A former colleague asked me if they should charge an initial fee for a new service and it got me thinking.
For their situation I suggested he test and start with charging £200 to £300 for the initial one-to-one telephone consultation. This would include an initial assessment and some highly valueable resources (like the example below).
My take is that if you are undifferentiated compliance/commodity provided then you'll have no opportunity to charge an initial fee. But, if you are a specialist with lots of value (and preferably in high demand) then you'll want to filter with an initial fee.
I attended an online seminar where a law firm share their experience of this. They used to have free meetings with clients for matrimonial disputes. Some became clients and some didn't but lots of value was given in the first meeting. They didn't like giving away so much value so designed what I call a "starter product/service".
They priced this at £750 and gave a 100% guarantee. The service includes a meeting (unlimited time) with answers to all questions, a full initial assessment and a DVD of three leading phycologists talking about how to keep kids out of the dispute.
The firm reports that clients love it and they make good money as the average time is 3 hours.
I thought about this a while back. I was split on it. Part of me believes that people don't value something they get free. I suppose it really depends what the consultation is. If it's just a meeting to understand the clients needs, and to determine if they would make a good client then I don't think there should be a charge. If it moves into the realms of advice then perhaps there should be a charge.
The other argument is that if everyone else offers a free initial consultation do the clients expect it? If you charge does it set you apart from the crowd, or make you unappealing? Would people pay for it? Would they value it, or would you not get that far? Would they just move on to another bookkeeper?
I believe the rules are (have?) changed for IFA's where they no longer receive commission but are paid for the work they do by their client. It will be interesting to see how that market develops.
The thing that is being missed here is that the initial meeting for a potential ongoing relationship is not simply the client deciding to use your services but rather you deciding whether to take on the client.
You could not charge someone a fee and then say thanks very much but we don't want to work with you.
That said, if you are offering something quite specialist where the meeting is an end in itself or the start of a short term project such as preparing a bank proposal then such is less the traditional interview meeting but giving away value and I'm with the concensus that such would be charged for based on the subject matter rather than the time.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
That's very interesting Bob. I'm aware of your stance on pricing etc. and I'm always intrigued by the way you approach monetising time spend on clients.
from what you've said before about (I think I've got this right) "value pricing", where you sit with a prospect for a long time and work out what they themselves consider to be the right price for your services - how do you see this working if you have a one-size-fits-all-paid-up-front consultation process?
Also, I'm worried that having an initial consultation "package" would put off start-ups? But I take Kris' point that people often don't value something they get for free.
__________________
my blog "the bookkeeper's in town - learning the hard way"
Actually thinking about what I'm saying above I realise that I'm actually in this instance agreeing with value pricing.
If I were preparing information for a client to obtain a £10k bank loan I would charge less than I would if preparing information for a client for a £100k bank loan as there is a different associated financial and reputation risk on my business even if little if any additional work involved and my fee's need to reflect that associated risk.
Well done Bob. You've got me to a quite specific value pricing agreement... You knew that you would do it in the end didn't you :)
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
@Shaun - there are no rules with pricing. If you tell the client why you are not going to work with them there is value and they may be happy to pay for the initial meeting.
@pDM - I do not try to monetise time with clients; it's all about knowledge. You are right, bespoke pricing is the basis of Value Pricing. One idea is to have different prices for different types/sizes of business.
if a client pays for an initial meeting they think that it is cut and dried that you WILL be representing them. They would not happily accept a thanks for your money, your not competent enough for me to represent, bye. approach.
My agreement over initial fee / value pricing (which I would call value pricing in this instance rather than valueing the cost of pefect information) is purely down to specific circumstances related to short term gigs where the initial meeting forms part of the service rather than an interview.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
@pDM - I do not try to monetise time with clients...
I do. I thought that's what business was? (and to correct you, I said "monetising time spent on clients")
The point I was trying to make is that your approach interests me. From the posts I've read; you value your time highly and make sure your clients know it. Your approach to this always impresses me, because I'd never have the balls to do it myself - and it seems to work for you.
I'm old fashioned; I charge what my time is worth to me. But I'm open to new ideas.
Likewise your original question of charging for an initial service consultation (an interview, if you will) is, in my opinion, a step towards monetising time with (albeit prospective) clients. Which I don't think is wrong, just ballsy.
__________________
my blog "the bookkeeper's in town - learning the hard way"
@pDM - it wasn't the "with" or "on" clients but the TIME I was picking you up on. The value of the meeting is not how long I spend with someone but what I say.
So, taking this forward (to reinforce the point) I value what I know highly, not my time. Spending time with me is expensive because you could be building a business or with friends and family.
