Carl N from Denver, CO. I have been doing one-time audits on contingency and it works well. But several clients have asked if I can monitor their bills on an ongoing basis to catch errors before they accumulate. What fee structure works for ongoing monitoring? Contingency does not make sense because the point of monitoring is to catch errors early when they are small — there is no big refund to take a percentage of.
Structuring fees for ongoing bill monitoring after the initial audit
Carl, ongoing monitoring is a different service that requires a different fee model. Most auditors who offer it charge a monthly retainer based on the number of accounts and the total utility spend. The retainer covers your time reviewing each bill against the tariff and flagging anomalies. Think of it as an insurance policy — the client pays a predictable monthly fee to ensure billing accuracy.
I charge $75-150 per meter per month for ongoing monitoring depending on the complexity. A simple commercial account on a flat rate: $75/month. A large industrial account on TOU with multiple riders: $150/month. My monitoring includes reviewing every bill against the tariff, checking for rate changes, verifying demand charges, and flagging anything that deviates from the expected range by more than 10%.
Walt, $75-150 per meter is helpful. For a client with 5 meters, that is $375-750/month or $4,500-9,000/year. Is that enough to cover the time you spend?
Each meter takes me about 15-20 minutes per month once I have the baseline set up. So 5 meters is about 75-100 minutes per month. At $750/month that is an effective rate of $450-600/hour. The key is building a spreadsheet template for each client that automates the comparison. The first month takes several hours to set up. After that it is mostly checking for anomalies.
I use a hybrid model for monitoring clients. Monthly retainer of $50 per meter for the review work, plus a small contingency (20%) if I identify an error that produces a refund. That way the retainer covers my time and the contingency incentivizes me to look carefully. Clients like it because the retainer is low and they know I am motivated to find problems.
Marcus, that hybrid monitoring model is clever. The retainer is low enough that the client does not question it, and the contingency kicker gives you upside when you catch something. What percentage of your monitoring clients produce findings in a given year?
About 60% of my monitoring clients have at least one billable finding per year. Usually small — $500-3,000 — because the monitoring catches errors early. But occasionally I catch a rate change or tariff revision that the client would have missed, and those can be worth $5,000-15,000. The monitoring retainer alone covers my base costs. The contingency findings are gravy.