Got a potential client here in Corpus Christi - small manufacturing outfit with CPS Energy bills around $8K/month. They want me to review 24 months of history but they want to cap my fee at $500 total regardless of what I find. I typically work on 50% contingency with a $2K minimum. Anyone else dealing with these lowball requests? Starting to see more of this since the economy tanked.
Client wants to cap our fee at $500 - worth it?
Vivian, I'd walk away from that one. $500 won't even cover your time to properly review 24 months of Georgia Power bills, let alone CPS Energy with their complex rate structures. You're setting a bad precedent and devaluing the entire profession. I have a standard LOA that clearly states my minimum engagement fee is $1,500 for any comprehensive audit, period.
Rachel's right - you can't do quality work for $500. I just finished an Empire District audit here in Springfield that took 40 hours and netted the client $18K in refunds. My fee was $9K. If they're not willing to invest in proper analysis, they're probably not serious about the savings anyway. Counter with your standard terms and see if they bite.
I disagree with walking away completely. Sometimes these small clients turn into bigger referrals. What I do is offer a limited scope review for $500 - maybe just check demand charges and power factor penalties over 6 months instead of full 24-month analysis. Set clear expectations in writing about what you will and won't cover for that fee. Duke Energy bills are pretty straightforward so it works for me in Charlotte.
Derek, that's actually not a bad compromise. Maybe I could do a quick scan for obvious errors - incorrect rate schedules, demand ratchets, basic billing mistakes. CPS Energy has been known to mess up the seasonal adjustments on their industrial rates. If I find something obvious I could point it out and then offer a full engagement at my normal rates.
Just make sure your LOA is crystal clear about scope limitations. I got burned once doing a "quick review" for Duquesne Light customer and they expected me to file the formal complaint and handle all the utility correspondence for my $400 fee. Now I have separate engagement levels spelled out - Basic Review, Standard Audit, and Full Service with Appeals. Each has its own pricing and scope definition.
Walt's approach makes sense. I use a similar tiered system with FirstEnergy customers here in Ohio. Basic review covers rate schedule verification and obvious billing errors only - takes maybe 4-6 hours max. If they want demand analysis, load factor optimization, or historical refund claims, that bumps them to Standard Audit pricing. Keeps expectations realistic and protects your time.
The key is having your engagement terms so well-defined that there's no confusion. I learned this the hard way with a TVA customer who thought my "comprehensive audit" included reviewing their entire facilities management contract. Now every LOA I write has a detailed scope of work section and explicit exclusions. Better to over-communicate up front than deal with scope creep later.