This is a great question that I am often asked. People are always keen to know the cost of something before they know the value. We are all preoccupied with cost, but maybe sometimes we should just take a step back and get the value proposition first.
One of my own personal pet hates is paying a delivery charge if I order something online, but if I stop to think about it, the cost for me to drive to town, pay for parking and then factor in the cost of my time, easily justifies any reasonable delivery charge. What we need to do however, is translate this way of thinking into anything that we purchase. Be it a coffee, some new flooring or even software.
Cost vs Value
In my early days in sales I was involved with Photocopiers, yes I had an interesting baptism!! On my first day in my new job, I was shadowing the star of the team and we went to set up an all singing and dancing copier at an engineering company. This copier was the bee’s knees, all bells and whistles, and had this strange contraption on the side that looked like a toast rack. It was a staple sorter which automatically collated and stapled the user manuals for this company. On our way back to the office I was asking loads of questions including the cost for the collating device. It was over £2,500 as an add on by which I questioned the cost. My new colleague just came straight back to me and said “have you ever collated documents?” I hadn’t, so therefore couldn’t see the value.
Back at base, he explained to me that the engineering company was spending over £700.00 on a print run for their manuals, but because they were always improving their products they had to continually update manuals and therefore their printing costs had risen. By using the new photocopier with the collator, they could bring their printing in house and only print when needed. Not only saving them money on the printing, but it also made them more proactive and ensured that manuals were always up to date and delivered quickly and efficiently without taken extra administration resource.
This engineering company didn’t question the cost because they knew the value and they signed the order. They also saved a small fortune on printing costs. This was a valuable lesson to me and has enabled me to help deliver value to my customers in my various roles that I have had over the years.
So how do you justify your fees?
You are probably wondering how you justify a high fee to a client when creating their fee note, this is exactly the same scenario. Does your client understand everything that you have done for them when preparing their accounts? Do they understand the CPD and training that you have put in over the years to get to the expert level that you are at today? What would it cost them in their time to come up with what you have produced? Do they have the necessary understanding of their legal obligations?
When you factor in everything that you do when working for a client, it should be easy to justify your fee and you shouldn’t feel pressurised to just write a bit of the bill off because you only charged a small amount last time.
To find out more about how mTrio can add value to your practice