Discussion:How to over come "I am charging too much?"

This season two clients in fact told me that my fees are "much lower than HRB and other they checked out." One client paid me $25.00 more than I had invoiced him!

Generaly I charge starting $75. (for basic 1040A) and up to $350 (1040 with Sch A and D). I do not do Business tax returns. I am in Fremont, CA area. There are few Tax Preparers in this area who charges between $25. and $100 for the same services! I am not sure if they are registered with CTEC or sign the return. I have only seen their posting on Craigs List.

Any suggestion(s) greatly appreciated. I just do not want to loose clints.

Thxs IshaqInagpurwala 17:51, 19 May 2008 (CDT)

Stick to your guns. Confidence will get you farther then an apologetic shamefaced display. Have a ready answer as to why you are worth that much. If you do returns in front of clients, remember that you are getting paid for your skill and knowledge and not your time. You might want to try ways of bringing the money issue upfront so that clients aren't getting hit by sticker shock. Remember, if you discount too much or too often, then you are bound to get abused.

This last season I inherited a client who had $150 taken off last year's bill. She pitched a fit when she didn't get the same thing this year. I was ready to let her walk rather then apply any discount, especially since she took up several hours of my time for a simple return. She ended up with $25 off and a spot on CTOBET.

Most of those price shoppers are a waste of your time, so don't feel bad about losing them. However, I'll take a price shopper over a refund shopper anytime.

Tax Preparation Fees

Working on eliminating this fear is your most important goal, not setting the proper fee. Two preparers are not like the gas stations of the 60s, where you will be having price wars. It is the value you incorporate into your services that you must collect. You can't show your clients these studies and tell them 'so and so says this is an average fee' because the good clients won't care while the bad clients will dispute it.

This past month a client called to tell me that I and his dentist were the last great bargains of this world. Now I am not sure how to take such a comment.

Also, it's the price-shoppers who will cost you the most to serve because they will call you more, withhold information and then "magically" find it requiring you to re-print, etc. To those, I say, See ya!

But as TheTinCook pointed out, I'll take a pricer shopper over someone willing to pay a more than average fee for a 'fraudulent' return (I refuse to take an average of two clients per year because of this).

Let me know where you live, I want to move there and start a business.

Seriously, if you aren't raising your fees each year, you are cheating yourself. Now, there may be those that you charge the same fee...maybe they referred 2-3 new clients to you...maybe you are related or they are good friends or business relationships who provide you services of value.

I can guarantee that your clients are paying more for bread, milk, lawncare, etc. If you are good, they won't even bat an eye. They enjoy having someone they know, that they can count on, that provides good service, etc.

Clients don't like to change. Those who do, you don't want.

If people are using you because of your price...you are underpriced. Period.

You deserve a pay raise...I would recommend at least 10-15%.

I live in expensive San Francisco Bay Area (in California). My expenses have gone up and my clients are very happy. Like Inagpurwala, some clients have given me $25 more than billed, others tell me that I am undercharging... In addition to that I don't charge some clients because they didn't have much income for the year :(

OK, you win, next tax season I will start with 5-10% increase and see how it goes...

When I worked for HR Block, some clients complained every year about the fees and said they will find another tax preparation firm, and guess what? They always went back, so you have a point!

Lexus dealer is $ 122.00 per hour-and I was charged for 1/2 hour to instal the battery-Labor charge for the 1/2 hour blue book was $ 65.00--Not only over charged but can't even figure that it should have be 61.00-but was rounded to neares $ 5.00 So you figure ..

Unless your clients are driving around in 15 year old Dodge Omnis, they are not looking for price, they are looking for value. Sell it to them just that way.

By the way, my average fee is around $700, and I can't keep people from referring.

94nole, clients to be terminated. A term some of us have used since people got wise to PITA.

C(lients) TO BE T(erminated)  = CTOBET

We kept it as a word file on the desktop of the main computer and updated during tax season as various & sundry clients were obnoxious and/or irritating. It was discussed in one thread severeal times, I just can't remember which one. Something to do with how/when to fire clients.

I like it because I don't think ANY client could figure it out, even if they happened to see it.

Not that I want to be a plumber...but jeez. Do any of 'us' on this forum charge $ 720 an hour?

I vow, right now, to raise my rates AND stick to the increases even if there's whining.

I have had good luck with "add ons", $25.00 document storage fee, but I don't Efile. I'll probably Efile for 08, and then it will become some other storage fee. "3 Year Hard Disk Storage" lol. No one has batted an eye at this storage fee.

From the legal side, I don't charge for copies. I get it some other way. The reason is that I have tried to charge, and got everything from sarcastic jokes, to outrage!

He definately took advantage of this lady; it's a second home for her, she's in assisted living 4 hours away, her husband died last year and (of course) he always deealt sith these things. It just chaps my hide, my husband & I live across the street and have somewhat adopted her in the sense of trying to help with this type of stuff. The rental management company hired the plumber, before we could intercede. And I'm not even sure the repair was done properly. Such a bummer.

Not to defend this gouger, but I have owned 3 houses in my life and two were built pre-Codes.....even 'simple' jobs in those money pits (like where we live now) are grief to some tradesmen. Putting in new outlets on the second floor of my first 1930 built house caused an electrician to walk away after he realized the price he quoted did not take into account snaking wires down stone and stucco walls. Or here, plumbers dealing with the heater must crawl into the space under the house, which usually has to be pumped out first if there has been rain.

The repair was an outside the house job to cap off a 'stand pipe' that was broken by sliding snow from the roof. We (my husband) had already shut off the water. The repair was done while my husband was out of town; so he wasn't around to monitor it...and I don't do plumbing. He didn't repair the break and put the outside bib back to functional status; he just capped it off.

Unfortunately, the bill's been paid. I am going to discuss with her daughter when she visits from the 'other' coast next weekend. The situation just irritates me (can you tell) and I tend to tilt at windmills from time to time; some battles just have to fought even if the amounts aren't material.

think I will use the CPT method plus the CPB method,, that is, the 'cost per tank' of gas when I fill my truck plus the cost per (grocery buggy) when I fill my grocery cart should be equal to my average client charge, using this method I'll definitely have some rate increases in the next couple of years, LOL,,, or maybe on a 1040A, when the gas station client says' "How much do ya'll charge?" I can answer, "A tank of gas" , I wonder if he thinks that will be too high!

As I plan to begin preparing returns "professionaly" this coming tax season -I live in Los Angeles-near Santa Monica and already have a good feeling I will be undercharging for my services. Since January - I've compiled a listing of 100 or so local CPA's (from various sources - yellow pages, internet search etc) to guage what the current market is like. Out of a 50% success rate, what I found amazed me (It felt like I was pulling teeth for this info). Average prices for 1040EZ's ran at about $175 - all the way to $500-$900 for 1040's + schedule A,C,D,E etc depending on client organization.

For my current clientele (consisting of 40 or so friends, friends of friends etc), I've been extremely underpriced over the previous 3 years - with a price of $70 for a 1040A, and $100 for a 1040. Even though I was not signing the return as a professional paid preparer - I'm offering more than just H&R services - (available to answer questions year round - individual tax planning- W-4, 401(k), "free advice" for my schedule C filers etc). My ultimate fear is that increasing the price will result in 0 client retention - but at the same time, they are happy with what I offer and know they can count on me come tax season and knowing they have a consistent CPA to ask questions.

For what it's worth - here is what i've come up with after doing a bit of local market research and considering I'm just starting my professional preperation career (which I hope will lead to my primary job come 4-6 years with 700-800 clients):

Min price: $125 1040EZ-$125 1040A-no adjustments $150 - w/adjustments $175 1040 - $200 Sch A $75 + Sch C $125 (depends on organization) + Sch D $50 min ($5 per line over 5 lines) + Sch E $50 min ($25 for each prop over 2 props)

I honestly believe my current clients will not seek other preparers once I raise my fees to a "fair" market price (even though I know I am STILL undercharging). I even plan on instituting a referall system. Something along the lines of doing your return for free next year (or this year if I have not yet prepared it) for every 5 PAYING clients you refer. Or a $20 referral fee for every PAYING client you bring me.

What does everybody think of my suggested fee structure considering my location and the level of competition in LA? I'm very interested to see what you think.

LakesFan

The first thing you need to do is sign those returns. You don't have to be a "professional" paid preparer to be required to sign the returns, just a paid preparer. Failure to sign penalties can add up in a hurry.

Believe me, your clients know you are undercharging. They just won't tell you.

My clients tell me I am undercharging.

Lakes, I am in expensive Bay Area and your fee schedule sounds fair. I think that I am going to adopt it too, if you don't mind, of course, he, he.

And thank you Marcilio for telling us that you didn't go out of business for raising your fees. The thing is that if you are undercharging (that would be me) maybe people think that you are not too good, perhaps?

Form 1041 Schedule D Schedule D Tax Schedule J Schedule K-1 Worksheet Recordkeeping 64 hr., 17 min. 15 hr., 4 min. 8 hr., 51 min. 39 hr., 27 min. 7 hr., 39 min. Learning about the law or the form 24 hr., 3 min. 2 hr., 27 min. - - - - 1 hr., 17 min. 47 min. Preparing the form 44 hr., 42 min. 3 hr., 44 min. 8 min. 1 hr., 59 min. 57 min. Copying, assembling, and sending the form to the IRS 5 hr., 21 min. - - - - - - - - - - - - - - -

Imagine columns going across. So, for learning about the law, they give you 24 hrs (oh, and 3 minutes for crying and knocking your head against a table), since you know the law so well at this point, it's not surprising you are given.. what!? 44hrs, 42 mins to prepare the form 1041 (after you've spent 64 hours getting your records organized, lol), and of course, extra time for various schedules. 5 hours (billable time)for getting it ready to mail in. This is obviously right because the IRS did extensive studies on this. See, you don't need to sweat over these fee surveys and stuff, it's already been done for you. For an uncooperative client (in this case, often dead), you can tack on more time, as circumstances permit.

I know what my next CPE is going to be.

It works.

I am reading a book that stresses the difference between dealing with customers versus clients. Customers are likely to be shopping for fees. Clients appreciated the advice and don't generally mind paying for it.

Sorry, but that word seems abhorent as I see our profession. I see no problem with knocking off $25 because your client recommended Joe Smith and Jane Brown, but not as a discount but as a thank you, a way of saying 'I value your business; thank you for thinking of me,' but I can only think of maybe one client who gets this treatment.

The overall problem I have experienced is the potential client who says, "My last preparer only charged me $100 or my return isn't that hard" when they dump on you a return with 100 stock trades, Schedule C, Schedule E, etc. I had that happen a couple of times. So I make sure they come in for an interview before I quote a price. I refuse to quote anything over the phone anymore because some will hold your feet to the fire on your price if you give them one.

Tom

Like a roofer who quotes you new roof, he starts pulling off old shingles nad notices rot and the need to replace the wood, that's not in the quote, additional fee.

Just make sure you specifically tell them that a quote is a quote. If they huff and puff, send em away.

Good point. I just like to be a "man of my word" and stick with my price when I give it to them. However, your approach makes sense. Many times people I think try to pin you down and lowball you intentionally because they are cheap so and so's.

Tom

Another ferinstance is when one of my preparer finished a return and I haven't reviewed it yet, client wants to know what refund or amount due is. I tell them it is policy to not disclose that until return is reviewed as there could be a huge swing in the return. Clients say ok, I then tell them that the return refund is, let's say $1,980, but that when I review, if the preparer made an innocent mistake it could wind up being that the client owes $3,278 and they aren't allowed to complain if that happens. I say it a few times and let them know that that is how it is, they can't hold me to an estimate or a number from an unreviewed return.

At least 1/2 of my calls hang up when they hear this. I got over it and revenue has NOT suffered.

That in my view is a very respectable fee for the work.

Beats working in retail on Long Island!

Matt

It's funny, and it's not funny, but I have clients that are happy to pay me $1,000 for a small easy corporate return and for the same type of return that the previous guy did and charged $300, they complain. Easing those guys up in price or out the door.

Me: "How long is a string"?

Tom