Now, there is an abundance of print and online resources that have greatly improved both our report preparation efficiency and effectiveness. Simply put, we have access to better information and are more productive in our engagements. Certainly, clients benefit from that increased access and productivity, but it comes at our ever-growing out-of-pocket library expense. So how do we recover that library cost? In this article, the author describes four practices used by his colleagues.
Many of us are looking at the costs of running our practices and wondering how to run a leaner, cleaner operation. That likely includes the substantial outlays paid for our BVFLS reference libraries.
The cost to acquire and maintain our libraries is mostly a fixed cost, and it can easily range from $15–20,000 per year. (Heck, a single user license to Capital IQ starts at something like $13,000.) That’s some serious coin. The question is: Do we eat this cost or pass some/all of it along to our clients?
When I started doing valuations in the 90s, print and digital resources were limited so the library cost wasn’t a throat clearer. Also, the research process was simplified because there weren’t that many sources. But the process was tedious because what information there was took forever to find and wade through.
Today, the abundance of print and online resources has greatly improved both our report preparation efficiency and effectiveness. Simply put, we have access to better information and are more productive in our engagements. And certainly, clients benefit from that increased access and productivity, but it comes at our ever-growing out-of-pocket library expense.
So how do we recover that library cost? I’ve observed four practices amongst my colleagues.
For what it’s worth, I’m in the unicorn recovery camp … but with a generous definition of what is expensive/special purpose. That’s because I struggle with subscription services, like IBISWorld for example, which offer an on-demand purchase option. Why should I pay (upfront) for an annual subscription when I don’t know how many times I will use it during the course of a year? Instead, why not just charge clients for the actual research required and obtained for their projects?
In the interest of full disclosure to clients, I believe whatever cost recovery method we follow should be described in our engagement letter. Here’s the language I use:
Burkert Valuation Advisors estimates that the professional fee for this engagement will not exceed $15,000 plus related expenses. Such expenses will include costs directly related to this engagement, including all research/reference materials purchased specifically for this assignment.
What about you … how do you recover the cost of your BV library?
I help BVFLS practitioners focus on the art and science of practice development in order to break through their time and income barriers so they can build authority, land clients, and improve profitability. If you have hit those barriers and are looking for help to grow faster and more effectively, e-mail me at firstname.lastname@example.org.