How Much Should I Charge?

Last week I promised I would cover “How much should I charge?” in detail. In this week’s blog I keep that promise. Here we go!

In last week’s newsletter I showed you how to keep things simple by charging in three places. 

Let’s take a look at the first place you will charge: planning.

The Planning Fee

How much should you charge for the up-front work: fact-finding, initial analysis and recommendations? 

There’s a lot of work you and your team need to do up-front, and the temptation is to cost it out and charge what you need to charge in order to make a profit. Now, I know this might sound crazy, but I’m going to suggest that, for now, you don’t worry about profitability this early in the client relationship. As you become more skilled in setting up your value at the first meeting you can increase your planning fee charges to cover more of your costs, and maybe even one day charge enough to make a profit on this phase of the work, but that isn’t necessary to start with.

How much you charge depends on many factors, including:

  • The quality of the clients you work with in general.
  • Your skill levels at the first meeting.
  • Your technical knowledge, and more importantly, your ability to communicate that knowledge effectively to clients.
  • The value you will add on the potential job for the specific client sitting in front of you (for some jobs it’s easy to add lots of value, for others not so much).

I suggest you start with a fee that you can ask for (out loud and in pounds) without freaking yourself out.

Here’s a good guide for finding that figure:

Trust me, the first time you ask for your fee up-front the amount is going to squeak out of your mouth. You might even find yourself sitting there with a figure in your head throughout the entire first meeting, only to halve it when it pops out of your mouth at the end. But hey, that’s what you have to do to get started. So ask for a modest fee, for example £500. Or if you are really scared and the client in front of you is pretty unsophisticated make it even less, say £250.

Asking is the key issue when you are learning this new skill, not how much you ask for.

If you are more experienced, skilled and confident and you work with better quality clients make it £995, or £1,995, whatever feels right to you. Try a few numbers on for size and see what fits.

What you will find is that people say “yes”. You’ll be amazed. It’s only advisers, using a charging system designed 300 years ago by product manufacturers, that think they somehow have to work for free! Clients don’t think this way.

We all know deep down that buying a service from a professional costs money. [click to tweet]

We have trained our existing clients to believe, think and expect that what we do is free, but truthfully even they don’t think that it actually is free. They know it’s built into the cost of the products they’ve purchased. Some clients are happy to not know how much that cost is, whilst others absolutely detest this way of working.

So ask for some money.

What happens is that very quickly (in less than 5 clients that you try this with) you will realise getting paid a planning fee is not a major issue. Within the first 3 months you will increase your planning fees and within 2 years you will be charging an amount that is right for you and your business.


Next week I’ll take a look at implementation fees and ongoing review fees.



6 thoughts on “How Much Should I Charge?

  • Brett – your suggestions seem to come from a starting point of ‘charge what you can get away with’ rather than having any reference to the time spent or costs incurred.

    You hint at the start that it’s possible to make reference to costs, and I’d suggest this should actually be the starting point. Setting up a financial model or forecast of a new or small business isn’t difficult (and if it’s larger get a management accountant to help, which is what I do). It soon becomes clear what your fees need to be in order to make profit. If you then choose to increase the fee to make a larger profit, that’s an issue of competitiveness.

    And one final thought – an accountant once said to me ‘If you don’t get a single complaint about the level of your fees, you’re not charging enough’.

  • Hi Chris, and thanks for your comments.

    I certainly don’t suggest that your mindset should be charge what you can get away with, but many of my comments in this article are aimed at advisers who are not yet charging a planning fee at all (which is still a surprisingly large number of advisers). The point I was trying to make was that if we conducted a very orthodox analysis of costs and decided they should be charging 1500 pounds, any advisers new to fee charging would freak out and never get going. Hence my advice to start wherever you can get started from (with a smaller fee). I mentioned that within a pretty short space of time the planning fee can be moved to a more appropriate level (which may well be based on a financial model as you suggest).

    I also believe there are two types of advisers we are talking about here;

    a.) the engineering types and the detail people who will have to know their costs before designing their fee’s, and

    b.) The marketing and selling types who can never quite get that approach to work for them.

    I’m in the second camp and so my advice in this area is going to be biased to that approach somewhat, but I make no apology for that because I think there are lots of that personality type in our profession.

    My advice in the article is also coming from the starting point that a firm is currently profitable (i.e. not going broke), even if they are not profitable enough. On that basis any planning fee charged is an improvement for firms who are not currently charging one at all, assuming their other charges remain the same.

    Finally, I’ve stated in other articles on this subject that I’m a fan of charging for value wherever that is possible, not time. Personally, I hate the whole concept of a ‘cost plus’ model when it comes to good quality financial planning. When it goes well, the value added is like the Mastercard ad; “priceless”. When you change someone’s life dramatically for the good how much can you charge for it? I realise there isn’t an answer we can provide, but clearly we can charge a premium for that type of outcome. The same thinking applies to great technical strategies that save the client large sums of money. Clearly there is another opportunity to charge a premium price should you wish to.

  • Is it just me that cant see the top of this article? It’s hidden by the adverts

    • Seems ok on my PC and mobile. What are you viewing it on, Phil?

  • As the charging dialogue continues it still amazes me how much of the debate centres around converting historical commission levels into perceived ” professional ” charging structures.
    So often the widely used ” commission offset ” model used to create fee levels was transparently a simple reverse accounting process to translate commission received into an hourly rate based on a notional time sheet.
    Any normal business approach would determine what the financial objective of running the business is and then to work out what it would take to achieve that objective.
    Our industry still seems obsessed with trying to market a business model based on what a manufacturer deemed was necessary to achieve product distribution.
    In any start up in a new market – which is where the adviser industry is at present – has to find out what the market will bear in establishing its charges. Providers have always played with commission rates to determine what was necessary to achieve their business objectives.
    Trial and error will eventually establish a comfort level both from a customer and a profit perspective.
    Concluding that there is a limited market just because the larger market will not pay the charges you have determined is probably not the way to prosper.
    In any case markets are always changing and to survive and prosper you have to adapt accordingly.

  • Really not sure what the time it takes me to prepare the plan has to do with the pricing. The process of understanding the client’s needs and objectives deeply enough to truly provide life changing financial planning is a skill that I have spent 15 years learning (and am still learning). I will not be giving it away cheaply simply because I am now accomplished enough to provide that solution relatively quickly.
    My price is based on value, the value is high and therefore so is the price. if i can’t provide high value to the client i don’t offer the service.


Leave a Reply