Should You Pass Fees onto Clients?

I came across a question that I thought was a good topic of conversation and that is:  should you pass fees onto clients?

When we say “fees,” we’re talking about all those little miscellaneous fees you get charged by your bank, by PayPal, by your merchant accounts, etc.

My answer:  No. No, you should not pass those fees onto clients. And here’s why.

1.  First of all, those fees are just the cost of doing business. They’re your problem, not your clients (and that’s how they feel about this as well).

2. Those fees are expenses that you get to write off at the end of the year come tax-time. In fact, you want to have those kind of expenses because it’s going to reduce the amount of money you have to pay taxes on. They actually help you in a round-about way. So make sure you are recording them religiously in your bookkeeping as expenses.

3. Passing on nickel and dime fees like that to clients is terribly un-customer friendly. It generates ill-will. Nothing pisses clients off more and causes resentment (which is NEVER good for any relationship) than to be nickeled and dimed like that. You should already have those kinds of things built into the professional rates and fees you charge. If you can’t absorb those kind of costs, you aren’t charging enough.

4. You want policies that generate good-will in clients. A lot of this has to do with mere perception and interesting human psychology. Clients much prefer to pay one simple fee, even if it’s higher, than having to be hit up at every turn for reimbursement of nickel and dime expenses. It just feels less to them and so it feels like a better experience.

5. It could be against the terms of use or even illegal. Don’t quote me because I’m not an attorney, but turning around and charging use fees (such as those associated with credit cards, etc.) back to the client may not only be against the terms of use of the card-issuing companies, it could even be illegal under certain circumstances. Ask your card company and your attorney about this. Better safe than sorry.

4 Comments Posted in Best Biz Practices, Billing, Business Management, Getting Paid, Legal, Policies & Procedures, Pricing. Bookmark the permalink.

4 Responses

  1. Mirna Bajraj says:

    Hi Danielle,

    Totally agree with you. It is not a good strategy to pass on clients every penny of the expenses we incur in. Our fees should be good enough to cover all those minor expenses.

  2. I agree 100%. Nickel and diming your clients will only give clients the impression that you’re greedy.

  3. Jeannine Nichols says:

    Love your blog! I didn’t think about the PayPal fees as tax deductible; glad that is added to the list now.

    BTW, I am meeting a reasonable number of other new AC’s in the networking mill. Are your old VA blogs going to be pulled over into an “archived” file on the new site or would you start from scratch? I know how much your previous blogs have helped me, and I love referring newbies to the idea to you. They had not heard of you and were delighted by your site. Thx a bunch for all you do for so many!

  4. That’s awesome, Jeannine! By all means, send them to the ACA site (and be sure and sign up for the affiliate program because while you’re referring folks, you can also be earning 25% commissions.) You can also continue to refer them to the blog here and encourage them to use the subscribe form as it will keep them on the list for when the blog moves over. I won’t actually be exporting all the posts over to the new blog. Instead what I’ll be doing is manually updating them individually as I go along and then republishing them to the new blog bit by bit.

    I really appreciate all your contributions and efforts! My feeling is that the more we promote the association on behalf of all of us, the more it benefits each of individually in connecting with and better educating clients. It’s a group effort and you’ve been such a big help in that so thank you :)

Leave a Reply

If you'd like your photo to appear next to your post, be sure to get your gravatar here.

Please copy the string HRRBJa to the field below: