Value Pricing in Uncharted Waters

Businessman sitting on scales with stack of coins in other trayAnd when hourly billing and fixed fees make more sense.

By Ed Mendlowitz
Call Me Before You Do Anything: The Art of Accounting

Equitable is not the same as equivalent.

MORE: Testifying Before Congress | Creative Ways to Retain Staff | What CPAs Can Learn from Lawyers and Doctors | My Top 10(ish) Regrets | Social Security Is an Asset Class | What’s Your Negotiating Style? | How to Make Your Own Opportunities
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I use the word “equitable” because I have charged three completely different fees for the same result. “Equitable” refers to the value delivered and charged to the client. But it’s not “equivalent.” And the difference can determine your pricing strategies.

With many accountants now working in uncharted waters helping clients get through the COVID-19 crisis, the pricing question is especially important.
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4 Ways to Bill Clients

Two businesswomen shaking hands in modern officeOf course we have a preference.

By Jody Grunden

When I attend CPA conferences across the United States, I often hear from CPAs: “I don’t want to bill for my time.”

So, how do you bill your clients?

MORE: 3 Measures of the Effectiveness of Your Team | Transferring Clients to a New Employee | Why Process Is Key to Remote Work | Innovate for the Right Reasons | Creative Perks for Remote Employees | 10 Interview Questions for Unlocking True Potential | Toss the Org Chart for an Accountability Chart
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Client billing can include hourly billing, but it can also include flat-fee, retainer-based and/or value-based billing. Most people use one of these four methods. Some use all of them or even a hybrid.
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Quoting Tax Resolution Fees

5 scenarios with fee quotation breakdowns.

By Jassen Bowman
Tax Resolution Systems

One of the most common questions I get from practitioners adding tax resolution services to their service offerings has to do with fees. Many practitioners see the benefit of offering flat-fee service options, while others choose to stick with their existing hourly fee model.

MORE ON TAX RESOLUTION: Basics of Tax Season Work Flow | Overcome Objections in 7 Steps | How to Reactivate Lost Clients | Don’t Ignore Your Existing Leads | Some Office Nuts and Bolts | The Importance of Goals and Affirmations | Market to Your Ideal Clients
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These are some example of how I quote fees when running a high-volume tax resolution practice. These scenarios do not represent any one particular client I’ve had. Rather, they each represent dozens of similar situations I’ve worked on. These scenarios are the norm if you’re focusing on 941 representation. For completeness, I’ve also added a 1040 scenario as an example.
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How to Set a Profitable Price Every Time

The right clients will be willing to pay fair prices.

By Gabrielle Fontaine
AddviserPlus

Whenever in negotiations with a potential client, do you know when to walk away, or do you feel forced to lower your price just to win the sale?

MORE on PRICING:  4 Ways to Bill Clients   |  Timesheets: The Nuclear Option  |  Joey Havens on Advanced PricingI Lost a Client to an Accounting Firm with Cheaper FeesAugust Aquila: What Marketers Need to Know about PricingValue Pricers Ignore Half the Pricing PuzzleWhere Marketers Fit in the Pricing ProcessThe Value-Pricing Con Job |  Price It Right: How to Value Accounting Services

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Especially when attempting to use flat-fee pricing, many accounting professionals get caught up in doing anything to win new clients. That’s a mistake.
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What’s Your Negotiating Style?

Businesspeople having a meeting over coffee sitting together at a table discussing a document, young man and two middle-aged women presentThe meeting is the goal.

By Ed Mendlowitz
Call Me Before You Do Anything: The Art of Accounting

We all have our own styles. Many have different styles for different things. Over the years I’ve developed an individual style for negotiating on behalf of clients that I have been very successful with, which I am sharing with you now.

MORE: Why Tax Time Is the Best Time to Get New Business | Problem Clients | When Pushing the Pencil Pays Off | When to Say No to Pro Bono Work | I Used to Hate QuickBooks
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When entering a negotiation, it is very important to have clients clearly articulate their thoughts about what they want. This takes time and patience, along with some prodding and challenging. But if it’s done right, clients will be clear about what they want.
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4 Ways to Bill Clients

Businessmen standing on dollar billWhat services do your clients value the most?

By Jody Grunden

When I attend CPA conferences across the United States, I often hear from CPAs: “I don’t want to bill for my time.”

So, how do you bill your clients?

MORE: 3 Ways to Keep Client Files Safe from Security Threats | How ‘Tech Stacks’ Can Help You Standardize | Automation and the Future of Accounting | The Rise of the Virtual CFO | Ready To Be a Virtual CFO? | The Only Three Metrics You Need to Measure Staffers
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Client billing can include hourly billing, but it can also include flat-fee, retainer-based and/or value-based billing. Most people use one of these four methods. Some use all of them or even a hybrid.

Let’s take a closer look at each of them:
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Timesheets: The Nuclear Option

Lamentations on the billable hour: Jamey Johnson’s “The Dollar.”

Nuke ’em: Kill timesheets before they kill the profession.

By Ed Kless

The litany of “challenges for the profession” repeats the narrative that has been well documented and continues to grow for over the last decade:

  • While there are more people graduating with degrees in accounting, fewer of them are sitting for the CPA exam. This is leading to fewer new hires for firms.
  • The new hires they do have are “millennials” who desire a challenge and think they should be made partner sooner rather than later.
  • Attrition, especially at the mid-career level, is over 10 percent and is mostly initiated by the professional, not the firm.
  • The loss of people in the middle and bottom of the pyramid is eroding the traditional economic model. Non-equity partners are increasing and funding for partner buyouts is disappearing.
  • Cries of “We must become more efficient,” and/or, “We must embrace new technology,” and/or “We must hold people more accountable,” reverberate in meetings.
  • Compliance work continues to flatline and while new offerings are growing revenue, they are not growing fast enough. Worse still those that do this work are often not even CPAs!

More Ed Kless at CPA Trendlines: Your Time Has No Inherent Value  |  Ed Kless: What Is Strategic Pricing?  |  Ed Kless on Factors Affecting Price Sensitivity  |  A Radical Close Look at Value Pricing  |  Billable Hour in the Extreme  |  The Four Factors for Fixed Pricing

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Presentation after presentation is viewed on the modern equivalent of the campfire, the conference room projector. “Our profession is sick, even dying. We might have cancer. We really don’t know, but it is bad.” It’s true, the profession does have cancer. The good news is, we know the cause and it is curable.

It is called “a timesheet.” It be must cut it out completely before it kills.

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I Lost a Client to an Accounting Firm with Cheaper Fees

Businessman holding two papers with happy and angry face each on themWhy they came back.

By Ed Mendlowitz
Call Me Before You Do Anything: The Art of Accounting

I have never been the lowest-priced accountant, but neither was I the highest.

MORE: Getting a Referral from an Adversary | The Background to Saving a Business | Secret Success Formula: E=fs4Uh | Becoming an Expert in IRS Collections | How Hidden Bias Taints Results | When to Keep Some Plans to Yourself | When Writeups Went Extinct | Kennedy’s Acceptance Speech | What Consulting Is
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Sometimes prices charged are subject to the perception of the client and not reality. Fees are always related to the value provided, although that isn’t always evident.
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