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Pricing Your Tax and Accounting Firm’s Services

Pricing is one of the most overlooked aspects of firm strategy, but is also the number one determining factor of profitability.

If you’re making less than 50% net profit margin when you add net profit and owner salaries on a cash basis, your pricing strategy for your tax and accounting firm may need a comprehensive review and overhaul according to our guidelines below.

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Pricing for
Profitability

Present a Stack of Services
to Visualize Value 

Seeing is believing, and oftentimes you must visually communicate the value of your services with a presentation. We’ll help design a stack of custom services for your tax and accounting firm so clients grasp the value you bring to their business, and are willing to pay higher fees. 

Present a Stack of Services to Visualize Value
Package Your Services to Eliminate Overcommitment and Scope Creep

Package Your Services to Eliminate Overcommitment and Scope Creep 

One of the biggest mistakes most tax and accounting firms make is committing to do too much work, for too little a fee. We ensure your packages are designed for maximum gross profit margins and elimination of scope creep.

Pricing Policy to Ensure Your Price Matches the Value Your Client Receives

Our pricing calculators aren’t based on hours. Instead, they’re based on the size of your client, projected impact on their business and what they are willing to pay for that value. Our strict pricing policies keep you on track to charge more while reducing service delivery.

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Pricing Policy to Ensure Your Price Matches the Value Your Client Receives

“Rinse” Clients to Increase the Profitability of Your Tax and Accounting Firm

Assess low-paying tax preparation or monthly accounting clients and offer them higher-level advisory services. If they don’t bite, we significantly increase their fees every subsequent cycle. 

There are 4 main ways we approach clients to raise our business to higher levels of profitability with fewer clients.

“Rinse” Clients to Increase the Profitability of Your Tax and Accounting Firm
1) Upsell Clients by Presenting a New Opportunity, Such As:

1) Upsell Clients by Presenting a New Opportunity, Such as:

  • Tax Planning
  • Virtual CFO Services
  • Wealth Management
  • Investments
  • Insurance
  • Advanced Planning

2) Repackage Engagements by Combining Components to Maximize Gross Profit and Minimize Service Delivery:

  • Tax Preparation → Tax Planning
  • Tax Preparation → Quarterly Tax Planning
  • Tax Preparation → Full Service (Chief Financial Officer, Tax: Preparation, Planning)
  • Monthly Accounting → Chief Financial Officer
  • Monthly Accounting → Full Service (Chief Financial Officer, Tax: Preparation, Planning)
2) Repackage Engagements by Combining Components to Maximize Gross Profit and Minimize Service Delivery:
3) Renegotiate Incorrectly Priced Clients With Price Increase Letters:

3) Renegotiate Incorrectly Priced Clients With Price Increase Letters:

  • Tax Preparation → Tax season increase
  • Monthly Accounting → New minimums

4) Add Commissionable Services Which Others Fulfill While You Take a Referral Fee:

Payroll
Human Resources
Investments
Insurance
Cost Segregation

Entity Selection
Accounting
Tax Preparation
Entity Selection

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4) Add Commissionable Services Which Others Fulfill While You Take a Referral Fee:

Key Pricing Principles

There will always be moments where you’ll want to break the rules for someone you know, or for an existing client of your tax and accounting firm. Here are a few pricing principles to stick to, no matter who the client is.

Always Get Paid Upfront

Always Get Paid Upfront

Until the prospect’s credit card clears, they’re not a client. Always get paid upfront even if you’re working on an hourly basis, start with a $2,500 retainer and bill into it. Until you get paid, you don’t start doing the work—no exceptions.

Always Qualify

Always Qualify

Always make sure you leave some room to come back later and increase or decrease the pricing, or add or remove services. This has to happen in the original strategy session (preferably) or during the first kick-off call.

Schedule Follow Ups Only When Needed

Schedule Follow Ups Only When Needed

If you can’t properly scope your services on the first call, set up a follow up and review their accounting file or tax return. Make sure you take a fully refundable deposit, ask the community, then come back confident.

Credit Card vs. ACH

Credit Card vs. ACH

For one-time payments, credit card is an acceptable form of payment. For recurring services, ACH is preferred for lower fees and higher clearing rate.

Never Send Completed Work Until You’ve Been Paid in Full

Never Send Completed Work Until You’ve Been Paid in Full

If the client has an outstanding invoice for an engagement, do not continue working on their account or hand over deliverables. If they need something, send them back a portion of the work, but not all until you’ve been paid in full.

Automatic Renewal

Automatic Renewal 

When you have an annual agreement, you should set the billing and agreement to automatically renew at the end of the term.

60 Day Cancellation After 12 Months

60 Day Cancellation After 12 Months

When you have an automatic renewal, the cancellation term should include a 60-day notice.

When in Doubt, Start Higher

When in Doubt, Start Higher

You can always negotiate down with great objection handling. But when in doubt, start high.

When to Adjust Your Pricing 

While we provide stacks, packaging, pricing calculators and guidelines, there are always reasons why a specific tax and accounting client doesn’t fit into the calculated price. Here are some reasons you may need to adjust your price higher or lower.

You’re Adding Multiple Tiers (Higher)

You’re Adding Multiple Tiers (Higher)

When you add 2 tiers, double the price from our guideline of $500/month for every $500k in annual sales. If you’re adding 3 tiers, triple your price.

There’s More Value (Higher)

There’s More Value (Higher)

Any time the work you’re doing is proving a 3-to-1 ROI, you can charge more. If you determine you can help them increase margins by $200k, you should charge ~$70k/year ($5,800/month) for your services—even if the company is doing only $2-3M per year.

They Have an Existing Staff Member (Higher)

They Have an Existing Staff Member (Higher)

Oftentimes, you’re eliminating someone whom they used to pay $25-50k/year to do the same tasks. Take this into account when pricing your deals, and consider increasing your price.

They’re Used to Paying an Extremely Low Amount (Lower)

They’re Used to Paying an Extremely Low Amount (Lower) 

If you’re talking with someone (including existing clients) who are used to paying only $50-100/month, you may have to reduce your pricing until they see the value. If so, make sure you confirm that you’ll want to reassess the price after 30-60 days.

They May Be Lower Margin Company Like a Manufacturer or a Restaurant (Lower)

They May Be Lower Margin Company Like a Manufacturer or a Restaurant (Lower)

When a company has inherently lower profits margins due to their business model, they are going to have less money set aside for operating expenses. In this case, you may bring down pricing by using an alternative calculation.

They Are a Startup (Lower)

They Are a Startup (Lower)

When a company has just started up, oftentimes they don’t have any sales and have just expenses. In this case, you may bring down pricing by using an alternative calculation.

They Have Already Set up Substantial Automation (Lower)

They Have Already Set up Substantial Automation (Lower) 

If your client has already implemented a fully (or mostly) automated process, such as using Bill.com for their accounts payable, you may need to reduce your prices.

There Are More Accounts Than Anticipated (Higher)

There Are More Accounts Than Anticipated (Higher)

If they didn’t tell you about all the accounts, legal entities and credit cards that they need your help with during the strategy session, you may have to increase your price.

Other Significant Items They Failed to Mention (Higher or Lower)

Other Significant Items They Failed to Mention (Higher or Lower) 

Anything else that greatly impacts the value that you are creating for them, or the amount of time and resources it’s going to take you to deliver on the value, you should adjust your price to accommodate. 

These are just a few of hundreds and even thousands of factors that can increase or decrease pricing. Always look for what’s impacting the value and how much time it will take you to deliver.

Our Clients Say It Best

Hear from tax and accounting firms who have increased their profitability by implementing our pricing policies.

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