Got offered a 60-location portfolio audit by a property management company. Sounds great except they want me to do it on a flat fee basis — $200 per location, no contingency. That's $12,000 total for what could be 3-4 months of work. They said their last auditor found nothing so they don't want to pay contingency. Red flag or reasonable request?
When to walk away from a portfolio deal
Massive red flag. If the last auditor found nothing, either the bills are genuinely clean (unlikely across 60 locations) or the last auditor wasn't very good. Either way, $200 per location is insulting. That barely covers the time to collect and review the bills, let alone do a proper audit. I'd counter with a hybrid — small flat fee of $500/location to cover your analysis time, plus 30% contingency on anything you find. If they reject that, walk away.
I agree with Greg — walk away from pure flat fee work on audits. The entire value proposition of utility bill auditing is that it's a no-risk, contingency-based service. When a client asks you to switch to flat fee, they're transferring all the risk to you. The only scenario where flat fee makes sense is if you've already done a preliminary review and you know exactly what the errors are and how much the recovery will be. Then you can price the flat fee to match your expected contingency earnings. But going in blind on a flat fee? That's a recipe for working for minimum wage.
That's what my gut was telling me. I'm going to propose the hybrid and see what happens. If they insist on $200/location flat I'm out. Thanks for confirming I'm not being unreasonable.