Yesterday I was on an Accountants website (his name is Paul) and I saw this clearly on the site.

Fee structure: “We can provide monthly fixed price service packages or bill based on hourly rates (bookkeepers $40-60 p/h, accountants $120-$170 p/h, partner $210 p/h) and estimate fees for our services.”

We were in an email exchange and I suggested he fix it.

Paul came back to me pretty quickly with this:

Fee structure: “We provide fixed price service packages that can be paid monthly. In some cases we bill based on hourly rates and estimate fees for our services”

I wrote back and suggest he change it to this:

Fee structure: “You’ll be provided a fixed price in advance either by the month or for the project. Unless the scope of work changes the price will not.”

I was amazed at Paul’s response…..

“ahh ballsy”

Why is this so hard?

You scope the job out, you price it based on what you believe it’s worth (value to the client), you put it in writing and have the client sign off on it. If there is a change in scope then there is a change in price.

It’s no different when you get your car serviced at the Car Mechanical Repair shop.

You’ve agreed to the $250 service and 2 hours after you drop it off you get a call “whilst we were doing your service we discovered that your brakes need repairing. We can fix the brakes today and the additional charge will be $650 – is that OK with you”? WE SAY YES EVERY TIME.

The mechanics (pardon the pun) of this are easy.

You price the project in advance, you get paid in advance (or at least a good chunk of it anyway) and you manage the scope creep and scope seep.

If it’s known work spread over the course of the year then you bundle it up (make sure you include all phone calls, emails and meetings as well for the year – no cap) and divide by 12 and you get paid on the first day of every month by direct deposit / ACH or Credit card. This is how I work with my Accountant and it’s brilliant.

Recurring revenue businesses are more valuable than project based businesses with lumpy cash-flow.

Everyone’s a winner here. No more hourly billing in arrears. No more charge rates (keep the time sheets – $1 per hour), no more write offs, no more WIP and no more Accountants Receivable.

No more surprises and no more cash-flow issues – on both sides.

What’s not to like about this picture?

Coming up with the price is a whole different story. That is 1 part mechanical, 1 part science and 98 parts art.

Have a great day pricing new projects.