Art of Accounting: I Lost a Client to an Accounting Firm with Cheaper Fees

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IMGCAP(1)]I have never been the lowest-priced accountant, but neither was I the highest.

Sometimes prices charged are subject to the perception of the client and not reality. Fees are always related to the value provided, although that isn’t always evident.

An example is a meeting I had with an attorney who had been referring a lot of business to me. He mentioned that he thought my fees were much higher than my “competition” and that it was getting harder for him to refer me.

When I left him, I had lunch with one of those “competitors,” who mentioned that they thought we were not being fair because we seemed to be lowballing fees to get business.

Neither was right, but that was their perception.

That day, when I returned to my office, I received a client survey from a good client who gave us the highest possible ratings. But he said that he thought our fees were too high, and while he paid them he did not recommend us because of that.

I dealt with all three situations and also adopted methods to create the perception (as well as the reality) of delivering extraordinary value for the fees paid, and lessened the dollar amount paid from being a sticking point.

Recently we received a call from a client we lost about five years ago simply because he was quoted much lower fees—actually he was lowballed by a larger firm. The call was to see if we could unravel an untenable tax situation where his multiple entities could not offset those with gains with losses from the others. The cause of this was because of inattention by the partners and staff working on his account.

We are all in business and as such need to earn adequate income. If too excessive, we will lose customers. If too little, we lose our future financial security by not being able to bank enough now and also to provide for reasonable growth. There is a balance, and as I have stated many times, accountants do not make obscene amounts—if we did, why do we keep on working—we should have much better things to do with our lives.

At the end of the day, the fees pay for the services provided. More fees equate to more services and value. Less fees mean less work, attention and obviously less value.

In the case of our wayward client, the accounting firm did an adequate job of filling in the forms and filing neat returns on time. What they did not do was the part that provided added value to the client. That means focus on the client with a big-picture look at what the client is doing, tying in all the loose ends, coordinating the compliance work with planning, suggestions, oversight and what is important to the client. We did that—their “new” accounting firm did not do that.

Our fee structure covers the vital extras that separate us from the others and helps our clients become richer. Their fee structure covered less than the basics, because when people engage a professional accounting firm, the extras are the basics.

A takeaway here is to pay attention to your clients, get paid for it and effectively communicate the value to your clients.

Edward Mendlowitz, CPA, is a partner in WithumSmith+Brown, PC, CPAs. He has authored 20 books and has written hundreds of articles for business and professional journals and newsletters plus a Tax Loophole article for every issue of TaxHotline for 27 years. Ed also writes a blog twice a week that addresses issues his clients have at He is the winner of the Lawler Award for the best article published during 2001 in the Journal of Accountancy. He has also taught in the MBA graduate program at Fairleigh Dickinson University, and is admitted to practice before the U.S. Tax Court. Ed welcomes practice management questions and he can be reached at WithumSmith+Brown, One Spring Street, New Brunswick, NJ 08901, (732) 964-9329,

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