Thousands of accountants are underpricing. Here's why.
What’s one tip or piece of advice you would give to a new accounting firm on how to price their services?
This is the question that my team and I posed to accountants around the country and the answers blew us away.?
As an investor, fintech entrepreneur, and advisor in the trenches (I've helped hundreds of accountants earn north of $90m in business over the years as cofounder of BizPayO and Bookgel ), I have pretty much seen it all.
Until now.
The results below are pretty shocking and frankly the very reason we decided to do something about it using AI (link to our story in Yahoo Finance).
TLDR: There is no one bulletproof pricing strategy and most accountants seem to be winging it. Below are some of the most interesting answers from dozens of whom we interviewed.
UPDATE: We just published some massive research on exactly why most accounting firms are underpricing and a new strategy to fix this in 2022. If you want a copy of the free report just ask me in the comments below (or follow me) and I’ll send you a free copy of our 37-page in-depth report.
Ok, let’s dive in.
Here’s what we have in so far for the answers on how accounting firms price their services:
“Basically I guess. And if I'm wrong, then I learned something.”
“See what your competitors in the area are charging and match or beat it.”
-Lora Vega CPA , Certified Public Account and Financial Advisor
“All you can do is try to find what other accountants are charging and base your prices on that.? Unfortunately, this information is not readily available.? No matter what, approximately, 20-30% of clients will complain. If this percentage is not complaining, your prices are too low.? This goes for any type of business.”
“Believe in yourself and your value, articulate that and present a value-based quote”
-Chase Birky, CPA , CEO & Co-Founder @ Dark Horse CPAs
“Charge what you're worth, and don't excuse yourself.? :)”
-Justin S. Jensen, MBA, CPA , Tax Partner at Morrison Clark & Company CPA's
“To research the market and to take into account what makes their firm different... their prices should take into account what they bring to the table that no one else can match.”
-Ramona Cedeno, CPA, PFS, CFP?, CGMA, MBA , Founder & CEO at FiBrick
“To remember it’s not how quickly you get it done, but you experience they are paying for.”
-Dawn Ellis , Business Owner Bookkeepholic
“Use (cost + ) to arrive at fixed fees. And don't forget to add your time ( advisory and consulting) which should be mostly 4 times higher hourly rate compared to the accountant's rate who will do the recording.”
-Bhairavi Parikh (CPA) , Consulting Controller/Part-Time CFO at Analytix Solutions
"Sell value, not cost."
-Gary K. Aldridge, MBA, CPA, CVA, CFE , Owner at Aldridge Valuation Advisors Founder of Leveraging YOU
“Speak to people at the local CPA society chapter or contact the state society.”
-Marty Latman, CPA, CFO, Consultant, Career Coach, Mentor , Executive Career Coach, Chief Financial Officer (CFO), Mentor, Keynote Speaker, Helping Business and People Reach a Higher Success Level
“Don't undersell yourself.? You bring value to a client and must be paid for that value.” -Scott M. Penn, CPA, EA, CTRS , President/Owner at Scott M. Penn, CPA
“Value yourself, and value relationships. Price accordingly so you are bringing in business you want and that pays.”
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-Jared Imhoff, CPA, CFP? Professional , Tax Planning Specialist and CERTIFIED FINANCIAL PLANNER?
“Move away transactional pricing for individual services. Charge a monthly fee and become their trusted financial partner.”
-Archie L. Jones, Jr., CPA , Investor | Advisor | Educator
“I think that you would need to know what your competition is changing in order to choose your pricing structure. I would make sure that those firms offer similar services in a way that you plan to offer them. I would not go in with a low pricing strategy in order to grow quickly. You will pick up clients that only care about cost in that way. They will continue to ask for more for less and in most cases are only loyal to the lowest price. They are clients that are not worth having even if you are new.”
-Troy Espenlaub, CPA , Property Management Professional and Realtor with RPM Avitus and Certified Public Accountant
“Don't base it on the competition.”
-Joe "JAG" Gallegos, CPA, CVA , Tax Planning, Chief Financial Officer, Growth Consultant
“The price per hour is generally the basis of work, however, what is included in the price per hour. Planning for expansion/contraction and educating/mentoring on tax implications moving forward are issues affecting all entities.”
“I would say to set a high standard and don’t deviate. There is so much business to be had, and so few quality cpas out there. If you are patient you can find the right type of clients in areas you prefer to work.”
-Michael D'Ascensao, CPA, MST , Tax Manager at Raiche & Company, CPA's
“One certainly needs to know that first number. For me, that is how much the person next door charges. National averages are useful, to a point. Knowing how much you would charge in New York, L.A., or Chicago may not be very useful in your area. Know your area.”
-Anthony Hayter , Taxation and Auditing
“Set an hourly rate at industry FMV and bill based on that. If you need to do a fixed fee arrangement, make sure to properly estimate a fair amount of hours and base the fixed fee on that x hourly rate. If the client thinks it's too high, then the client may not be worth it.”
-Naveed Danny Sioni EA MST , Tax Manager at CPS Tax Professionals, Inc
“Price your services for recurring revenue. Package your services that communicate the value you can deliver and flexible options to create solutions tailored to the client's needs.”
-Terry Smith , Terry W. Smith and Associates CPA?
“From the beginning, I have used fixed value pricing for my core services and keep billing simple for me and my clients with 50% due with signed engagement letter and 50% with final report delivery. I only use hourly billing for open-ended projects and require a 10 hour retainer.
I am committed to fairness and compassion and love having the ability to offer discounts when my heart tells me it’s the right thing to do.”
-Tricia Van Vliet, CPA , Founding Member at The Wellness CPA PLLC, ERISA plan audit specialist?
“Much depends on the firm's intended clientele and location.? Firms I've coached tend to fall into two categories: tax factories (doing hundreds of 1040s and some business returns) and those that provide a much higher level of service, geared to people with more sophisticated needs.? The former is very price-sensitive, requires a significant investment in staff and staff supervision, and doesn't necessarily lead to more lucrative business (the exception being tax and wealth management practices, where the tax preparation is the entry point and, sometimes, a loss leader).”
“Price services according to number or amount of transactions that need to be accounted for. Fewer transactions = less accounting work = lower pricing. ;-)”
-Philip van Nedervelde , Metaverse builder | 30 yrs. awards-winning XR creator | E-SPACES founder | Polyglot advocate of VR, AR, space, NBIC, superlongevity
“There are massive shifts going on in fintech and banking that are going to influence where businesses and individuals both go for all kinds of financial services. So I'd say have the long game in mind, see the bigger business/finance picture, and don't ignore those trends. They'll influence what customers expect and are willing to pay, and your ability to partner within those industries might make it easier to do more for your customers without exceeding their price point.”
-Wanda Thibodeaux , Freelance writer/columnist; Host, Faithful on the Clock podcast
“I believe the best way to go about pricing is first to understand what type of firm you’re building and accordingly create a business model and pricing structure. If you want to have higher-paying clients and you know what to offer then you can charge for that value. So first define what type of firm and then build your pricing structure.”
-Pinchas Engel , E-commerce and Retail CFO & Bookkeeping Services
Did we miss anything? Just drop in your helpful tip or advice in the comments below.
If there is someone whom you think may give a creative answer just tag them in the comments so that they can see and contribute.
Executive ghostwriter, columnist; Host, Faithful on the Clock podcast
2 年Thanks for the tag--happy to help!
President/Owner at Scott M. Penn, CPA
2 年Good study, very eye opening.
Founder & CEO at FiBrick | Accounting, Tax Planning & Outsourced CFO Services | Best-Selling Author | Speaker | Host of In Great Company
2 年Ben Ofori, CPA