Charging more next year

[Pacun]

I have 3 clients that I want to triple (at least) what I charge. This year, I will charge them normally but in May, I will send a letter stating that next year it will cost them $$$$ to have their taxes prepared by me. I will explain that I am sending this letter in May so that they have time to secure another tax preparer if they wish so.

Do you have a letter to that effect that you could share?

[MsTabbyKats]

Just curious....but why triple?

Trying to fire them...or just to much work for the price the pay?

[Lion EA]

Keep it short and sweet, with no little points for them to argue. Something like after keeping fees stable for X years, your new fee will be $YYY for a similar return in 2015. Optional, depending on if you are trying to get them to go away: If you secure a new preparer, remember to take them your 2013 tax folder for their information.

[Richcpaman]

I would double the fee at pick up for THIS year.

Then the fee for NEXT year would be triple....

Rich

[JohnH]

You could also generate the bill for triple the fee this year, then discount it down to what you want to charge them this year (1/3, 2/3, whatever...). Then add a note that the discount only applies this year.

That way you're putting it right in front of their eyes, plus you save yourself the trouble of writing an after-the-fact letter which they will likely forget or ignore and then act shocked when you charge them triple next year. There's just something about seeing that number on paper that focuses their attention.

[michaelmars]

once you realized that the work was much more than prior years you should have let them know. I have called clients with "you know in the past my fees were always around x but this year I see you have xxx stk trades and a k-1 requiring 2 new states. Just want you to know that my fee will have to go up at least X%. Would you like me to continue on this return?"

Can't blind side them after you do the work, and you don't want to piss them off. You might even get the response, "yeah, I figured this year would take you much longer."

I never have set fees but clients do sort of expect them to be in line with prior years.

You don't say why you want to 3x their fees but I would never reference that you are letting them know so they can go elsewhere. What if next year its a simple return and would be profitable for you under your current rates? You sound like you are apologizing for having to charge more next year. I never apologize, I might say, Hey I am glad your are doing so well or that you are presenting a more complex return. It means you are growing and I get to make some more money. Let them apologize if they have an issue with you getting paid for your work and knowledge.

[Pacun]

Someone posted a charge chart a couple of years ago and that return was going to cost them a bit more than $700. I have been charging them $150 and I have three clients in the same situation. So, I make $$450 from these three clients. If one stays, she will still get a good deal and I will be working less. If all three leave, I will loose $450 but I will save a lot of time. In the past, I have kept them because I wanted to be exposed to their cases but now, they are not interesting to me anymore. Of course $1500 from them will keep my mind interested in doing their returns.

[MsTabbyKats]

If this is the case, I'd go with giving them the higher bill now...but showing them the discount...with a note that there won't be the same discount next year.

Depending on the situation, it's not a good policy to burn bridges. Word of mouth in such a situation can be bad PR.

[ILLMAS]

How involved is their tax return?

[RitaB]

I would just tell them in person. And if they slapped me or spit on me, oh well, there might be an additional fee. I got a feeling they are going to bail. Might as well suffer a little.

And you know I'm kidding, right? But really I'd just explain, "Hey, I'm not charging you enough, and if you can find someone to do your return for less, no hard feelings."

Maybe rub some onion on your hands and wipe your eyes so a tear rolls down.

[norcalea]

I have a standard line..I underbid your return, based on the work involved it should be $xxx, given this your fee will be increased by x amount a year until it is within acceptable range.

[Pacun]

How involved is their tax return?

2 W-2

1 K1

1 child

after care

2 1099 int

1 house for rent, with 6 depreciations

1 house where they live

energy credit

1040 with 2441, energy credit, depreciation schedules

DC and MD returns (part year)

DC-30 Unincorporated business for the rental.

PITA client (and cheap by definition)

[MsTabbyKats]

Oh...quadruple the fee...or even more.

$150 is ridiculous...unless you're desperate and destitute.

You don't need PITA clients.

[MsTabbyKats]

Also...cheap PITAs...usually refer their cheap PITA friends....which you don't want.

Tell all 3 you're cutting back sometime in November...and won't be able to accommodate them any longer. Meanwhile...try to find someone who can...and give them a referral.

I did this a few years ago...and it worked like a charm.

[JohnH]

I agree.

Quadruple the fee.

Give them a 25% discount for this year only.

If they complain, tell them you're removing the discount.

[kcjenkins]

I agree with John and Michael, increase the fee on your bill, then put in a discount FOR THIS YEAR ONLY, bringing it down, but not all the way to that way low price you've been giving them.. Do not mention them going elsewhere, that is their decision. Just let them know that in future their fee will be that non-discounted number, and don't be defensive about it. Just pleasant but firm.

[joanmcq]

Jeez, that's insane for $150! I'm cheap, and I won't do just 1040 with Sch A for that, not even 10 years ago when I was starting out.