Professional Fees In A Tough Economic Environment

Costs have gone up. Credit lines are harder to get and, if you have one, harder to keep with tightening requirements by banks. Gas is currently down but does anyone expect that to last? Healthcare costs are certainly not down and probably will not go down.

As you plan your revenue forecast for 2009, the questions are: Do you stand pat with your fees or increase them and enhance your value proposition? Or do you cut your fees in hopes of winning client loyalty?

Your thoughts?

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Permalink Reply by Maureen Sharib on January 1, 2009 at 11:53am

We'll stand on our fees and when we do increase them I will (ever so-subtly-maybe-not) remind our customers that we did so during these challenging times. I'm prepared to do whatever it takes to get the job done and I think my customers understand that - that's my value proposition.

Gas? That's a wild card. I did not expect it to go down but I THINK the powers that be saw what severe damage high gas prices did to the world economy (sub-prime mortgages my ass) in a very short time and are cognizant that raising them again like that could strike a mortal blow.

There are things we can control - like our appetites to spend money we don't have. We as a nation must get over the entitlement mentality that many of us have sunk into. Every American doesn't "deserve" to live like a king or a queen. Get over it and put your work boots back on. We need to heave our shoulders to the plow once again. Can we do it anymore? That's the question.

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Permalink Reply by John G. Self on January 1, 2009 at 12:51pm

Maureen Sharib said:

We'll stand on our fees and when we do increase them I will (ever so-subtly-maybe-not) remind our customers that we did so during these challenging times. I'm prepared to do whatever it takes to get the job done and I think my customers understand that - that's my value proposition.

Gas? That's a wild card. I did not expect it to go down but I THINK the powers that be saw what severe damage high gas prices did to the world economy (sub-prime mortgages my ass) in a very short time and are cognizant that raising them again like that could strike a mortal blow.

There are things we can control - like our appetites to spend money we don't have. We as a nation must get over the entitlement mentality that many of us have sunk into. Every American doesn't "deserve" to live like a king or a queen. Get over it and put your work boots back on. We need to heave our shoulders to the plow once again. Can we do it anymore? That's the question.

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Permalink Reply by John G. Self on January 1, 2009 at 12:55pm

We are increasing fees for clients because the white-shoe firms are already up there. This year, with all the travel, I suddenly realized my lower fees were NOT winning any prizes. I am tired of delivering a better quality work product with more value for less money. I will stand pat with existing clients, though.
In our area, most firms are getting 30 to 33.3% of the total first-year cash compensation, including the bonus. We have never used the true up with a bonus. But we are now because that is the market.

But I am still having worries....always when I adjust fees upward.

We hold 2-3 percent of the world's proven oil reserves and consume 20%. This is a bad sign for continued lower prices. The speculators and a spikle in global demand drove up the price once. Right now lower gas prices are a godsend for the economy. But the bad news is that people with good credit scores who CAN buy are going back to the larger vehicles. We just never learn. Why I am not surprised. We now have crop subsidies for banks and automakers...China and India are growing like crazy and the number of people in China and India who are buying cars -- that will require more of the global supply to operate -- will certainly send the price above $3 again. I just hope that it does not spike before the economy recovers.