How to deal with clients’ price complaints
Start by finding out if they’re really upset with your price—or with something else.
April 15, 2013
When I was first in the practice of public accounting, one of my mentors was a man named Dave Powell. I once asked him how to handle price complaints, and he told me this story:
Last week, I delivered a financial statement to one of my clients, along with a bill for the service. The client took one look at the invoice and said, “Your fee is too high.”
Most accountants are spring-loaded in a defensive posture. Touch them anywhere and they withdraw into their defensive shell—especially when it comes to their prices. Thus, typically, if a client questions an accountant’s invoice, he or she will immediately reach into his or her briefcase, pull out the time run, and wave it under the client’s nose, exclaiming, “I even wrote it down!”
Not me. I’m not at all defensive about my prices. I’m worth every penny I charge and more. If a client says my invoice is too high, I do not try to justify it. Instead, I turn it around. I looked the client in the eye. I smiled in a friendly and confident manner, and I asked him, “Why do you think the price is too high?” You see, I put the shoe on the other foot. I played offense, not defense.
He hemmed and hawed and stuttered and stammered for a bit. Finally he said, “It just seems too high.”
So I replied, “Well, it’s not.”
And that was the end of the price discussion.
Powell had encountered what I call the “pro forma complaint.” It’s not a real complaint. The client thinks, “Who knows? Maybe the accountant will lower the price. It cannot hurt to ask. He or she sure can’t raise it anymore.”
For real complaints, you should still ask Powell’s question, “Why do you think it is too high?” Nine out of 10 times, if a client does complain about a price, the price is not the real problem. The problem is some aspect of the service, such as a late report, a telephone call or email not returned, an appointment missed, and so forth. But the client doesn’t know how to articulate his or her real complaint, and so the price becomes the focus.
If you ask why, you can find out the real problem. Then you can handle it, as the following example shows.
How to handle a price complaint
A client is contemplating a $1 million transaction that can have significant tax ramifications if not handled correctly. You suggest that you want to research the tax treatment to see whether there might be a more tax-favored way to do the deal. After $3,000 of research, you discover it doesn’t matter. You charge the client $3,000, and she complains.
You ask, “Why do you think the price is too high?”
Her response: “You didn’t find anything, so the research has no value.”
The real problem here, of course, is that you did not discuss the price and the possible outcomes with the client before you did the work. Let’s suppose you succumbed to the myth of “Do the work first and worry about the price later.” Now you are in trouble.
Research is an insurance policy
Here’s how to handle that. Say the following:
No, we didn’t find anything. But that is also valuable. Think of the research like an insurance policy. At the end of the year, if your house didn’t burn down, do you think the insurance was a waste of money? Of course not. We invested this $3,000 to protect your $1 million investment in this transaction from adverse tax consequences.
If that doesn’t do the trick, you can add:
Evaluate us over one to two years. We may not be worth what we charge every single month. Some months, we may be worth many times what we charge. Our goal as a firm is to be worth three times what we charge. We want you to view us as an investment, not an expense.
Sometimes it’s easy to measure our value in reduced taxes, increased profits, reduced costs, and so forth. Sometimes our value lies in peace of mind. And who can put a price on that? Yet our goal is, year in and year out, to be worth three times what we charge. I think that if you look back over the last few years [here, you can remind the client of several great outcomes in the past], you will agree that we are well worth what we charge.
If that doesn’t do it, say, “Then you don’t have to pay,” and make sure you remember next time to discuss prices before you do any more work for that or any other client.
Editor’s note: This column is an excerpt from David W. Cottle’s book Bill What You’re Worth.
David W. Cottle, CPA, consults with professional firms on profitability improvement, partner compensation, marketing, client service improvement, and strategic planning and management. He also provides advice at retreats, speeches, and seminars.