I've been doing this about 18 months and I'm still not sure if my contingency fee is in the right range. I've been charging 40% of recovered overcharges plus 40% of ongoing savings for 12 months. Had a couple prospects balk at that. What are you all charging?
What percentage do you charge?
Forty percent is on the higher end but not unreasonable, especially for smaller accounts. I charge 50% on accounts under $5,000/month in utility spend and 30-35% on larger accounts. The bigger the account, the more competitive you need to be. I audited a manufacturing plant in Akron for Ohio Edison — $38,000/month spend — and charged 25% because the errors were obvious and the recovery was going to be huge. Ended up finding $14,200/month in rate classification errors and the client was thrilled even at my fee.
The key thing to remember is that you are providing a zero-risk service. The client pays nothing unless you find savings. Frame it that way every single time. When a prospect balks at 40%, I ask them: would you rather keep 100% of zero, or 60% of something you didn't even know you were losing? That reframe works almost every time. As for specific percentages, 30-50% is the industry range. I recommend starting at 50% for your first few clients while you build your track record, then you can adjust based on account size and complexity.
I also vary my percentage based on whether it's a refund or ongoing savings. For refunds going back 2-3 years, I charge 50% because that's found money the client had written off. For ongoing monthly savings, I charge 33% for the first 24 months. This way the client sees immediate relief in their monthly bill while I still get compensated fairly. Closed a deal with a grocery chain in Charlotte — 14 locations on Duke Energy — using this split structure and they loved it.
The split structure is a great idea. I'm going to try that on my next prospect. And Randy, you're right about the reframe — I've been presenting it wrong, leading with the percentage instead of leading with the zero risk angle. Appreciate the help.