Accountancy Charge out rates

I can't imagine any business is in a rush to publish their costs for pricing. It's obviously not in their interests to do so. Accountancy firms are hardly unique in this regard.

It may also lead to disagreements with clients. I presume (not that I'm a partner in a big firm) that the discounts or loadings to the standard rate would be based on stuff like "the audit will be risky as the client is an idiot with no clue how to do accounts" and "we think the business model doesn't work and will fold soon." I don't think a prospective client would appreciate being told that.

It's not true to say that the big firms don't have small clients. Some of the regional offices in particular would have a decent chunk of small clients.

Restaurants and dentists (not sure about orthodentists exactly) are required to publish their price lists. It's not that they all want to. Mandatory minimum pricing like the Institute of Chartered Accountants of India would generally be considered cartel behaviour as it would stop prices falling below this floor. It would have been very bad to have this in Ireland as we'd still be stuck with bubble prices probably.

There's obviously an element of haggling in all this. Firms will try to charge as much as they can and clients will try and pay as little as they can.

Let's ignore that though and focus on the theoretical side of things. Accountancy prices aren't set in stone like buying a can of coke from a shop. There is the "guideline" price that the firms use for a rough idea and then they will tailor it for each job. They will charge more at busy times of the year. They will charge more for risky jobs which might leave them open to bad pr or being sued. They will charge less for big jobs. They will charge less if the work is recurring or may lead to more work in the future. And so forth.

Publishing their "normal" prices doesn't tell people a whole lot as the prices will vary massively anyway. I don't believe it would help competition a whole lot. It certainly wouldn't help my tax money. The state takes out goodness knows how many contracts a year throughout all the state bodies. They know full well what a normal rate is.

Really we're back to the usual solution of making sure people shop around in order to drive prices down. For bigger jobs these should be put out to tender and the tender process needs to be done well.

I'm not sure why you've had trouble getting prices in the past. I've never been involved in hiring the Big 4. I'd guess that if you just rang them they'd be reluctant to give a guess over the phone as they don't know your business properly to give a correct quote. If they thought you genuinely might choose them for the work and weren't just ringing around then they'd talk it through with you and work out a quote. If they think you're just trying to benchmark and won't actually go to them then they won't bother wasting their time calculating a price. As you know their time is worth a lot .

BenThere wrote: »

I've never had a problem getting prices when I ask, the whole point of starting this thread is to question why they make you ask in the first place. Why don't they publish their pricing even if it is only their RRP/Rack rate?

Ben

Most professional services firms as far as I can see are the same - lawyers, PR people, engineers - the pricing model for most of them seems to be ''whatever we can get away with'', or ''whatever the client can bear''. You can't put that on a price list.

No other professionals give standard rates so why on earth would accountants?

So does that answer the questions?

You clearly aren't going to accept any answer until you get the one you want, but I'll just point it out again. I work for a big firm, you come to us, ask us for a piece of work, I.e. ct compliance, we will quote you a fee, if you want, we will break it down further, 600 for calcs, 200 for submission etc.

Do you want the work done for that fee, or do you want us to justify how muchh everyone is paid by the hour, down to the guy in the mailroom?

While we're at it, do you want a breakdown of how much it costs to have us suscribed to accountancy magazine, each accounting software, the rent apportioned to my small area of the floor I work on, how much it costs the firm to maintain my laptop, and how much of my hourly rate is a result of the training courses I'm constantly enrolled in? What about an hourly quantification of how much money/time is saved by the software doing the work for me, which is included in your bill?

Or maybe you just want the final fee quote, and not information which is irrelevant and of no use to you

BenThere wrote: »

Nah, all I want is for the big firms to publish their standard charge out rates (which they all have and will give you if you ask) without me having to ask. When I have a specific piece of work/project to be undertaken I'll still ask for a fixed fee quote or if that's not possible an indicative quote based on X hours of associate @ €? per hour and Y hours of a partners time at €? per hour.

Are you saying that the reason the big firms don't publish their charge out rates is because their clients couldn't work out what a project would cost if they submitted the estimated number of hours required by each grade of person to fulfil the project??

Ben

As someone said earlier, there's often a premium or discount based on risk, complexity of the job, and other qualitative factors which essentially mean that simply looking at rates really isn't indicative of the final fee. Even comparing rates across firms isn't indicative since firms weight the qualitative factors differently, meaning that Firm A's rate of 100 / hour and Firm B's 101 / hour doesn't mean that Firm A will give the cheaper quote.

BenThere wrote: »

C'mon TL, you sound cleverer than to selectively quote me to make your point. :rolleyes: I also said "if the job is unattractive to the firm due to too much perceived risk or for some other reason (e.g. being asked to audit a Ltd company which has a reputation as being a front for criminal activity or is involved in an industry sector the firm has a policy of avoiding e.g. strip clubs) then it can simply decline the opportunity."

Risk is completely mitigated by declining a job but is also mitigated through limitation of liability clauses in the terms of engagement and via professional indemnity insurance should the engagement agreement not prevent the firm being found negligent in a subsequent court case.



Thanks for clarifying my point there ref complexity TL. That was EXACTLY the point I was making. If one firm uses 2 x senior associates x 40 hours each at €300 an hour = €24,000 and another firm would tackle the same job using 1 x assistant manager x 64 hours x €450 an hour = €28,800 the first firm would cost €4,800 less and, assuming both firms could start the job on the same day, the first firm would have the job finished 3 working days earlier. See complexity is absolutely reflected in and adjusted by the hours worked by various grades of staff.

QED I'd say

Now, does anyone actually know why the rate cards are not published by organisations who in the case of accountants have a responsibility for delivering transparency????

You've just given a worked example of how two different firms can give two different quotes based on how they internally staff the job. In a situation where a potential client has looked at the published theoretical rates on both firms websites and then received a quote from both firms, the potential client has now gained nothing from seeing the published rates. In my view, you've answered your own question.

Can you please explain clearly what further explanation you're looking for?

I mean, the very bottom line is, they don't want to publish their rate cards. It's not industry standard, and the firms gain nothing from it. The industry isn't what I would call a price competitive one. It's an industry defined by quality of work and client service, and prides itself on these aspects, not price.

If you're trying to pick fault with the firms for not publishing their rates, or trying to subtly complain about the situation, I don't think there's much more that I can say that will give you what you're looking for.