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Discussion:New client fee: LESSON LEARNED

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Discussion Forum Index --> Tax Questions --> New client fee: LESSON LEARNED


Wkstaxprep (talk|edits) said:

28 February 2007
I learned a good lesson this week. A new client referral i received and i met with them for about 1/2 hour and went over their tax situation . So far this year i have been giving new clients, especially with more complex returns an upfront fee estimate to avoid any misunderstanding or uncomfortable situation when it's time to get paid.

Guess what ? I let my guard down on this one and now i got myself into a sticky situation .

Just thought i would pass on the lesson i learned in case it helps anyone here.

Lesson learned = New client or current client with substantially more work in current year than prior year - give them the fee estimate upfront, will save you headache, aggravation, time and .......of course....money :)

Will

JR1 (talk|edits) said:

February 28, 2007
Well, don't apologize for coming back and saying it was an estimate based on the prior year, and whoooeeee, there's a whole lot more to do this year. Tough.

Truthseeker (talk|edits) said:

28 February 2007
Agree with JR1, you should be allowed to make price adjustments just like any other profession. Most clients get stuck on the old price and if you try to adjust upwards, you

usually get the ... oh, you went up on your price... regardless to the amount of extra work involved.

Taxea (talk|edits) said:

28 February 2007
Be aware of the fact that an "estimate" is often "heard" by the client as "this is what the return will cost". I don't do estimates. I tell the client that the complexity of the return results in the cost of the preparation. Until I get into the return and see all that it entails there is no way to accurately predict the cost to prepare it.

They either use my services or they don't. I also let them know that they get what they pay for...a cheap possibly inaccurate return or peace of mind that their preparer has their best interests at mind. taxea

Death&Taxes (talk|edits) said:

28 February 2007
On the phone I tell them a range of my fees last year and give them an idea for a simple Itemized deduction return, but let them know if I have to input lots of stock sales, lots of interest and dividend payers and the like the price goes far higher. The idea is to get the client to talk about the return so I can get a ballpark idea.

Bx524 lca (talk|edits) said:

February 28, 2007
Why is it that we always get questioned on our fees? When someone takes their car to a mechanic and they charge them $150 for an oil change, do they question that?

Deback (talk|edits) said:

February 28, 2007
I'm always willing, like D&T, to give estimates on the phone by asking some questions to get an idea of what forms need to be filled out and the complexity. It's just part of the job, and that's why I don't lack for work during tax season. Being friendly to prospective clients and current clients is a definite must if you're going to have a profitable business and retain clients.

But I did turn away a new partnership the other day (not enough time), and last month, I turned down a chance to speak at some city meeting, where I could have gained new clients--like I really need more tax returns to do--and I have no time to go anywhere during tax season and definitely have no desire to make a speech on income tax or speak about anything in front of a crowd.

Death&Taxes (talk|edits) said:

28 February 2007
I quote my average fee from last year. Since I get most people from recommendations, I have some idea why they are calling. Right now I am torn with adding one more day in my Philadelphia office 60 miles away; a day away from here means coming home to 30-50 emails, 4-5 phone calls and the next day spent printing the returns I did the day before [no printer in Philly and I am not carrying one because too much to carry and printing slows down getting their faces out from in front of me]. On Monday night I found an email from a member of the Philly orchestra: a rehearsal has been called the same day two members made appointments and while I can juggle one into another slot that day by having someone else move their time, the other has no where, plus I have the inevitable 'are you taking new clients?' lines from others, telling me so and so, the architect, recommended me.

I turned down a 501(c)(3) and left a note for the CPA who shares my Philly office to see if she wants to take this legal partnership I met last week and which has one set of 'books' on paper and another in Quickbooks and ne'er the twain do meet....it is a good fee from what I saw last year but the time element....

We must be crazy to put up with preparer abuse.

Klesher (talk|edits) said:

1 March 2007
Yeah BX 524, I agree - why are we always questioned?

And I am sick of people calling on the phone wanting estimates! Like the guy today "oh I just have a 1099 and interest and you know some deductions " Ok what kind of deductions , I ask ? Lands up being all schedule C deductions! My price just went up - he said he was going to call around ! Be my guest!!

Rgtaxservice (talk|edits) said:

1 March 2007
And when you so give them the quote they always 'have to talk it over with the husband/wife and get back you'.

The best calls are the ones that start with "I used to do my taxes, but now it's getting hard, can you do them?" or "I have a problem and I need help". My favorite..."You were refered to me by ....." Those rarely ask about fees.

Those that want someone to 'do their taxes' are price weasels. Those requiring tax preparation are willing to pay the price for the quality and service.

Will "the tax guy" (talk|edits) said:

1 March 2007
When I get these calls I always give them an average unless they give me enough info to determine a price. Even if I know I quoted them a price which is lower than the actual charge I usually just tell them that will be $X and if I have done a good job for them they rarely say but you quoted me $X. If they do comment I just explain to them that I had to do this or that that wasn't mentioned to me on the phone. I had a client today that I clearly remember him calling asking about prices I charged him exactly what he paid last year, which was more than my quote and he said that was exactly what he budgeted for.

Kathyt (talk|edits) said:

1 March 2007
I started going by a fee schedule last year (per form, with some exceptions, recapping, long winded clients....) and it has made fee quoting so much easier. It has also increased my revenue a LOT. Some clients had a less expensive bill, others had more expensive. Last year I had several complaints that the fee went up, I explained that we switched to a per form fee schedule, I expected some clients to leave (I didn't really care, I have much more work than I care to have at this point) but so far this year, I haven't seen any decrease at all. I've finished about 250 returns so far this year and I think I've had maybe 3 complaints in fees (to which I've responded, your fee went up because YOU sold this or YOU received this 1099...) my gross this year is up 20% from last year this time. Plus it's less work for me. I put my form charges into Lacerte and it figures the invoice for me, one less thing for me to do. I just look at the invoice when I'm finished with the return and make sure that all time charges are fair (the client who was in & out in 15 minutes v/s the client who handed me one peice of paper at a time, very SLOWLY, T H I S IS M Y W - 2". I always tell them my fee is just an estimate, but I will call if it appears to go higher after working on it, which rarely happens. I can usually time it pretty good.

Smokeytax (talk|edits) said:

1 March 2007
Say, Kathyt, how do you tell your clients their fee will be calculated, to take into consideration that the same forms might result in differing fees for the very fast vs very slow clients?

Thanks.

Klesher (talk|edits) said:

1 March 2007
KathyT - what do you about the sch A after you have input the info , only to find out they are short of itemization? Do you charge for the A ?

Death&Taxes (talk|edits) said:

1 March 2007
On that point, how many clients call after they get the copy to say, "You didn't give me my church" because I used the Standard deduction? There are times I print the Schedule A anyway and attach it to their copy.

Kathyt (talk|edits) said:

1 March 2007
I print the tax summary with every return that breaks down the total itemized deductions & compares this year to last year. When they don't have enough to itemize it shows on that summary so I can point it out to them (if they ask) that they were better off with the standard. Do I charge for for the A anyway? It depends, if they have only mortgage interest & taxes and it's 2 quick entries, no I do not. But if they have employee business expenses, recapping, in other words, real work, and not just 2 quick entries, then yes I do. I add it as a time charge to the invoice. The slow clients have a time charge added to the invoice. I really have not had any complaints to speak of, like I said, maybe 3 so far out of 250, not too bad compared to prior years.

Wkstaxprep (talk|edits) said:

1 March 2007
Some helpful response for sure.

I guess we should look at this way: we charge good fees and raise some fees , we just tolerate the few who complain it's worth it.

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