EA, Owner 1st Step Accounting LLC
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COVID-19 Pricing Strategy for Your Tax Practice

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Appropriately pricing services has always posed problems for tax and accounting professionals, but throw in a global pandemic and all it comes with and it becomes more complex. We now have to balance the thin line of ensuring your business earns a profit and can still assist clients that are currently struggling financially or on the brink of closure. The answer isn’t simple and I’m sure at some point this year you’ve struggled with this. So have I.

Dec 17th 2020
EA, Owner 1st Step Accounting LLC
In association with
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Here are some strategies I put into place to help maintain the bottom line and still managed to afford to assist those clients whom COVID hit the hardest.

1. Know Your Breakeven Point

As accountants, we should have a good grasp on our monthly costs. But in order to commit time or services to our clients in need, we need to drill down and know what our breakeven point is for the current services we provide each individual client. Ask yourself the following:

  • How much time does that equate to?
  • Can you shift around staff to provide the same level of service at a lower cost?
  • Can you afford to donate time to help your client come up with additional revenue streams to help them recover during this time of uncertainty? 

Investing extra time in financially struggling clients now could lead to high returns in the future. It could also lead to saving an existing business from having to close its doors permanently.

2. Be Transparent

The number one rule you need to face is that you too are running a business. As such, your pricing should reflect the growing needs of your firm and take into account the needs of the clients you serve.

Being transparent with pricing from the outset will help eliminate any potential clients that aren’t a good fit from the beginning, allowing you to allocate those sales resources to potential clients that are a much better fit. Having minimum or base pricing doesn’t mean you won’t accept or work with clients at different or lower price points. It simply means you have a minimum that your firm needs to charge in order to keep your business afloat. 

This transparency could also aide in eliminating price shoppers who aren’t interested in building long-term relationships with your company. There was an accountant who said to me, “You choose when you work for free, don’t let the client decided for you.”    

3. Do Not Discount

Honestly, I struggle with this because personally I LOVE a good sale. But discounting our products leads to unrealistic expectations from our clients. They will believe the discounted price is the standard price and will come to expect it.

I am, however, in favor of being generous. Jeremy Allen of System Six called it being generous with your time. If you are willing and financially able to help your clients for free temporarily, make sure your clients understand the value and time period associated with this generosity.

Send the invoice for service with a line item zeroing out the balance due. This serves the purpose of allowing the client to understand how much this will cost in the future and it allows your firm to track how much you have given back to your clients. As they say, you can’t measure what you don’t track!

4. Get Flexible With Pricing Options

Having clients sign annual or long-term engagements has been the norm for creating reoccurring revenue streams, but we may want to re-evaluate these contracts for more flexible needs-based arrangements in the present. COVID-19 has made cash flow predictions for some businesses virtually impossible to measure, making these owners overly cautious and weary to spend their available resources on a long-term basis.

Instead of asking these clients to get into a long-term relationship and part with their cash, consider creating flexible payment options or project-based engagements. This way the client gets to minimize long-term spending and still has their needs met.

As the project continues in phases, the client can choose to extend the contract. Also, don’t be afraid to consider extended payment arrangements as well. Instead of a lump sum paid monthly, offer weekly or bi-weekly payments with the life of the payment cycle extended for an extra 30 days. Now, I know these ideas do nothing for your firm’s cash flow and revenue planning models, but it sets up goodwill with clients that will go far beyond your reach in the years to come. 

5. Get Your Clients Involved

We’ve all shopped in a store that has asked if we wanted to round up our purchase price to the next dollar to make a donation to a charity. Consider asking your clients who haven’t been hit as hard by the pandemic if they would like to donate to your internal accounting services fund to help other clients who may struggle during this time.

You may find that your clients will be more than willing to help ensure that another business connected to your firm gets to continue to benefit from your services. If you are doing your job right, your more well off client will love you so much that they wouldn’t want anyone else to lose you because of a hopefully temporary setback.

In Conclusion

You have a lot to decide with pricing during these tumultuous times. With uncertainty of the long-term impact the pandemic will have on our country, we need to reconcile our desire to be generous with our desire to be a capitalist. 

On one hand, you want to ensure that your family and staff are taken care of and on the other you want to save all the clients. Well, as they say, “be sure to put on your mask first.”

Take your time to assess financially how your firm is operating now so that if you want to do more you aren’t creating a financial burden on yourself. Knowing your break-even point or asking clients or staff to donate resources will allow you to freely give to those businesses in need whilst maintaining the lifeline of your firm.  

Intuit Accountant helps tax and accounting professionals make a meaningful difference in their clients’ lives with our industry-leading software — Lacerte®, ProSeries®, ProConnect™ Tax Online and QuickBooks®. Visit intuit.com/company for the latest news and information.

 

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