Mastering Pricing in Your Tax & Accounting Firm

The Transformative Journey of Pricing Strategies

In the ever-evolving tax and accounting services landscape, pricing strategies have undergone a remarkable transformation.

Gone are the days of one-size-fits-all pricing models; today’s firms must embrace a dynamic and client-centric approach to unlock exponential growth and maximize client lifetime value.

This comprehensive guide will take you on a journey through the evolution of pricing in your tax & accounting firm, equipping you with the knowledge and tools to stay ahead of the curve.

Understanding the Pricing Evolution

The pricing evolution within tax & accounting firms can be broadly categorized into four distinct stages:

1. Client-Dictated Pricing Model
   In the early stages of a firm’s growth, clients often dictate pricing. The common mindset is, “Well, they told me they’d pay me $350 to do their tax return, so I charged that.” This model is typical for businesses in their infancy or those trying to break out of the learning phase.
   
2. Minimum A La Carte Pricing Model
   As firms begin to realize the need to charge more, they may adopt a minimum a la carte pricing model. This approach aims to avoid scaring away clients with “big price minimums” while still allowing for higher pricing on more complex services.
   
3. Good, Better, Best Packaging Pricing Model
   Most firms currently operate within this model, offering three distinct service packages priced as a percentage of revenue. This approach helps scope the work and provides clients with clear options to choose from.
   
4. Advanced Dynamic Pricing Model
   The pinnacle of pricing evolution is the advanced dynamic pricing model. This model is designed to maximize the lifetime value of a client, not just the current year’s revenue. By leveraging tax savings and offering bundled services, firms can create a win-win situation for both themselves and their clients.

The Power of the Rinse Process

At the heart of the pricing evolution lies the transformative “Rinse Process.” This strategic approach is designed to help tax & accounting firms shift their tax preparation or bookkeeping clients who qualify for advisory services into higher fee structures. The Rinse Process involves:

• Evaluating your client base by service and fee charged
• Hosting one-on-one sales calls to upsell qualified clients
• Sending price increase letters once revenue is “replaced” through the upsell process
• Believing in the value of your services and the new fees you’re charging
• Achieving fewer clients but higher revenue and profitability

The Rinse Process has proven to be a game-changer for firms, enabling them to double their business revenue while losing only 30% of their client base. By embracing this approach, firms can work less during tax seasons, hire the right people to offload compliance work, and achieve profitability targets of 50% or more.

Mastering Advanced Dynamic Pricing with Corvee

At the core of the advanced dynamic pricing model lies the art of determining the optimal pricing for your services. This process involves several key steps, and Corvee’s tax planning software can be invaluable in mastering this approach.

1. Determine Tax Plan Pricing
   Establish a pricing structure for your tax planning services, typically based on a percentage of the estimated savings (e.g., 30% of estimated savings, capped at a specific amount). Corvee’s software can help you quickly identify potential tax savings opportunities for your clients, making determining fair pricing for your services easier.
   
2. Determine Strategy Implementation Pricing
   Set pricing for implementing core and advanced tax strategies, taking into account the complexity and potential savings involved. With Corvee’s extensive library of over 1,500 tax-saving strategies at both the federal and state level, you can easily identify the most impactful strategies for your clients and price your services accordingly.
   
3. Determine Tax Preparation Pricing
   Establish pricing for tax preparation services, considering factors such as the number of entities, revenue ranges, and the inclusion of individual tax returns. Corvee’s multi-entity tax planning capabilities allow you to analyze how changes in one entity affect others, enabling you to provide comprehensive tax preparation services and price them appropriately.
   
4. Determine Quarterly Estimates Pricing
   Determine pricing for providing quarterly estimated tax payment services, based on the number of entities and revenue ranges. Corvee’s six-calculation system ensures maximum accuracy by analyzing prior year, current year, and future year tax scenarios across federal, state, and local tax forms, helping you provide reliable quarterly estimates and price your services competitively.

By leveraging Corvee’s powerful tax planning software, you can create a dynamic pricing model that maximizes client lifetime value while ensuring fair compensation for your firm’s expertise and services.

Leveraging Tax Savings in Pricing

One of the key advantages of the advanced dynamic pricing model is the ability to leverage tax savings in your pricing strategy. When you successfully implement tax strategies that result in significant savings for your clients, you can bundle additional services, such as accounting and financial advisory, into your offering.

By demonstrating the value you’ve already delivered through tax savings, clients are more likely to perceive the bundled services as a worthwhile investment, leading to higher retention rates and increased lifetime value. 

Corvee’s customized tax planning strategy reports, compiled into branded, client-ready PDF files, can be a powerful tool in communicating the value of your services and justifying your pricing.

Leveraging Tax Savings in Pricing

Implementing an advanced dynamic pricing model requires a well-trained and knowledgeable team. Here’s how you can effectively train your sales and non-sales teams on the pricing calculator using Corvee:

Sales Team Training

• Set up training sessions (e.g., lunch and learns, team meetings) to educate your sales team on the pricing calculator and how Corvee’s software can streamline the process.
  
• Review how to input necessary information, such as revenue ranges and the number of entities, into the calculator and how Corvee’s multi-entity tax planning capabilities can simplify this process.
  
• Update each section of the calculator, including planning, core strategies, premium strategies, estimated payments, tax preparation, individual returns, schedules, incorporated entities, sub-accounts, monthly accounting, controller services, CFO services, setup, and cleanup, leveraging Corvee’s extensive library of tax-saving strategies.
• Review common pricing situations and examples relevant to your firm’s services and industries, utilizing Corvee’s case studies and success stories as a guide.

Non-Sales Team Training

• While your non-sales team members may not need to be as proficient in pricing as your sales team, they should have a general understanding of where pricing starts. Provide them with a pricing guide that outlines the starting prices for various services, such as tax planning, core implementation, advanced tax strategies, payroll setup, bookkeeping setup, tier upgrades, and tax preparation.
• Encourage your non-sales team to familiarize themselves with Corvee’s software and its capabilities, as this knowledge can help them better understand the value your firm provides to clients and the rationale behind your pricing strategy.

Embracing the Future of Pricing with Corvee

The evolution of pricing in your tax & accounting firm is an ongoing journey, one that requires continuous adaptation and innovation. By embracing the advanced dynamic pricing model, leveraging tax savings, and training your team effectively, you can unlock exponential growth, maximize client lifetime value, and position your firm as a leader in the industry.

Corvee’s tax planning software can be a powerful ally in this transformative journey, providing you with the tools, insights, and support needed to master the art of pricing. With features like the ability to quickly find and calculate over 1,500 tax-saving strategies, multi-entity tax planning capabilities, and customized tax planning strategy reports, Corvee empowers you to deliver unparalleled value to your clients and justify your pricing with confidence.

Moreover, Corvee’s dedicated support team, consisting of certified public accountants, tax attorneys, enrolled agents, and other industry experts, is always ready to guide you through the complexities of tax planning and pricing. By leveraging the private client community, dedicated success managers, and direct access to the Corvee team, you can stay ahead of the curve and continuously refine your pricing strategy.

Remember, pricing is not just a numbers game; it’s a strategic tool that can elevate your firm’s value proposition, strengthen client relationships, and drive sustainable success. Embark on this transformative journey today with Corvee by your side, and witness the remarkable impact it can have on your firm’s growth and profitability.

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