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Discussion:Charge for Initial Consultation

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Discussion Forum Index --> Business Growth Community --> Charge for Initial Consultation


Jossiecpa (talk|edits) said:

7 August 2012
I usually don't charge new clients when I first meet with them. I consider it a "getting to know you" kind of thing, and usually the first meeting doesn't include tax advice etc. It's just to determine how I can help someone in their situation and what kinds of services they'll need.

However, I received a referral from someone yesterday who is asking to meet because him and his wife are having their personal residences foreclosed on (actually receiving deeds in lieu). They want tax advice to know how this is going to impact their taxes so they can plan. He asked me how much I charge for the consultation, and I gave him an hourly rate, and said I would discount it because it was a referral from someone I know. He then replied "To be honest I thought it would be free haha. I only say that because we've met with two attorney's through this short-sale process and the first consultation was free."

I guess I get a little taken aback when someone wants to get free advice. It looks to me like they're trying to meet with professionals and suck us dry for as much free information as they can get. Maybe I'm overreacting . . . So I'm curious what others do when someone wants to meet for tax or accounting advice as opposed to meet to see if you're someone they would like to work with. I just can't help but think that when I make an appointment to get my hair cut, and I need advice from the stylist, if I wanted her to try something new on my hair and want to see what it would look like, she would charge me. Why is it not the same with professionals like ourselves?

Thoughts?

Jrochestercpa (talk|edits) said:

7 August 2012
I use the "it is free when you come back for me to file your tax returns". If the potential client is looking for specific tax or accounting advice, I charge for the consultation but will give them a credit toward the preparation of their tax returns. A retired attorney friend once told me that when potential clients asked him for a free consultation, he would ask them "Do you want it free and go to jail, or pay for it and stay out of jail?". Yep, they get what they pay for.

Taxaway (talk|edits) said:

7 August 2012
For a few general questions, I don't charge someone who is referred by a present client, so that gives about 15-30 minutes which may include conversational chat, and they could turn into a paying client. But it would be on my terms (phone/email or a time when I'm in the office.)

Anything more in-depth, anything involving examining their returns, etc., yes, charge for your expertise. If they expect free, they likely are shopping for the free bargains, or don't value your time and advice. They can go to 'the other guy/lady' for free, or pay the tax pro whose advice is worth it.

Belle (talk|edits) said:

August 7, 2012
....because we've met with two attorney's

Why was it necessary to meet with two of them? They sound like window shoppers; looking for the advice that they like the best.

Foreclosure tax consequences can be complicated (look at how many posts Dave Fogel has answered :-) and I don't see any reason you should give that knowledge away for free. I like the above suggestion of a credit IF you eventually prepare the return for them.

DUCKMAN57 (talk|edits) said:

7 August 2012
It is amazing how many people want us to work for free. From phone calls to drop in's who just "have a quick question". Though I sometimes answer questions from non clients for free if they come in they are told, politely, that we do charge for what we do and if we do prepare the tax return I usually credit a portion of the consultation toward the return. Gone are the hour long "free" consultations that end with "let me talk to my husband/wife". Sometimes there is a thin line between picking your brain and picking your pocket.

Jossiecpa (talk|edits) said:

7 August 2012
Thanks for the suggestions. I like the idea of giving a credit if I prepare the return for them too. I know times are tight, but I can't go to a doctor for a consultation for free.

Uncle Sam (talk|edits) said:

7 August 2012
This doesn't sound like a client you'd want to keep.

Shopping around for free advice - when they're desperate and coming to you as a last resort - it's not worth risking your reputation.

Only in the last couple of years have I learned to turn away clients who are potential trouble. No matter WHAT fee they pay you.

Jossiecpa (talk|edits) said:

7 August 2012
I just hate this mentality that's out there today that people should get something for free, just because they are in a tight spot financially. I suppose that's the handout mentality that exists due to our overreaching government, but that's a topic for a different section and another day . . .

PollyAdler (talk|edits) said:

7 August 2012
Quote: "I suppose that's the handout mentality that exists due to our overreaching government..."

You are correct. The corporate welfare is intolerable. We spent between 3 and 7 Trillion taxpayer dollars bailing out private financial institutions. Trillions of dollars to help the rich fat cat. We must stop the corporate welfare. We can't afford it.

I seriously doubt the attorneys were giving them free tax advice in those meetings, and I would guess that the attorney's finally got paid something, i.e. the intent from the beginning was to earn a fee.

I am insulted by DIY clients who are just seeking "How To" advice. I don't mind helping people in true need, but I like to be the one who decides to do it. I don't think people should ever presume that my services are free; they don't presume that a pack of gum in a convenience store is free.

Uncle Sam (talk|edits) said:

7 August 2012
I think that we should have an Aussie animated puppet's voice message saying "Give us 15 minutes - we'll save you 15%".

Maybe we'll get more clients that way.

Captcook (talk|edits) said:

7 August 2012
I agree with Taxaway. I'll meet with a client to get to know them and determine whether it is someone I want to do business with and this time provides them the same opportunity. I'll keep the conversation at a relatively high level: "How have you worked with professionals before? What type of service will you need in the future? What kind of service do you currently need?" Both the expertise level and hand-holding level is evaluated at this point. Once we've agreed that we are willing to do business with each other and I'm adding value, the "meter's running."

Tax Writer (talk|edits) said:

8 August 2012
They sound like window shoppers; looking for the advice that they like the best.

I agree with Belle. We don't charge for an initial consult from taxpayers who have been referred, but even then our office has been burned.

Southparkcpa (talk|edits) said:

8 August 2012
A consultation and a meeting are very different. I think Taxaway and Belle are very spot on. At the risk of modesty, I have developed a very succesful, high fee practice with good clients. It has been accomplished by turning away a third of potential clients who call us. The meeting is usually 15 minutes to see if they are a good fit. Interestingly, I tell them PLEASE, do NOT hire me today. Think about this meeting and contact me tomorrow. I want you to be comfortable with the decision as its like a marriage. I literally say that. Captcooks questions above are almost exactly what I also say. I explain to them our engagement letter, that a retainer is required to start and what to expect. I also tell them what I expect...no shoe boxes, good records and accountability.

In my view, the potential client and you should do due diligence on each other.

IF they have a specific tax problem and are referred for advice, that is a consultation to me, I then charge a fee to give that advice. Usually $100 for the visit.

Lark (talk|edits) said:

8 August 2012
I like the policy of charging for initial consultations and giving credit if they become paying clients. Find myself doing too much work that is not billable. Have also instituted a "document fee" charging for small jobs such as quick responses to government agencies or insurance companies. The clients do not seem to mind the small fee ($25 - $45) and it reminds them of the work done on their behalf. I like it because even though it is not a large fee, at least I am not doing it for nothing.

Kbairtax (talk|edits) said:

9 August 2012
I guess I have been lucky. I only take clients on referral. I do not advertise, no one will find me in the phone book....so that keeps a TON away. So, when a client comes via a referral, I never EXPECT to be paid. I can generally tell after about 10 mins whether they are on a fishing expedition, or if this is a client that will use my services. 90% of the time, when the meeting is over, they will ask, "do we owe you anything for today?". My response is always, "no.....this is my investment in you, and I will hope that you will come to me for services". I have lost only a handful.....again, I have been lucky.cc

Bobstatax (talk|edits) said:

9 August 2012
I totally agree that corporatocrasy is real, and it should be feared. Remember "we" are the government which we at least theoretically control but follow the money because that may be in jeopardy.

Anyway, I might be in the minority, but I don't return non-referral phone calls when the call includes, "and I want to know how much you charge." I think it's very important to consider who gives the referral because if it's a good client, I'll tell referred person, at this point, not to worry about fees. You show them how good you are and you might get a new client plus you'll be a star with your good client. This attitude goes up or down depending on the value of the client who gives the referral.

Sumwun (talk|edits) said:

10 August 2012
Bobstatax, I see your thinking, but how many potentially good clients do you think you lose? If someone decides that they need a CPA for the first time and doesn't know anyone else who uses one, don't you think it is a legitimate question to ask? Years ago, I decided that hiring a stretch limo for a date would be a good idea. I had no clue what the cost would be so I called a company out of the Yellow Pages. My opening was along the lines of "Special date - no idea how much these things cost - help!" he spent a couple of minutes explaining my options (which he said were pretty standard in the city) and told me his prices. One service was affordable but not what I wanted and the other was exactly what I wanted but more than the price of the rest of the evening. The decision was made in two minutes flat - we took a black cab instead.

Bobstatax (talk|edits) said:

10 August 2012
I absolutely check prices when I'm looking for a limo, and I don't think it's an unreasonable question to ask if someone is looking for a tax preparer. At this time in my career, however, I don't want clients who are price shopping on the phone. Earlier in my career, though, I would give my billing rate/how difficult your return is spiel to people who called. There's nothing wrong with giving estimates to price shoppers. It just depends on your practice and your attitude, and, certainly, if you're main emphasis is to grow your practice then it's a very good idea.

Uncle Sam (talk|edits) said:

10 August 2012
It's not unreasonable to ask a question of fees - however in this profession EVERY client or potential client as a different perception of what services they are in need of, and have their records organized and prepared at a different level.

I visited a local businessman the other day who previously spoke to me on the phone and was so misinformed and mixed up as to what he needed and was looking for - that's why I had to visit him. On the initial phone conversation he was talking to me about an LLC set up out of state where he gave up the address mid-year in that state, and an S Corp in a different state with -0- payroll, and then also wanted his tax return prepared, like immediately.

Upon visiting him, I discover that he commingles his LLC income into his personal account, the S Corp was dissolved in a prior tax year, and the LLC only had one source of income and paid -0- estimates or money with extensions. He was completely oblivious to comprehending business nexus in a state, filing fees, an organized bookkeeping system, and his personal tax information was skimpy and incomplete.

Had I quoted him a fee based on what he told me over the phone - I definitely would have lost him.

Once I, by process of elimination, saw what type of client and returns I was dealing with, brought the fee down to a more realistic amount, and we were able to consummate a business relationship.

The stories are endless - where the clients don't know what they're asking, don't realize how much time and effort is required to prepare an accurate return, and you can't judge it simply by quoting a fee over the phone blindly.

In addition, you don't know how much you can trust them with financial decisions - and what they've been told by whom.

Xz (talk|edits) said:

22 September 2012
Good discussion. Certain people like to ask questions for free. If a non client calls for a question, how shall you answer without offending them and damage your reputation?

Bottom Line (talk|edits) said:

24 September 2012
I usually do an initial consult/"getting to know you" of about 1/2 hour for free. Allows me to decide if I want to work with them. I'd rather waste 1/2 hour than get stuck with a PITA and I can usually weed them out in about 1/2 hour. I'll make it up on the back end somewhere.

Mdwtax (talk|edits) said:

7 December 2012
Good discussion. Thank you all. I work almost exclusively by referral and don't even talk to salespeople that call to sign me up for Yellow Pages ads paper/online, simply because I don't physically have time and cost/benefit does not work out for me for bargain shoppers. My question is, I do get the occasional online inquiry from my website ranging from just wondering how much I charge to specific tax questions. How far do you go when answering tax related questions for people you haven't actually met? Answer an initial question, then if there are follow up questions in e-mail, have them set up a time to meet?

I like the idea of charging for an initial consultation, especially for these people that have no previous connection, then giving a credit if they become regular season clients.

Thank you for your input.

Captcook (talk|edits) said:

7 December 2012
If it is something I can do in a few minutes without any research, I'll probably just shoot an answer back to an email inquiry. Something like gift tax exemption amounts, ยง179 limits, mileage reimbursement rates, etc. might be this type of situation. If it is something I need to research or that requires more information, then I will call the client or email them an explain I have more questions to adequately answer their question. I will not simply ask the questions via email. I usually mention it is much more efficient to discuss the questions via phone. Once on the phone, you can start the qualifying conversation. Are they just looking for "one-off" research work? A second opinion? Establish a new relationship? I will likely charge them for all three, but this allows me (and them) to get an idea of what expectations should/will be.

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