Everyday ethics: Pricing fairness in professional services

As told to Susan Muldowney

Question: “I’m CFO of a mid-sized professional services firm that is considering offering discounted services to new clients as part of a broader expansion. While this has the potential to expand our client base, I’m concerned that it may alienate — and possibly infuriate — our long-time clients. Is there an ethical aspect to this dynamic that needs to be addressed? Is it fair to bring new clients on for the same service at a cheaper rate?”

Answer: Providing discounts to attract new clients is a common business practice across many industries, including accounting. But is it fair and ethical given this results in the most loyal clients paying the highest amount? 

There are a few ethical issues to consider here, and the first relates to discounting more broadly. 

As financial services professionals, we have some broad commercial ethical obligations. One is to do great technical work and give good advice based on our education and training. 

Another is to provide clients with peace of mind in knowing that their accounting affairs are being looked after well, and that they are in safe hands.

CPA Australia members also have more pointed ethical obligations under the APES 110 Code of Ethics for Professional Accountants, which is based on IESBA’s international code. 

One of the primary ethical issues to consider is that discounting for new clients could lead to the perception that long-term clients are subsidising new client expansion. This could potentially alienate a loyal client group. Naturally, this raises ethical issues regarding fairness across the entire client base.

While it is possible to do great technical work and discount the cost for that service, it is much harder to ensure clients know that, if we are discounting, they remain in safe hands. 

The unspoken perception from both new and existing clients may be that if anything is discounted, it is inferior. This can easily lead to many clients worrying about the long-term sustainability of the practice, which is not very helpful for peace of mind. 

My advice is that instead of discounting on fees, seek to add significantly more value for both new and existing clients. This justifies a standard fee across the entire client base and encourages loyalty. The value you add will depend on the business model as well as the types of clients being served. 

My perspective is that added value beats discounting every time. Discounting is fraught with structural ethical issues, but adding value rarely is.