After several years of intense pricing pressure, 83% of CPA firm decision-makers say they plan to increase book rates next year.
And the best firms are planning the most aggressive price hikes.
About 70% of all firms plan to raise book rates 1% to 5%, according to the latest edition of IOMA Partner’s report (subscribe here). Another 13% are planning rate increases of more than 5%. Only 16% say they won’t raise prices next year.
About half have already increased book rates this year, with 44% holding the line and 7% actually cutting rates.
“Is it reason to celebrate? Maybe,” writes editor Jess Scheer. “But we suggest holding off on popping the champagne just yet.” Realization rates remain dismal.
Yet an increase in book rates can give a firm extra negotiating power. Scheer adds, “We certainly see the anticipated increase in book rates as a good sign for the profession. CPA firms are at least going into the negotiations with some level of confidence.”
5 Responses to “Are You Ready to Raise Your Prices?”
Gil Ostrick
In the end clients only pay us perceived value added regardless of the bill we send to them. The difficulty lies in articulating on the invoice the benefit or savings they sustained/received compared to the billing amount.
John Shaver
This really reinforces the fact that billable time is complete and utter nonsense.
Eliminate the billable hour and timesheets and this whole issue vanishes.
True professionals don’t track time.
Mark Koziel
Has it really been SEVERAL years of price pressure? Seems it’s only been about three. I’m sure some feel it’s been too long already.
Joe Mendez
Excuse my ignorance but, what are “book rates”
Why can you call them by their “english” names?
Rick
Think of book rates at the MSRP sticker price on a new car, the price at which the seller begins his negotiation downward to what we might call effective billing rates.
That’s one definition. There are others.