At FKQ Chartered Accountants we believe one of the easiest ways for an SME to lose profit without realising it is through underpricing repeat work and long-term client accounts. These relationships often feel stable, predictable and commercially valuable. They may have been with the business for years, provide regular work and require little sales effort to maintain. Because of that, pricing decisions around them are not always challenged often enough. Fees stay unchanged, old assumptions remain in place and extra work gradually becomes part of the service without being properly reflected in the price. Over time, what once looked like a profitable client relationship can become a quiet drain on margin, team capacity and business performance.
This problem is especially common in service-based businesses, but it also affects companies providing ongoing support, repeat production work, regular project work or account-based pricing arrangements. The issue is rarely one dramatic pricing mistake. More often, it is the slow build-up of small concessions, unreviewed costs and outdated pricing structures that gradually reduce profitability.
Familiar Work Is Often Priced on Old Assumptions
One reason repeat work is vulnerable to underpricing is that it becomes familiar. Once a client relationship is established and work begins flowing regularly, pricing often stops being actively reviewed. The original fee may have been agreed years earlier under very different conditions. Since then, wage costs may have risen, supplier costs may have changed, delivery may have become more complex and the client’s expectations may have increased.
Despite this, many SMEs continue billing on the basis of old assumptions.
This tends to happen because repeat work feels safe. The business knows the client, understands the process and values the recurring income. That familiarity can reduce commercial discipline. The price is accepted because it has “always been that way”, not because it still reflects the true cost and value of the work.
Long-Term Clients Often Receive More Than They Pay For
Another reason margins weaken on long-term accounts is that service creep becomes normalised. Clients who have been with the business for a long time often receive more attention, more flexibility and more goodwill than new clients. That is understandable to a point. Strong relationships matter, and good clients are worth protecting.
The problem arises when additional work, support or responsiveness becomes routine without any adjustment to the fee.
That might include extra meetings, additional revisions, urgent requests, small add-on tasks, reporting, admin support or out-of-scope advice that is never billed. None of it may seem significant on its own. Collectively, however, it can change the economics of the account quite substantially.
The business still sees recurring revenue coming in, but the amount of time and resource required to service that account has quietly increased.
Loyalty Does Not Automatically Equal Profitability
Long-term clients are often viewed as some of the most valuable relationships in a business, and in many cases they are. They can provide reliable income, strong referrals and commercial stability. However, loyalty and profitability are not the same thing.
A client who has been with the business for ten years may still be underpriced. They may still absorb disproportionate management time. They may still be buying services that have become more expensive to deliver. In some cases, the very fact that the relationship feels secure makes it less likely to be reviewed critically.
This is where SMEs can get caught out. The client appears valuable because they have history, volume and familiarity, but the financial contribution of the account may be much weaker than assumed. In some cases, newer clients paying modern rates may be more profitable than long-standing clients who have never been repriced properly.
Repeat Work Can Hide Margin Erosion
Repeat work often creates a sense of efficiency. The process is known, the client is familiar and the work may be relatively straightforward to deliver. That can make it easy to assume the margin is healthy.
In reality, repeat work can hide margin erosion very effectively.
If prices stay static while labour costs rise, margin narrows. If the work takes longer because the scope has expanded, margin narrows. If the team dealing with the account has become more senior or more expensive over time, margin narrows again. Because the revenue arrives regularly and the relationship feels stable, these shifts can continue for a long time without serious challenge.
By the time management starts asking why the business feels busier without becoming more profitable, the issue may already be embedded across several long-standing accounts.
Underpricing Creates Pressure Beyond Profit
The cost of underpricing is not limited to weaker margin. It also affects how the business uses its time and capacity. If a team is spending significant hours servicing low-value repeat work, that time is not available for better-priced work elsewhere. If senior staff are tied up dealing with demanding long-term clients who are paying outdated rates, the wider business carries the cost.
This creates a strategic problem as well as a financial one. Underpriced accounts can distort priorities. They make the business feel full, but not necessarily productive. They can delay investment decisions, weaken cash generation and reduce the capacity available to pursue more profitable opportunities.
In other words, the real cost of underpricing is often larger than the invoice value suggests.
Pricing Reviews Need to Be Routine, Not Occasional
One of the clearest ways to protect against this problem is to make pricing review a routine commercial exercise rather than something that only happens when margins are already under pressure. Businesses should regularly ask whether long-term and repeat work is still priced appropriately for the cost, complexity and value involved.
That review should not focus only on headline fee levels. It should also consider:
- how much team time the account is consuming
- whether the scope of work has changed over time
- whether support expectations have increased
- whether costs have risen since the fee was agreed
- whether the account is still commercially attractive compared to other work
This does not mean every long-term client should receive a sharp fee increase. It does mean pricing should be based on current reality rather than historic habit.
Good Client Relationships Still Need Commercial Discipline
Many SME owners avoid repricing long-term clients because they do not want to damage the relationship. That instinct is understandable, but it can become expensive if it leads to years of undercharging. A good client relationship should be strong enough to support an honest conversation about cost, value and sustainability. In many cases, clients are more understanding than business owners expect, especially if the service remains strong and the rationale is clear.
The bigger risk is allowing loyalty to replace commercial judgement. A business that consistently underprices repeat work may remain busy and appear stable while quietly undermining its own profitability.
For growing SMEs, this is worth taking seriously. Repeat work and long-term client accounts can be a valuable part of the business, but only if they are still contributing properly to profit. When pricing is left untouched for too long, familiarity can become expensive. The businesses that protect their margins best are often the ones willing to review long-standing arrangements with the same discipline they would apply to new work.
If you would like to discuss your business, contact us by email fiachra.quinlan@hotmail.com or visit fkq.ie.
Disclaimer: This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.
