What Happens When Firms Don't Review Their Typical Fees For Common Services
Are You Charging Half the Market Rate — and Don't Realise It?
There's a quiet tension in many accounting firms at the moment. Costs are rising. Staff expectations are shifting. The compliance workload hasn't reduced. And yet, when it comes to fees, many principals still hesitate — to increase them, and to let go of clients who resist them.
Your average charge rate is not just a number. It is a signal. It signals how you value your work, how the market perceives your firm, and increasingly, the future saleability of your practice.
The Market Is More Price-Sensitive — But That’s Not The Whole Story
Yes, clients are more price-conscious and comparison is easier than ever.
But price sensitivity does not automatically mean “be cheaper.” What it means is that clients expect clarity.
They want to understand what they are paying for. They want responsiveness, reliability, and advice that prevents problems — not just compliance that records history.
The firms that struggle most in fee negotiations are rarely the most expensive. They are usually the least clear.
Clear positioning reduces negotiation pressure.
Your Charge Rate Reflects More Than Revenue
When we review practices — particularly those preparing for succession or sale — one metric tells the story very quickly:
Typical Fees for Common Services.
If rates sit materially below market benchmarks, the implications are immediate. A client or potential buyer may think:
- Is the client base highly price-sensitive?
- Is the work predominantly compliance with limited advisory leverage?
- Will clients resist fee corrections under new ownership?
In one recent review, a principal explained, “We keep our rates low because we’re competitive.”
After analysing the numbers and benchmarking the firm against comparable practices, the conclusion was clear:
At those rates, the practice would struggle to sell. They were sitting materially below market — close to half in some service areas.
That’s not personal. It’s commercial.
The Compliance Margin Squeeze
The Domino Effect of Low Fees
- 1. Low rates compress your margin.
2. Compressed margin reduces your ability to reinvest.
3. Reduced reinvestment limits firm growth.
4. Limited growth directly damages your valuation.
That sequence is entirely predictable.
Compliance Work Is Not Getting Lighter
Compliance work is heavier than it was five years ago. Regulatory expectations are higher, documentation standards are tighter, and professional indemnity scrutiny is sharper.
If your rates haven’t adjusted accordingly, you are absorbing regulatory inflation. And that isn’t sustainable.
Many firms underestimate how much compliance time has expanded relative to fee growth. When we benchmark practices at Rob Knights, the equation we most often see—Increased workload + Increased staffing cost + Flat charge rates—simply does not hold long-term.
Most fee negotiation challenges are not about client pushback. They’re about principal hesitation. When a principal is uncertain about their own pricing logic, that uncertainty is felt across the desk. But when you are clear on your market position, comparable rates, value delivered, and capacity constraints, the negotiation dynamic shifts entirely. Confidence is not aggression. It is clarity. And clarity comes from data.
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Typical Fees for Common Services Report
Price range: $198 through $396 incl. GST This product has multiple variants. The options may be chosen on the product page
The Real Issue is Confidence
Most fee negotiation challenges are not about client pushback. They’re about principal hesitation. When a principal is uncertain about their own pricing logic, that uncertainty is felt across the desk. Confidence is not aggression. It is clarity. And clarity comes from data.
Benchmarking Removes Emotion From The Conversation
When Clients Push Back
Let's be realistic. If you correct your fees, some clients will resist. Some will leave.
But not all clients are your clients.
If a segment of your client base is chronically fee-resistant, that tells you something about your positioning. Sometimes the most commercial decision is not figuring out how to defend a fee increase — but deciding which clients to release to free up capacity.
Preparing For Exit Means Fixing Fees Early
For principals approaching retirement or sale, fee structure becomes critical. Buyers scrutinise your average charge rate, fee concentration, discount patterns, and your compliance vs. advisory mix. If rates are suppressed, a buyer will either:
Adjust the valuation downward — reflecting the risk that fees will need correcting post-settlement, reducing what they're willing to pay.
Budget for a severe post-acquisition fee correction — increasing transition risk and making it harder to retain clients through the handover period.
Neither outcome favours the seller. The earlier fee alignment begins, the less disruptive it becomes. Fee corrections implemented gradually over two to three years are absorbed far more smoothly than sudden, aggressive adjustments under new ownership.
The Discipline Of Reviewing Charge Rates
Most firms review fees annually. Fewer review average charge rates strategically. Those are not the same thing.
A disciplined, high-end approach includes:
• Analysing effective hourly recovery.
• Segmenting clients by profitability.
• Identifying chronic under-recovery.
• Comparing against peer benchmarks.
• Setting strict minimum engagement thresholds.
This is not about becoming the most expensive firm in town. It’s about ensuring your pricing supports sustainable margins, staff investment, risk coverage, and ultimate enterprise value.
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Typical Fees for Common Services Report
Price range: $198 through $396 incl. GST This product has multiple variants. The options may be chosen on the product page
A Final Thought: Value Is Not Cheap
(And It Shouldn’t Be)
There is a persistent belief in some corners of the profession that “being affordable” builds loyalty. In reality, value builds loyalty. Clients who understand the commercial and strategic benefit of your advice are far less likely to argue over incremental increases. As principals transition out of ownership, one question matters more than most: “How does my practice compare?” Not just in revenue. Not just in profit. But in charge rate quality.
The market does not reward hesitation. It rewards clarity. Know your numbers, understand your market position, and align your rates with the value you deliver.
Because ultimately, your charge rate is not just what you charge. It’s what your practice is worth.
Ready to see how your practice truly compares?
Written by Michelle Knights
Michelle advises professional services firms across Australia on practice risk, governance and regulatory readiness, working closely with accounting, legal and financial services businesses as they navigate structural and compliance change.
Want to know more? Book a 15-minute call with Michelle Knights and discover how she can help your practice.
What practices are selling for, and what is moving the numbers
Michelle’s monthly note on practice valuations, buyer activity and the conditions we are seeing across accounting, financial planning and legal firms.
