Is determining the value of a business a science or an art? Certainly the research…
By John Borrowman, CPC
Borrowman Baker, LLC, BV Staffing + Consulting
Price competition is as old as business itself. But, current economic conditions and the compliance nature of some of the work you may do can combine for a one-two punch that might be costing you engagements.
Everyone is shopping for the best deal. Maybe you’ve done a little price-shopping yourself, recently. You have no reason to be surprised, then, when an attorney who may be a long time referral source starts citing your competition in an effort to push your prices down. What can you do?
Stop for a moment and think about your own buying habits. Is there a business that you consistently buy from, even though they may not have the lowest prices? Why is that? Some of your reasons are probably related to the nature of the business and the product or service they offer. It’s also likely that somewhere on that list is the comfort you have that you get quality and value every time you buy.
What is it that your referral sources and clients have said about the quality and reliability of your work that you can pull out, now, to buttress your value?
Everyone understands that “you get what you pay for”. That’s pretty easy to see in the world of cars, or homes (i.e., tangible products). What’s difficult is for a client to see how that applies in the world of valuation, something he probably doesn’t understand much about in the first place.
You can help educate your client by breaking your work down into “steps”. Develop a short, to-the-point explanation of the importance of each step and how skipping, or shortchanging, that step puts the quality of the result at risk. Having done that, you’re in a better position to apply to the “you get what you pay for” argument.
If the opinion you’re being asked to render is one that risks being challenged at some point in the future (by the IRS, let us say) make sure your client is well aware of that risk and the value of investing in a quality engagement on the front end. If the client’s circumstances are those which are more often challenged, your argument can be even stronger.
The time may come when you feel you have no choice but to lower your fee. If so, don’t do it on the basis of some future quid pro quo. No one who has ever paid a reduced price sees any reason why he should ever pay the “real” price. To the extent that you can, base your price reduction on past loyalty, and make sure your client, or referral source, knows it.
The time may also come when you have to pass on an engagement because you just can’t produce the quality report that your reputation and standards require. If and when that happens, don’t be shy about it. Don’t be sorry about. And make sure your client hears you say it.