Change your fee structure, change your tax practice
As a tax professional, how do you ever really know if the price you charge clients is the ‘right’ price? Between the well-to-do socialite that never blinks an eye at your invoice to the penny-pinching spend-thrift that questions every line item, it can be difficult to gauge if your price sheet is where it should be.
To better understand the dynamics of what makes for a good pricing policy for client services, one must understand the following factors:
- Economic realities of your location
- Extent of services offered
- Experience and designations
- Strength of your value proposition in the market
Factor #1: location, location, location
If you are a tax preparer having just relocated from California to West Virginia, it is likely you may need to revisit the rates you charge for a traditional 1040 return with a single common schedule. Why? Because the economics between both locations tend to vary close to 20%. Furthermore, if you land in an ultra-competitive locale those numbers can differ even more.
Factor #2: supply and demand
While virtual tax offices are growing in number, making distance and location less a factor in everyday business, proper pricing can still hinge on how your tax service offerings stack up to local competitors. Can the consumer get all their tax needs met with you? Or must they inconvenience themselves by seeking other pros to take care of their full tax needs?
Factor #3: does EA mean “earn a lot”?
Do designations matter? More specifically, does all the work you put into becoming (fill in the blank with designation) matter to the everyday consumer? Survey findings provide a clear ‘Yes’ answer to this question. Not only do consumers prefer to do business with tax pros with designations (and the experience that comes with it), but findings also suggest they are willing to pay more for the designee’s services.
Factor #4: a strong value proposition
Taking the previous three factors into consideration, one of the most important factors to building your best and most profitable pricing policy is the strength of your value proposition. Your value proposition is important in that, if effectively communicated, it allows your customers to understand your value in helping them solve their problems. This added consumer confidence makes creation of a more profitable price sheet workable.
Want a deeper dive in creating a profitable price sheet for 2025?
NATP and Wolters Kluwer Tax & Accounting invite you to attend an upcoming free webinar on Thursday, Nov. 14 at 2 p.m. ET, titled ‘Pricing Your Tax Business for Profitability’. In this co-partnered webinar, attendees will hear from Jennifer Van Elzen, member relations & analytics director at NATP, and Loren Fogelman, CEO and success coach to tax firms at the Business Success Solution. Join this wide-ranging discussion as we take an informative look into the findings of the most recent NATP Fee Study report and talk about the steps required to build a value-driven price model for a more profitable tax business. 1 hour of NASBA credit will be offered.