Prep Talk

A potential client inquired about my service for filing S corp returns.

He started running a pharmacy last year and "everything" is done through his POS system. Besides that, he has bank accounts and rent payment for the store.

He asked for a price quote.

I told him that we needed to set up his books and records because information is now in different pockets.

I asked him to generate the following reports from his POS system:
a. General Ledger (YTD);
b. Sales (taxable & nontaxble) YTD;
e. Income Statement YTD.

My approach will be taking those reports and combine with the info from checking accounts to create his books and records.

He refused to give me the general ledger until I give him the price quote. Should I just give him the bookkeeping rate and tax prep hourly rate.

I usually quote the tax return in a range and tell the prospect it is contingent on seeing his books and records. I usually don't quote hourly rates.

Do you think he is a price shopper? Do you think he is likely to cost you more time than he should? I suppose withholding the GL until he gets a price quote is reasonable, especially if this is his first year in business.

Give him a "fee range" - if your records are "perfect" then $______; however (a big however) if your records
are a mess then it's $_+++++.
Think of the worst/worst case for the latter quote.

Agree with the two previous posters. Your request is reasonable. Bad financials heavily affect pricing. If you quote without seeing the financial data, make the fee contingent.

I recall someone saying something about pricing that's always stuck with me - something along the lines of "pricing a tax return prior to defining the scope of work is akin to agreeing to paint someone's house for a fixed price - without first seeing the house."

Thanks everyone for responding!

After I posted this, I actually have time to think it through again. I came to realize that I should just give him a range (as some of you suggested). As for the accounting work (of compiling a trial balance), I may need to give a fix fee of 10 hours work. And any time goes beyond 10 hours would be $X per hour (bookkeeping rate).

I really do not want to waste more time on this client (because he asked me for templates for General ledger & Income statement. I think it is too much.

Late December and January all the "price shoppers" start making calls because more than likely they got a tax organizer from their current tax preparer with a note for price increase!

My approach has been to NOT quote a specific amount until I see the work involved. I give them a range and tell them I will give a firm quote (free of charge) after I inspect last three years tax returns and other books and records (business clients).

I have found that the reasonable people with agree to that. The jerks will tell me no way I am showing a stranger my tax records, and I tell then no way I am giving a firm quote without looking at the job! BTW if you know what business they are in you can almost make them eat their words if you put it in perspective with their line of work.

Sometimes other professional will ask me for an hourly rate and that is easy to answer once you know what profession they are in.