As a CPA, do you sometimes wonder whether what you earn is enough to justify the enormous time, effort, and dedication you expend? If so, an immediate question to ask is whether you are charging the right fees. How to charge fees that correspond to the premium service and expertise you provide your clients – and charge premium fees with confidence – is the subject of this article.
I was talking to a practitioner last week, based out of Indiana. He has owned his firm for 18 years with a fairly large number of clients by most people’s standards, 300+ personal tax clients, close to 100 business accounts, new business formations, etc. His revenues: $275k. His complaint: having to work way too hard for way too little.
It’s a problem and frustration I seem to hear quite a bit from many practitioners. And it can be fixed, to a large extent by charging the right fees.
I will share with you how you can get rid of the underpricing issue in your practice. As a CPA, your fees have a big influence on how clients and potential clients value your services.
Think for a moment about automakers like Mercedes Benz, BMW, and Lexus. These companies fetch high prices for their vehicles, even though less expensive vehicles exist in the marketplace. Why? Because they convey quality, craftsmanship, great engineering and so on.
This is why you want to continually adjust your fees upwards – to reflect the premium value and service you want to convey to prospective clients.
Here is where many CPAs hesitate, and it’s often a psychological issue. If you’re reluctant to raise fees, the first question to ask yourself is the following: Am I delivering low-quality services? If you honestly believe you’re coming up short, here is where you can and should work on raising the quality of the services you provide.
Ask yourself and your team these questions:
- How long does it take to deliver our services (financial statement, payroll tax, sales taxes, etc.)?
- What are our response times to clients’ questions via phone calls and email?
- How do we fare when communicating with our clients in terms of courteousness, respect, attitude, and caring?
Decide on what these response times and client service criteria should be – and have your entire team commit to meeting them.
Value What You Deliver
But what if you know you deliver excellent service, and you still hesitate? Then the problem boils down to your beliefs. You must convince yourself of the truth: that you are the expert; that you deliver smart solutions to your clients’ business problems and challenges.
Always remember that much of the knowledge you take for granted is completely unknown to many people out there, even savvy entrepreneurs. You have expertise, insight, and instincts. And to many people, they are highly valuable. Charge based on the value of the solution you provide – not the hours of work needed to deliver it.
Decide what your new fee structure will be, adjust your firms’ services agreement to reflect this, and explain them to your clients.
Next, you’ll want to position your practice so that you play an integral role in the success of your client’s business. Regardless of the service you provide, it has to be translated to the client as a value proposition. Whether or not they know how to articulate it, your clients want a seasoned professional who can provide them with friendly business, financial, and tax advice in a way they can easily understand. They also want someone to be their financial sounding board for their dreams and future plans. (This is the real essence of your client relationships and what your fees actually pay for.)
You ultimate goal is for clients to view you as an integral partner in the success of their business. Once you achieve that, your fees will be of secondary concern to them. They will see themselves as paying for the relationship – not for a mere transaction. You will be earning the fees you deserve.
Position Your Practice as Expert Partner
In my own CPA practice, I never frame my services as simply preparing financial statements and tax returns. Instead, I market my ability to decipher complicated financial information and deliver insight that leads to smart financial decisions. I am an expert advisor – a “secret weapon” of sorts on their team. Every client wants a secret weapon. And trust me: they’re willing to invest in getting this kind of specialized, high-level insight on a regular basis.
Here’s a practical example of how this can work. In my firm, I provide a service that I’ve labeled “financial and tax stewardship meetings.” Before I meet with the client, I prepare by reviewing the client’s financial statements and I compile a meeting agenda. Then, after the meeting, I e-mail the client a set of meeting “minutes” – notes of what transpired during the meeting. The minutes are a one- or two-page summary of the salient points discussed, plus any action items agreed upon. My clients love this type of proactive service. It’s an example of how clearly communicating value can lay the foundation for higher fees.
Before closing, I want to share with you one more secret that has enabled me to charge higher fees.
Many CPAs believe the best way to keep clients happy is to be available to them at all times, but they’re quite wrong. The truth is, scarcity is a key factor in setting up your fee expectations. Price is a function of supply and demand. The sought-after CPA with limited availability commands the highest fee.
So what does this mean for you? It means you should look for opportunities to communicate your “in-demand” status. Here’s an example: Suppose a client calls and wants to make an appointment with you. Respond along these lines: “I can see you Wednesday between 3:00 and 4:00, or Friday between 11:00 and noon.” This conveys that you’re a busy professional and that your time is valuable.
If you’re not charging premium fees for your services, do some digging into your own psyche and find out what’s stopping you. When you’re confident in the value of what you bring to your client, adjusting your fees will be much easier – especially when you’re identifying opportunities to position yourself as your client’s secret weapon and expert partner.
After you do some digging, what are some beliefs that need shifting? Where did those beliefs come from and how can you change that way of thinking moving forward?