When we take on an engagement with thin margins and then we encounter a problem with the engagement – from our doing or not—we are left with little ability to fix the problem. Healthy margins give us the wherewithal to fix mistakes, earn trust and build loyalty with our clients. In this way, our most profitable clients get our best service. It does not happen the other way around. Superior service does not improve profit; profit improves service.

The test for this is the ringing phone. When we look down and see the profitable client’s name, we are happy to pick up. When the unprofitable client calls, we cringe. Our clients know whether they are getting the best from us, but they rarely know why. Failing to charge enough leaves us little room to move and creates discordant dynamics with our clients. All of this affects the quality of our work and our reputations as reliable advisors.

Every client on our roster deserves our fullest attention, our best service and our commitment to fixing mistakes. For us to deliver this to them they need to deliver to us the profit margin that will allow it. We need to accept nothing less. Healthy profit margin is vital, for sometimes the right thing to do is to give some of it back in order to correct a bad situation. The implied understanding is: we will be paid well and in exchange we will take care of the client. We will make all the little problems go away.

How many client relationship problems could have been avoided or fixed if we had charged properly? How many of our clients could we have done better for simply by commanding a little bit more money?

The Death of the Change Order

The change order represents most of what is wrong with our business model and our client relationships. Firms like ours are not fired over the large invoices for strategic work; they are fired over the small invoices for tactical work. It is the change order that creates the resentment that builds until the relationship snaps.

Would we eliminate the change order and the client resentment that comes with it if we had it in our power to do so? Such an achievement is possible. When the client allows the expert firm to take control of the engagement and charge more, he does away with the injustice of a new invoice every time a small tactical change is requested. Is this not a tradeoff that quality professionals and better clients would make?