Thursday, 21 June 2018

How to lift your fees by 26%

How to lift your fees by 26% - Ditch your multiple charge-rates if you want to grow your accounting firm starting 1st July.

I did this in 2012 in my firm and never looked back. My fees grew by 26% in less than 12 months with Zero marketing spend.
If you really want to lift the performance of your accounting firm, then make a new "financial year's" resolution to stop using multiple charge-out rates for your staff. It is cumbersome and inefficient. The bigger your firm is the more charge out rates you have to track and then increase for a particular staff member when you do pay reviews. It's crazy!
A simpler, more efficient and certainly more productive approach is to ditch your multiple charge-out rates and simply implement a firm-wide Target Average Hourly Rate (TAHR). This is the Target AHR you want and set from the 1st July for ALL compliance work that comes in to your firm. Therefore each year, all you have to do, is to be ambitious enough and increase the TAHR and your fees will grow automatically.
For Example: Recently one of the accounting firms that I am working with were horrified to discover that for the entire financial year, their firm wide AHR recovered for professional staff was $53 per hour! That's insane! Where's the ROI on your investment, your risk, your blood, sweat and tears! And there's a lot of tears (and blood spilt) in running an accounting firm as you very well know.
The quickest way to increase your firm's fees is to simply set a target rate that must include all staff, including Admin. Therefore you need to increase your target TAHR slightly more than what you would expect to take into account your Admin Staff who may not charge their time. Personally I believe all Admin Staff you charge their time. But that is an argument for another day.
This is how you do it:
  1. Ditch all individual charge rates in your firm.
  2. Still complete time sheets, however the charge rate for everyone is $1.
  3. Prepare your fee estimates based on the number of hours to complete the job with some buffer for overruns.
  4. Always monitor daily the hours left on ALL the jobs and always adjust for scope creep and scope seep.
  5. Set your fee budgets based on hours multiplied by your Target Average Hourly Rate regardless who is working on the job. For example: An accounting job comes in and you budget 20 hours from start to finish including Admin time to log in the job and mailing it out. If you set a target AHR of $230 per hour, then the fee budget is $4,600 plus GST.
  6. High-end business advisory work should be charged at an even larger TAHR. Therefore at the most you may only have two target AHRs in your entire firm. How simple is that?
You can lift your fees across the board in 2019 without spending $1 on marketing and without acquiring one new client. Just simply set a Target AHR for the entire firm and price everything accordingly.

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