Charging the Right Feesby
Almost every CPA I mentor tangles themselves in a web of confusion and wrestles with the same beast. The confusing nail biting beast that I am referring to is pricing and charging the right fees.
It really pains me to see fellow practitioners struggle with pricing and not setting, or getting, the fees that they deserve. And realistically, when approached properly, setting your fees can be one of the easiest things you’ll ever do in your practice.
One of the biggest problems we face as a profession is that practices have taken their capital and commoditized it into a one-dimensional billing rate, but this is a SERIOUS mistake.
As CPAs, we have three basic ways to price our services: hourly, fixed fees or value-based hybrid pricing.
Hourly billing sets the tone that your services aren’t much different from any other CPA or bookkeeping firm. This hourly billing gives no incentive to be more efficient than your competition or get your work done faster, so you’re actually losing revenue.
Now with fixed pricing, the risk is transferred to you. If you use fixed pricing, you should charge more. A fixed pricing strategy can be used for one-time projects like tax preparation for a fixed fee, or it can be used for recurring monthly services.
While these strategies will provide you with an income of money, I prefer the value-based hybrid model.
Value-Based Hybrid Model
Factor in the measurable financial, tax and personal benefits that you provide your client.
Let’s say you provide cost and price analysis services that result in profitable changes to a client’s pricing model. Or, you will set up a new billing system for a client that improves cash flow and reduces write-offs. These are tasks that are going that extra step for your client and their future prosperity.
When you provide any of these types of services, don’t be afraid to charge based on the value you brought to the table. Whether it be a huge monetary gain, or an immense amount of emotional relief, you deserve more.
Add in value-based factors to your fees.
Taxpayers have a huge fear of the IRS, and your firm provides them with protection. That is something valuable, and something to charge more for.
Now if you are charging by the value of the service, you must be sure that you are providing the quality.
Do What You Say You’ll Do. If you promise that a tax return will be prepared in X number of days, make sure it is ready when you say it would be, or sooner.
Deliver 5-Star Service. Ensure that clients are treated with the utmost respect and kindness throughout the entire process. Make sure your team is expressing enthusiasm and passion in what they do and their gratitude for every client’s business.
Master Scripting. When talking to a client, make sure you are incorporating language that demonstrates you are diligent in helping them save money on their taxes and preparing an accurate tax return.
When working with my coaching members, we create an outline that covers the points to hit when conversing with a client at any time. Type them up and keep them by your desk to remind the client of all that you are doing for them.
Increase Demand With Expertise. Be better than other firms, know you are better, and show that you are better. Continuously highlight your expertise. One way you can do this is by sending out a newsletter discussing relevant topics for saving, retirement, etc. Or write a book that you can share with clients. I have written two books, and I give them out as gifts to clients all the time.
Provide Social Proof Through Testimonials. If you’ve read any of my prior articles, or this is your first read, I am an advocate for testimonials. Ask your best clients to write a few words about their level of satisfaction and their positive experience with your practice. Incorporate these everywhere: website, advertising, etc. It will build your confidence and provide value to your existing and new clients.
I understand this is a slightly different approach to pricing, but too many CPAs are laboring under the assumptions that are just plain wrong and devaluing.
Salim Omar is the author of The Million Dollar CPA Firm. He is also a successful business owner of Straight Talk CPAs, an accounting firm, and President of CPA Marketing Genius. He has a passion for helping CPAs engage in personal growth and professional development. While he is...