Price pressure on firms’ fee margins

FIRMS ARE FIGHTING HARD to maintain fee levels, according to research compiled by a strategy firm.

Carnaby Co found that UK firms are under pressure to maintain fee levels, so are turning to new billing structures and innovative services to maintain their margins.

A quarter of the top-100 firms have received requests from clients to reduce fees.

Just under 40% had also seen a drop in fees over the last three years, with more than 80% discounting their services from the rate card.

Jon Holt, a consultant at Carnaby Co and one of the report’s authors, said: “Accountancy has long been a mature market in the UK, so firms are familiar with competing on fees.

“But this extended period of price pressure – and a drop in real-term hourly rates for over a third of the industry – means each firm has to look carefully at its strategy to ensure its model is robust. If there is good to come out of this period, it is that firms are looking to specialise and innovate to ensure competitive advantage.”

Carnaby Co surveyed 50 firms in the Accountancy Age Top 50 + 50 2010 listing – with the exception of four practices – in its Fighting for Fees report. The results also took into consideration 10 private interviews (with mainly top firms), as well as third-party suppliers to practices.

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