Should You Let Go of a Demanding Client or Adjust Your Rates?

Introduction

I’ve been working with a relatively small new client on a three-month pricing trial, charging a fixed monthly fee of $1,700 USD. Initially, the arrangement seemed reasonable. However, as the trial period progressed, I’ve realized that the client’s expectations are far more demanding than anticipated.

Unforeseen Challenges

This client requires almost part-time availability, which exceeds what I’m willing to offer. What was originally estimated to be about 1.5 hours of work per week has ballooned to around 5 hours, primarily due to their meticulous and nitpicky approach.

Scope Creep

My original mandate was to handle a monthly BK close, which includes paying contractors. However, the role has grown to involve responding to every service request from their CFO and conducting weekly reconciliations for real-time Bookkeeping. Additionally, they expect sales to be closed out three days after the month ends—a requirement that wasn’t discussed during the discovery phase.

Misaligned Expectations

The tasks required resemble those of an internal employee. I’ve repeatedly communicated that I provide an arm’s length service, leading to a mismatch in expectations. This reached a breaking point when the CFO reprimanded me for not promptly responding to her Slack messages, despite being informed that I’m not available on demand.

Next Steps

Given these challenges, I’m at a crossroads. Should I discontinue working with this client, or should I propose a higher rate to prompt them to decide whether to continue or part ways? What I am certain of is that I cannot sustain this level of service at the current rate.

Understanding the Current Situation

Pricing vs. Workload

Initial Agreement: $1,700 USD per month for what was initially estimated as 1.5 hours per week.

Actual Workload: Approximately 5 hours per week due to additional tasks not initially agreed upon.

Client Expectations

Role Mismatch: They need someone who is essentially a part-time staff member, whereas you are operating as an outsourced service.

Communication Issues: The client expects on-demand availability, which you have already communicated is beyond your scope.

Specific Tasks

Monthly close including paying contractors.

Answering to the CFO’s service requests.

Weekly reconciliations for real-time books.

Sales closeout 3 days after month-end, not initially discussed.

Options to Consider

Option 1: Re-evaluate Pricing

Assess Value: Calculate the value of the services you’re providing based on the actual time and expertise required.

New Quote: Draft a new proposal reflecting:

Hourly rate x Actual hours worked

Any premium for on-demand availability or additional tasks

Communicate Clearly: Discuss and negotiate openly with the client, presenting the revised quote as a reflection of the increased workload and expectations.

Pros:
– Potentially salvaging the business relationship.
– Appropriate compensation for your time and effort.

Cons:
– They may perceive the price hike negatively and choose to part ways.
– Risk of continued misalignment if expectations are not clearly managed.

Option 2: Disengage (Fire the Client)

Terminate with Professionalism:

Formal letter or meeting explaining the situation.

Highlight the mismatch in expectations as the primary reason.

Recommendation:

Suggest finding an internal hire or another service provider who aligns more closely with their needs.

Pros:
– Freedom to focus on clients who align better with your services.
– Relief from ongoing stress and miscommunication.

Cons:
– Loss of income from this client.
– Potential impact on professional reputation if not handled diplomatically.

One response

APAdmin

26 February 2025 at 2:00 PM
Deciding whether to fire a client or adjust your pricing strategy can be a challenging crossroads. To tackle this dilemma, let’s break down your situation and explore potential strategies using Markdown formatting:

Understanding the Current Situation

Pricing vs. Workload
- Initial Agreement: $1,700 USD per month for what was initially estimated as 1.5 hours per week.
- Actual Workload: Approximately 5 hours per week due to additional tasks not initially agreed upon.
Client Expectations
- Role Mismatch: They need someone who is essentially a part-time staff member, whereas you are operating as an outsourced service.
- Communication Issues: The client expects on-demand availability, which you have already communicated is beyond your scope.
Specific Tasks
- Monthly close including paying contractors.
- Answering to the CFO’s service requests.
- Weekly reconciliations for real-time books.
- Sales closeout 3 days after month-end, not initially discussed.
Options to Consider

Option 1: Re-evaluate Pricing
1. Assess Value: Calculate the value of the services you’re providing based on the actual time and expertise required.
2. New Quote: Draft a new proposal reflecting:
3. Hourly rate x Actual hours worked
4. Any premium for on-demand availability or additional tasks
5. Communicate Clearly: Discuss and negotiate openly with the client, presenting the revised quote as a reflection of the increased workload and expectations.
Pros:
– Potentially salvaging the business relationship.
– Appropriate compensation for your time and effort.

Cons:
– They may perceive the price hike negatively and choose to part ways.
– Risk of continued misalignment if expectations are not clearly managed.

Option 2: Disengage (Fire the Client)
1. Terminate with Professionalism:
2. Formal letter or meeting explaining the situation.
3. Highlight the mismatch in expectations as the primary reason.
4. Recommendation:
5. Suggest finding an internal hire or another service provider who aligns more closely with their needs.
Pros:
– Freedom to focus on clients who align better with your services.
– Relief from ongoing stress and miscommunication.

Cons:
– Loss of income from this client.
– Potential impact on professional reputation if not handled diplomatically.

Final Recommendations

Given your description of the mismatch and the stress from the demands, it’s crucial to align your service offerings
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