5 Pricing Trends for Tax Firms

By William Hamilton

Founder, SmartPath.co

Were you happy with your margins this tax season?

Pricing data shows (on average) that small tax and accounting firms are losing
$24,700 a year through underbilling.

Here are the Top 5 Pricing Trends we’re seeing small tax firms use to increase their margins.

1 Getting Paid for “More” Value > Bundled Services
There are so many things you do for your clients outside of just tax prep and accounting.

The problem is most firms don’t realize what they’re giving away and how valuable their help is to clients.

Clients don’t want to pay more for the same help they’ve been receiving.
The key is adjusting your relationship to go deeper and offer services as a bundled package.

The package you offer your clients should match their specific goals. So, you need a better approach than trying to push every client into a “Silver/Gold/Platinum” package.

That may have worked 10 years ago, but client needs are more complex now, so your bundles need to be smarter.

2 Fixing the Cash Flow “Crunch” > Moving clients to a subscription model
We hear this all the time: “My clients wouldn’t pay me monthly for a tax return.”
Or, “Why would I want my clients to pay monthly when I could get the money all at once?”

Clients will happily pay you monthly if offer them the right package with services they care about. 

For subscriptions to work, you must offer deeper-level help than just tax prep. 

Help them with tax planning, dive in and give them some recommendations about cash flow, and help them financially convert to a better accounting system. 
The value of working with you is the progress you help them make in their life or business. It’s not just filing a return with the IRS—computers are getting pretty good at that now—we have to go deeper.

Offering clients a monthly subscription makes it easier for them to pay you. It also evens out your cash flow throughout the year and separates you from firms that aren’t willing to modernize.

3 Stop Giving Away Free Work > Controlling scope

Clients ask for things outside of scope when we don’t clearly define the scope for them and hold them accountable for it. 

Most invoices from Tax Prep software shoot out a bunch of form names clients don’t understand and don’t care about. 

When you define for a client what you’re actually doing for them throughout the year *without using tax jargon*, you start to define the real scope of the engagement. 

Once you’ve defined it you need to document it and share that document with the client (repeatedly if necessary) to hold them accountable. 

“But won’t clients think I’m mean and leave if I do this?” They will if you do it in a mean way. 
The key is having a dead-simple workflow to give them the help they’re looking for when they ask for something outside of scope. If you make it easy for them to “upgrade” and get the help they need, they won’t look for the door.

4 Automating Recurring Revenue > Take collections off the table

Too many firms still bill “after the fact”. 

Collect a payment authorization form from every single client—no exceptions. 

Automate billing through technology or staff. 
When you visit the Doctor, do they ever talk to you about money?
No, they spend their day treating patients, not dealing with paperwork.

You’re a valuable professional. Focus on helping clients and automate the money part.

5 Allowing Other Staff to Quote > Standardizing Pricing

How long does it take to quote a client and send a proposal? 

If it’s more than 5 minutes, then your pricing needs to be standardized.
Once you have a client you want to work with and are willing to pay, getting them onboard should be easy. 

If all your pricing is in your head, odds are it’s taking too long to quote, quoting fees is stressful, or you’re stuck being the only one on your staff who can price clients. 

It doesn’t have to be this way. Standardize your pricing and package options, then enforce those options with every client so your staff can help you price.
(Shameless plug, our Engage™ software can do this for you).

I would love to work with you to help get your pricing and margins where you want them to be. 

Grab a call on my calendar

We’ll spend 30 minutes together. I’ll assess your current situation and understand your goals, then give you our recommendation for what to focus on first. 

The call is free. If you’re a good fit, we would love to work with you.

Calendar Link to grab your spot. 

To your success!