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Language in engagement letters

For many firms the concept of ‘pricing up front’ scares them. They are scared that the price will be wrong, that there will be ‘job blow out’, that there are variations and the dreaded ‘what will  the client think’?

Once you get over yourself and start pricing every job up front you will find that the clients love the fact that there is certainty in the price and scope of work. You will be pleasantly surprised.

To help you with some of the mechanics you need to have 2 paragraphs in your engagement / implementation plan letters:

Paragraph 1 – deals with ‘scope creep’ – when there is more in the job then you first thought:

“The price listed is for the scope of works that are documented that we have both agreed on. If there is anything outside of this scope that you request, or if we find additional matters that need dealing with that have not been listed and priced then we will communicate with you separately with what they are and how much the additional price will be.”

Paragraph 2 – deals with offering phone calls and emails.

Please feel rest assured that you can contact us as often as you like with questions or for
assistance. Our Annual Accounting Service only covers those discussions which assist you
with your initial query. If as a result of our discussions and/or upon your request, we deem that
there is work to be performed that will fall outside of our Annual Accounting Service, we will
advise you of this before we commence any work and provide you with a fixed price
engagement to complete the work, at your discretion.

“As part of this service you can contact us as often as you like with questions or for assistance. Our [Service] only covers those discussions which assist you with your initial query. If as a result of our discussions and/or upon your request, we deem that there is work to be performed that will fall outside of our [Service], we will advise you of this before we commence any work and provide you with a fixed price engagement to complete the work, at your discretion.”

By adding these paragraphs you will serve your client better and improve your margins. Win:Win!

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