonder if everybody's happy with the status quo or if anybody's thinking of a change?

[JohnH]

Change

The poll & very useful comments actually have me thinking about making some changes. My hourly rate is fine & don't do much fixed-rate work on regular returns, but this thread has made me realize I give away a lot of off-season time for no good economic reason.

[Lion]

Clarification

My no-charge policy is for the quick answers or reporting back on something I wanted to study anyway or for when I've already built in to the return fee some extra time for off-season issues. Otherwise, I charge, and not nearly enough and need to charge more and probably more often, too.

[DTS]

Lion

Bart forced me to start ranting the other day and I was ashamed of myself after

I read your suggestions and those of some others and thought there were some great ideas there. I don't think it's a good idea to nickel and dime clients and ultimately get them to shy away from calling us. My "rant" referred to clients that are always calling, presenting notices, writing letters for them, covering their behind, etc, year in, year out and "expect it" because I do their return. These are the clients that I will rethink my fee schedule for.

That was an interesting thread. I enjoyed Bart's poll and reading all who posted!

Dennis

[JoshinNC]

As a side note to this,

Business Week for Small Businesses did an interesting article on when and how to fire a client. I will try to find a copy of the article online and post a link. The article even contained a handy equation for determining whether a client is profitable, and if so, how much.

[JohnH]

Article on Firing Customers

Here's a link to a pretty good article on the subject. Not as in-depth as the one you describe, Josh, but it hits the high points rather nicely.

http://www.entrepreneur.com/money/moneymanagement/financialmanagementcolumnistpamnewman/article173108.html

I think there's no question about the wisdom of firing some clients, but the devil is in the details. How it's done can be the real challenge, since all clients have friends and some of the difficult clients have friends who have the potential to become good clients themselves.

[JoshinNC]

That was my thinking too,

Here's a link to a pretty good article on the subject. Not as in-depth as the one you describe, Josh, but it hits the high points rather nicely.

http://www.entrepreneur.com/money/moneymanagement/financialmanagementcolumnistpamnewman/article173108.html

I think there's no question about the wisdom of firing some clients, but the devil is in the details. How it's done can be the real challenge, since all clients have friends and some of the difficult clients have friends who have the potential to become good clients themselves.

regarding potential clients. That issue is not addressed in the article, unfortunately.

[Black Bart]

Not a rant

...My "rant" referred to clients that are always calling, presenting notices, writing letters for them, covering their behind, etc, year in, year out and "expect it" because I do their return. These are the clients that I will rethink my fee schedule for...

Dennis

Dennis/ I didn't take your comments as a "rant," but rather just the normal reaction of a tax preparer who feels he/she's been taken advantage of from time to time by a cynical, complaining freeloader. That's something that'll ruin your day; they leave feeling they've snookered an "educated dope" and we're left feeling like suckers. Of course there are many legitimate reasons to do something free, but sometimes a charge is in order if for no other reason than to let them know who is in charge. Anyway, I think you're on the right track, I'm of the same mind as you are, and I'm going to try to improve my style and score on this.

"Don't get mad; get even." -- Bobby (I think) Kennedy.

[RLymanC]

Fees

I normally don't charge fees to my clients that need a copy of previous years, help in calculating the W-4, some occational investment advice,,,etc., etc. when they ask,"How much do I owe you." I'll say, not a thing, glad to help.

NOW, the client that gets up and say's "thanks", see you in a few months, I'll reply,,,,how would you like to pay for my services,,,,check, cash or credit card.

[Lion]

Charging

I'm trying to walk that line between getting the client to call me before he does something with a tax consequence and getting the client to pay enough for my time. When he's appreciative and has a pricey return and brings me his mother or his son's trust or other new clients, I think I've been paid for recomputing his estimated tax in the fall after he sells some stock. If his return is really a bit too cheap and he acts like he expects me to be his on-call personal financial manager, I really have to start charging more often and more money. I have one who refinances every year and has the mortgage broker call me to get a "self-employed" letter that very same day; hasn't he been working with the broker for days or weeks... I haven't told him I'm leaving my employer at the end of the year!

[joanmcq]

Do you sign SE letters? I don't...

[JAinNC]

Hey Lion

It sounds like you and I do something we all called "Value Pricing" a few years back.
Sometimes it has to be ....... how valuable my service is to the client. Yes we want them to call with questions before they do something they really need help with. (It's okay that they don't always know when they really need to ask ..... because they still need to call).
I want them to call but I will still charge for it and add it to their accounting bill or tax return fee. I have some half-page fill in forms we made up on gray paper to put date, context and remarks for phone calls during the year. These we staple to the prior year recpt in their file. It helps my memory when they come in and I don't forget to charge.

This poll has been helpful. Lately, I have had more appointments for consults. I tell them on the phone that only a new or potential client gets 30 minutes free. During the appointment I am now noting on a pad when the 30 minutes is up so charging begins.

If we don't think we are worth it, clients won't either.

Jeannie

[John of PA]

Fair to both you and your client

One of my general rules on charging is asking this question: "Is my fee fair to both my client and me? To me, outright value billing should not be used as an excuse to engage in greed, that is, getting as much as you can out of your client. The client is not as naive as you may think, they know you are doing that.

[Black Bart]

Fallout from firing

...I think there's no question about the wisdom of firing some clients, but the devil is in the details. How it's done can be the real challenge....

As to "how it's done," I haven't yet found a really good way to tell someone that I don't want their business. About the best I've been able to do is ease the pain (for both of us) by making it direct, brief, and firm.

...since all clients have friends and some of the difficult clients have friends who have the potential to become good clients themselves...

I haven't found the fallout from such to be as bad as I expected. Of course, we can't really know unless somebody comes up and says "Joe Blow says you're a terrible tax preparer," but even then you can reply "Well, consider the source;" and they'll usually know what you're talking about -- it's a good bet the ex-client hasn't show his/her true colors only to us. I once had to get rid of a client whose girlfriend is the local Gossip-in-Residence (in olden days she'd have been elected Town Crier by a landslide). I fired him anyway and I know that people take what she says with a grain of salt. But whatever the situation (even death row prisoners have friends), it's either do the needful thing or continue to suffer.

[Luis Mopeo]

As to "how it's done," I haven't yet found a really good way to tell someone that I don't want their business. About the best I've been able to do is ease the pain (for both of us) by making it direct, brief, and firm.

Dear So-and-So,

This letter is to inform you that our office will no longer be able to provide services for you. Please contact our front desk if you need copies of any documents that we have in our possession.

Sincerely,

Luis Mopeo

By this time the client already knows you're miffed about something. They know what the issue is. They either pulled a stunt you're not going to get involved with, or they've ignored your directions more than once.

I've used this approach on several occasions, and it's worked 100% of the time. The person disappears. As a note, once I've decided to fire a client, if possible I will finish the task at hand so that I'm not leaving anybody high and dry. The "Dear John" letter goes out soon after the last task has been finished and paid for.

Don't sacrifice your integrity. Don't lie. Don't make up convoluted stories like "I've decided to specialize in another area of tax law and I deeply regret..." Every time you equivocate or try to explain, you're giving the person words to twist. Don't underestimate a person's willingness to think a letter is a mistake, or all it will take is a phone call and some schmoozing to get you to reconsider. If you try to let them down easy, they won't get the message.

Not mean, not angry or insulting. They can wave that letter around town all day long, and nobody's going to see anything other than you wanting to get rid of the client. Other people know what this person is like as well.

I recommended a fine auto mechanic to my brother-in-law once, and he tried to con the mechanic into fixing a pre-existing problem by telling the mechanic he broke it when he was working on the car. It got ugly, and my brother-in-law went on and on about what a terrible mechanic this guy was. I didn't switch mechanics. I just made it a policy never to refer my brother-in-law to anybody again (at least anybody I liked).