Recently I was in a coffee meeting with a friend of mine who is a partner in a top 10 firm chatting about the accounting market. Roger (not his real name) was relaying to me an experience his firm had in a tender with a prospective client late last year. The tender was for a specific project around the need for the client organisation to restructure their tax affairs and as such it had some complexity – certainly not a straightforward compliance project.
Three accounting firms were involved in the tender: 2 “Big 4” firms and my friends top 10 firm. My friend’s firm put their bid in at say $90k and one of the big 4 firms pitched at $140k. Now I have changed these price points to protect the innocent, but the relativities are the same. The other big 4 firm, for apparently the same scope, put their bid in at $40k. My initial reaction when my friend shared this with me was how incredibly foolish and desperate. Unless there are specific strategic reasons to go in at such a low level or there is an excess of staff capacity that is not being utilised and needs to be “got working” why pitch at such a low price which is clearly (at least in the short term) unprofitable and unsustainable?
In the days since the coffee chat my thinking has turned to the much more fundamental issue that the above big 4 firm is not only doing themselves a disservice but also the entire accounting profession. By default, rather than by design, the firm, has in the mind of the market, devalued what they do for clients. This is incredibly dangerous since it has introduced the unsophisticated device of price as the key differentiator. Unchecked, widespread discounting will simply commoditise the profession and set in train a chain of events that will reduce the availability of high quality and tailored advice to only those who can afford to pay the top end firms.
For the sake of your own firm’s viability and the health/strength of the overall profession please think carefully before you discount!
All my best,