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Discussion:Fee increase

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Discussion Forum Index --> Business Growth Community --> Fee increase


Haz48076 (talk|edits) said:

18 December 2009
i am not sure if i should increase my fees for the 2010 season.

i was thinking about 3% to 5% any one planning to increase their fees? by how much?

FloridaTaxes (talk|edits) said:

18 December 2009
I will be increasing my fees by around 10%. I know I will still be priced very competitively for my area. I am doing it because my expenses have increased (software, overhead, etc).

Davidcpa (talk|edits) said:

18 December 2009
I figure I will be like the health insurance companies and raise my rates 20-25% across the board. :)

CrowJD (talk|edits) said:

18 December 2009
You can't do it this year because it's not fair to your struggling clients, and you'll get bad press. However, you should still retain the right to soak the rich.

I put a luxury tax on the rich, and collect it myself. Some of the smart allecks will point out that there is no luxery tax (most of them don't know). For the inquisitive, calmly inform them that there is now a luxury tax, and it's for you because you consider it a luxury for them to have you as an accountant.

Some of your more "tony" clients will actually be glad to pay just to be able to tell their friends that they were so rich, they had to pay the tax.

Pink Pearl (talk|edits) said:

18 December 2009
I think a 20% increase is in order for me this year...the extra two bucks a return will come in handy !

Death&Taxes (talk|edits) said:

18 December 2009
No, PP, it's eight dollars on the $40 bargain return some plan to offer.

Pink Pearl (talk|edits) said:

18 December 2009
Nooooooooo...my business model is gonna be The Dollar Store ! More volume that way

FloridaTaxes (talk|edits) said:

18 December 2009
Great idea! Only problem is the paper, toner, and folder you need might cost more than $1 per tax return. I think maybe doing them for $2 will be better for you.

Pink Pearl (talk|edits) said:

18 December 2009
oh noooo...I get all my forms from IRS and pencil the form in while customer waits...they have to make their own copies. I have thought of everything Florida !

FloridaTaxes (talk|edits) said:

18 December 2009
Sounds like you have thought this out very well and will have a great season...lol.

Kokomo (talk|edits) said:

19 December 2009
I typically raise rates 5% or $25 whichever is higher.

Kevinh5 (talk|edits) said:

19 December 2009
I keep wanting to get a sign made similar to the one my plumber has:

Prices

If I do it....$100 an hour.

If YOU watch...$140 an hour.

If you HELP....$250 an hour.

VanjaCPA (talk|edits) said:

20 December 2009
Kevin, that's a great idea.

I would love to have a sign like that. I can't stand it when a client comes in and wants to HELP or even just sit there while I do the return! I don't know what makes them think I'm supposed to be able to concentrate and not make mistakes when they are sitting there going on about random stuff I could care less about?!!

Kirthe (talk|edits) said:

21 December 2009
love that list.

how about:

if you interrupt: $275 an hour

if you argue: $300 an hour

DZCPA (talk|edits) said:

21 December 2009
If you come around to the back of my desk to explain $350 an hour

Wear heavy bad perfume $375 an hour If you lean over my desk with a low cut top.....Price Less!

Umk395 (talk|edits) said:

21 December 2009
Fees will be increased by approx 5% in my firm.

Remember, wrong answers are FREE!

Ilovedangerousdogs (talk|edits) said:

28 December 2009
You guys are hilarious! I have slowly raised my fees over the years, but are still highly competetive with the local "chains" everyone seems to use. Recently I have had people complain so I made up a sign with a pic of my two pit bulls and my giant rott on it that says "complaint department". Normally it gets a smile out of everyone. Well almost everyone.

I am waiting on my T-card. Wondering if anyone who got theirs is raising fees soley based on the fact that you are enrolled now.

DublinTax (talk|edits) said:

28 December 2009
Certainly you can increase. Also, because some tried to bomb a Detroit plane you can increase your fee.

You don't need a reason to increase fee.

Do you think because of your T-Card you can get more refund than you did without it, if so, that should be a valid reason to increase the fee.

I think your T-card allows you to performs varied things with IRS but it doesn't change the quality of service you provide to anyone.

Death&Taxes (talk|edits) said:

28 December 2009
Robin Hood, someday you are going to find out that you must spend money to give clients better quality of service.

I could do their returns cheaper if I returned to the day of pen and ink, and went to the post office to take the forms there to use, but I don't think they want THAT quality of service.

Should I return the $850 Tax Planning software I just bought to give clients a better picture for the future?

An abacus is cheaper than a computer and will give quality service.

Should I scrap my RIA Checkpoint subscription and go with Wikipedia for research? Should I stop taking CPE unless it is free? I could maintain my level of service for a year or two by doing these.

I think you would admit these items are needed for better service, so how do I pay for them? Between Checkpoint and BNA the cost is $2,000 a year. And God knows, the gospel according to you says we should never raise fees. So should I cut out my prostate medicine? That's $640 a year. What about the dog? He surely costs $15 a week, or $780 a year, and I'm sure someone will adopt him, or at least I can think he has had a good life here. But I am still short of Dublinizing my practice.....hmmmmm, who needs blood pressure medicine....that plus the prostate and the dog should make me even and let me continue without raising a fee to give better service.....what the heck, if I cut back on food I can even cut fees. Are you guys listening?

Now I understand why saints were stoned.

DublinTax (talk|edits) said:

28 December 2009
Hi D&T

The question is should I increase my fee because I got T-Card. For that question I think answer is a NO unless I can provide better service because of my T-card.

If the question is should I increase my fee this year. The answer will take all the points you mentioned.

If I took a good CPE course and I learned something valuable I am confident I know more than I did last year and can do better job certainly increase the fee

you subscribed to RIA Checkpoint this year but not last year and you believe that this adds value to client certainly yes you can increase because it adds value to your client

the RIA check point price increased compared to last yesr yes you can pass on the cost to your client.

New tax planning software adds value to customer so you can charge more for those who needs tax planning.

I don't think getting T-card doesn't change anything relating to the quality of service you provide or add any value to client. It only adds value to the practitioner allowing him to do varied things.

Should I increase my fee depends on few factors like

1) Am I adding more value compared to last year

2) Does the cost of services needed to perform job increased (like CPE etc)

3) Will the increase in price increases my revenue. Meaning If I increase my fee by 50% and next year I loose 80% clients that's not good but I increase 50% fee and I loose only 40% I am doing less work but earning more.Sounds good.But the catch wit the less work approach is that you loose one client you loose more revenue.

That's how I see things.

Kevinh5 (talk|edits) said:

28 December 2009
Dublin, you forgot

4) Do I stand to lose more now that I'm an EA if I really mess up, compared with being an unenrolled preparer. (Am I held to a higher standard of accountability by anyone?)

Natalie (talk|edits) said:

December 28, 2009
I'm with you D&T. Even without considering improvements, the cost of providing service has gone up, therefore my fees will go up. It's pretty easy to decide unless one is in a position to take a cut in pay.

DublinTax (talk|edits) said:

28 December 2009
Natalie,

That is what my point is also. I am not disagreeing on that.

Kevin,

I don't think I will add point 4 into my list.

The additional losses attributable to being EA is attached additional revenue that EA allows me to get by doing more than what an un-enrolled preparer can do.

My client is coming to me because he thinks I am professional and I know what I am doing and I don't ask my clients to pay for my mess ups.

Kevinh5 (talk|edits) said:

28 December 2009
Dublin, those of us who have tried to help you are now beginning to ignore you. April 15th will come soon enough for you to realize that some of us have learned (the hard way) the very lessons we are trying to teach you. But you are intent on learning the lessons yourself, so good luck.

Pink Pearl (talk|edits) said:

29 December 2009
Dublin's use of the English language seems to improve as time goes on...and with the extra spacing between sentences and the reference to multiple prior posters by name in his/her response, it is really starting to sound a lot like Jasmine/Jeff-Ohio/New2Tax...Just an observation.

Ilovedangerousdogs (talk|edits) said:

29 December 2009
Maybe getting a T-card in its self doesn't improve the quality of work that I do, but the class that I took definitley helped me improve the quality of the work that I do. Not everyone takes a class to help guarantee a passing grade the first time around, so that may not be the case with everyone that passes.

Each year my software goes up, that is a given, seems that my E & O goes up as well. My husband owns the building and I rent from him so if he wants peace in the house he won't raise my rent! My employee expects a cost of living raise each year. I think it is normal for us to do the same with our clients. I try to look at my costs and raise prices accordingly. I do think that once people know what an EA is, they are willing to pay higher rates. Problem is, people don't know what it is and they also don't know that there is no licensing requirement in Virginia for tax preparers. I think people would be willing to pay for for someone who has some credentials.

I think Dublins comment about his client coming to him because he "thinks" he is a professional is kind of funny. I hope my clients know that I am one!!

In any case people will take advatage of you if you let them. If you charge less people tend to think less of you. If you don't charge enough they think you don't know what you are doing. Finding a balance is hard.

CrowJD (talk|edits) said:

29 December 2009
Clients are less respectful of all license holders now. Even doctors don't get the respect they used to.

People think they can read an article on the internet, and practice medicine. Same with law, same with taxes.

Part of the problem is that many in the middle class are squeezed financially, yet they seem to be able to find the money to blow on electronic gadgets.

Only thing I can do is charge them out the wazoo when the come in to have something cleaned up. Oh, one other thing, try to develop good, long term relationships with your clients. Not easy in this mobile world, but still possible.

In the off season, advertise for non-filers. Bring them in from the cold. You're the person that takes the weight off their minds, and charges them handsomely for the privilege. You're the gentle, understanding, caring person that will help them, and your ad should reflect that.

A bad economy generates tons of non-filers, simply because, to their mind, they cannot afford to pay the taxes for their last "good year". So, they don't file. Then, it cascades.

Xz (talk|edits) said:

12 January 2012
If you decide to increase your fee, from 100/hour to 110/hour. Do you notify your clients first? Or, you just start to use the new rate. The invoice will show the rate. Thanks!

Kevinh5 (talk|edits) said:

12 January 2012
You should disclose it in your engagement letter, Xz. Or just tell clients 'this year, your tax return will be 8% higher" or whatever, before doing the work. Not fair to just raise rates without some communication with the client.

Xz (talk|edits) said:

12 January 2012
Thanks, Kevin. For personal returns, I want to increase a small amount, like $5-25 if their situation hasn't changed. I already sent the engagement letters out and didn't say anything about fee increase. Do I need to tell them first before I start the work?

For business clients that I charge by hour, shall I send a notice first by mail? I am still debating on how to do this without making clients upset.

What will clients reaction be if you state the fee increase in your client letter or engagement letter?

SuperTaxGenius (talk|edits) said:

12 January 2012
Business fundamental. Don't raise fees until you are really busy. Then raise fees slowly such that you stay just about as busy, but make more money. The fact is, as you get better, higher profile, you will need to be unafraid of losing clients. The idea is that you bring in higher paying clients to replace the ones who aren't willing to pay.

When you get really good, you try to do fewer clients, for more money.

If you desire, you can expand and hire employees, but remember, they will represent you, even if they suck.

Fsteincpa (talk|edits) said:

12 January 2012
Fees should go up each and every year. COLA for everyone else, why not us.

I wouldn't hesitate to raise fees even though you sent out engagement letter already.

If you are good and your prices are still reasonable. Don't worry about it. If someone complains, give them the previous years price as a discount and let them know the price will be increasing every year.

If you have to worry about keeping a client because of reasonable price and increases, it's not a client worth keeping.

And what the STG guy said.

Fort Wayne CPA (talk|edits) said:

21 January 2012
Fee increases,

We are a three person CPA firm. We increased our rates this year by 16.7%. We do not increase our fees every year. Instead we increse them every two or three years. We sent out client letters at the end of December and told everyone that our rates were going up. That way there are no surprises.

We lose very few clients due to fee increases. That being said we will lose a few and that is OK.

We are still underpriced; that being said, we are slowly getting our rates to where they should be.

What we REALLY need to do is start firing more of our bad clients...

Mike Sylvester

Xz (talk|edits) said:

22 January 2012
Thank you for your input. I have been in business for two seasons (years). I haven't raised my fees yet. I am going to raise my fees for individual clients a little in the upcoming tax season. For business clients I charge by hour to do accounting and consulting, I will notify them at the end of this year for slight fee increase.

Just hired an assistant. It is nice to have her take care of miscellaneous office task. I need to get more bookkeeping type of work to keep her busy.

CrowJD (talk|edits) said:

22 January 2012
"We sent out client letters at the end of December...."

That was low. A man has enough to worry about in December trying to pay for Santa Claus and then to find out on top of that his accountant is going up must have been hard. You'll get some resentment over this. If you had just raised your bill 16.7% on the March or April invoice they would never had known you did it.

Hold the tax return over the clients' nose like a dog biscuit and let them know if they want the biscuit they'll pay the fee. Make them beg for it if necessary. I run a no advance notice policy at my firm. If you insist on using an engagement letter, hedge the fee in the small print. "Subject to going up at any time etc." like the big corporations do (it always goes up, it never goes down). Never give the client time to argue.

Taxaway (talk|edits) said:

23 January 2012
I always notify my clients about fee increases using lemon juice.

If they protest, I tell 'em it was so secret I didn't even know about it.

Captcook (talk|edits) said:

23 January 2012
I don't agree with Crow very often, but we used to make clients upset by sending out organizers in December. Most of them said they didn't want to think about taxes until after Christmas. We now send organizers the first week of January. We haven't heard any complaints.

CrowJD (talk|edits) said:

23 January 2012
Think of the pressure the average fellow is under during the holidays and have some pity on him. It's more than one time I've ended up in the doghouse. This Christmas I tried to get away with giving my wife an iron for Christmas only to have it dashed against my head. It didn't help when I offered to get her a new ironing board as well.

Fsteincpa (talk|edits) said:

23 January 2012
http://youtu.be/Twivg7GkYts

The story of my life.

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