I Was Undercharging and it Wasn’t Good for My Clients—or Me
If you’re like me, I’ll bet you can recall the energy of Fridays at the height of the pandemic.
The Federal Register would release its documents and we’d forgo sleep to rifle through them because our clients’ survival was our survival. I’m proud to say we worked hard, and all but two of our clients survived that challenging time.
The overworking exacted a toll, and I found myself truly burned out … again. The pandemic may have been new, but the feelings weren’t. Just four years into my accounting career I’d also been worn so thin, I collapsed into a year-long trek across South East Asia in search of renewal. I credit the meditation practice I picked up with helping me recognize these feelings weren’t new. They were a cycle.
Once that idea was out of the box, there was no putting it back. I had to change. Quickly. This led me to restructure our business and confirm something I’d known but been too afraid to admit: My entire career, my excessive dedication to my clients had been hurting them—and me.
The toxic cycle of trading time for money
My journey began in the small city of Springfield, Massachusetts, a tight-knit, blue-collar community. I was raised in a family of five with the winning work ethic that made Boston the epicenter of America’s industrial revolution. I always worked odd jobs because working hard felt natural and entrepreneurship was a path to something greater.
At 10, I mowed lawns. At 12, I bussed tables. I developed a serious appreciation for money because I always had to grind for it. I saved to buy my first bike and eventually, start my first business. But it also infused me with this concept of trading time for money.
Accountants are knowledge workers, and we don’t trade time for money. Or, at least, we shouldn’t. We trade knowledge for value. But this feeling of work-hour productiveness was ingrained in me, growing up with parents saying, “You want something? Work hard for it.” Jobs that paid hourly taught me to sense what people were willing to pay. It taught me to be price shy, to discount, and to fear that maybe, I wasn’t worth what I was charging.
But what was I worth?
I have always been the type of person to undercharge and over deliver. It’s what we accountants do. I don’t promise something and not deliver, even if it means I’m up until midnight on a Friday. If I told the client they’d have it by Saturday, that’s my lot. I get it done.
I started my practice when I only had four years of tax experience and I can assure you, I knew nothing at the time. But I thought I had to know everything. I’d buy tax research software and spend nights and weekends researching things I never billed clients for because I felt knowing was my burden. Not until my latest epiphany did I realize that, on an emotional level, my fear of rejection—of clients possibly saying they’d no longer work with me—caused me to undercharge to a degree that was unhealthy for all involved.
The other day, I met a prospective client having an issue with a $300,000 piece of equipment they’d acquired, which their CPA said they couldn’t depreciate. I said I’d do some research, and in one billed hour, found and shared some court cases proving they could. “We’re firing our old CPA and hiring you,” that client wrote me. “This reduces our tax bill by $105,000. Seems like the other guy’s working for the IRS.”
In one hour, I saved them enough to pay a senior-level employee’s salary for the year. As accountants, we do this all the time. But we don’t see the value the way our clients see it. I have always been far too comfortable overextending myself, undercharging, and placing myself and my employees in a position where to make ends meet, we must work through a crush of low-paid work condensed into two or three months of virtual insanity.
Perhaps you can relate. Busy season is when many of us say goodbye to all sense of normalcy and fire on all cylinders at all hours to serve our clients. You probably set aside the high-value advisory and the tax planning because you don’t have the headspace. You’re lost in a sea of details, worrying that you have to get through it to cover your overhead, and afraid that charging your value could end the relationship.
But that’s a scarcity mindset. If you’re thinking that way, you’re never going to see those $105,000 tax savings opportunities. Your fear of your lack of worth fulfills its own prophecy.
So, we raised our prices
We raised prices pretty significantly, and yes, we lost some clients. Some of whom we enjoyed working with. But there were surprises on both sides. Clients we thought would never agree signed without question.
Growing up in a small town, I’ve always been a loyal person. I felt like I owed so much to the people who hired me and believed in me back when I knew much less. Their support allowed me to do something I was passionate about, and to research, create tools, and build a practice full of smart, hard-working people. I am so grateful to every one of them. But that loyalty prevented me from raising prices for too long and all of these clients were on legacy rates, despite the fact that our business had changed entirely. So had the city of Austin, from a cost of living standpoint. The moment had come when I realized that on those legacy rates, we’d never have the mindshare to be strategic for them.
So we made the change. We communicated that they would be getting more strategic advice, more planning, and more availability. That’s the biggest reason CPAs lose clients, and I know this because we always ask new clients why they switch. The most common response is, “My CPA took three months to respond.” I empathize with their old CPAs. I’m them and they are me. Except now, Launch Consulting has built a system to protect us from falling into the scarcity mindset. We’ve set restrictions on ourselves that keep us out of the volume trap, where we wouldn’t be able to truly grow our clients’ businesses.
For many of those clients, there was no need to sell the idea. They knew what they were getting—more of the parts of our practice they already found so valuable—and many told us as much.
The fear never goes away, but you learn to manage it
I still fight the fear of rejection. The fear of raising prices, and the fear of people leaving. These are very human fears to have. But I’m also coming around to understanding that not all money is equal, and sometimes losing a client who didn’t see the value in our consultative approach is actually winning. It means we’ve avoided taking on someone who’s going to impact the quality of our work for others. Maybe it’s that small-town Springfield mindset, but I hate to lose anything, so reframing it that way really helps.
If you’re reading this and feel the burnout and that you’re not able to give your best, know you’re not alone. Our entire industry is grappling with this question. And I hope the realization for all of us is that undercharging our clients is doing them—and us—a grave disservice. We’d all be better off if more firms acted on it.