3 Tips for Ending a Client Relationship

by Thom Tracy

2 min read

Small business success is usually tied to how well a company serves clients. However, the phrase “the customer is always right” may not be the best motto for business owners to follow. Some clients can be very difficult, making unrealistic demands that no business can accommodate. As well, some clients miss appointments or payments, which ends up costing the owner time and money. Regardless of the cause, some business owners are better off ending a client relationship. Since firing a client have negative consequences, understanding how to best end a client relationship can help save your reputation.

Raise Prices

While this may seem counter-intuitive, one of the easiest ways to end a client relationship is to raise prices. This works best for service-oriented businesses because they dictate the price for each individual customer. This gives the client an opt-out option, in which the decision to end the relationship is their choice. For example, an accountant can raise the price of filing a tax return for a difficult client. If the client complains about the higher fee, they can leave. However, if the client does not opt out and agrees to pay the higher fee, the accountant will be compensated for it. Unfortunately, this method will not work for clients who need to be fired, regardless of how much more they pay. This method does also not work well for product-based businesses. For example, it would be challenging to sell a product for a higher price to a difficult client when the same identical product is cheaper for everyone else.

Changing Directions or Focus of the Business

Another way to end the relationship with a client is to tell them that the business is going in another direction or focus. The client will need to understand that their needs can no longer be met with the new direction the business is going and should look elsewhere to find the services they were previously receiving. Another alternative is to say that the business is reducing the amount of clients it will be servicing and the remaining clients need to fit a certain criteria. This method is effective because it does not assign blame or fault to the client who is about to be fired. They will not take it personally and will understand that their needs can no longer be met.

Find an Alternative Option

One way to end the relationship with a client is to find them a suitable replacement. This method is effective because the client will not feel discarded or abandoned, which could lead to resentment. At a certain point, both the client and business owner should feel that the relationship is not working out as expected. An easy transition would be for the business owner to find an alternative in the same industry that would be a better fit for handling the client’s needs. Therefore, the client never has to worry about finding a new option and will never feel that they were fired.

Related Articles

What’s Changed in the New QuickBooks

The new QuickBooks Online bookkeeping software has gone through quite a few changes. As…

Read more

Assigning Costs: How to Use Activity-Based Costing

If you make and sell products, you want to have the best…

Read more

Internal Reporting Options: Variable Pricing Versus Absorption Costing

Materials, labor, and overhead are combined to make products to sell. The…

Read more