Raising My Fees

[ETax847]

Granted we all have different fees, but in terms of a fee hike, I was thinking of raising my fees by 25% in light of the new tax law changes.  Anyone doing the same or more?

 

 

[Jack from Ohio]

I did that, 4 years ago.  Lost 5 clients, 7-8 complained, and I made a whole lot more money.

That was the same year I started taking credit cards.  My increase was large enough to absorb the 3%.

I am also contemplating raising my base fee by around 15% for the same reasons you mention.

[ETax847]

This year, I'm also not filing a return until payment is received.  Tired of chasing people down to collect their prep fees.

[Lee B]

It's really a function of what kind of client base you have and where your pricing currently falls.

All of my PTE clients are getting healthy increases, but even that varies depending on how I had them previously priced.

My 1040 clients will be getting a 5 to 10 % increase.  Really my pricing is more based on complexity and level of value provided.

 

 

[Jack from Ohio]

1 hour ago, ETax847 said:

This year, I'm also not filing a return until payment is received.  Tired of chasing people down to collect their prep fees.

This has been my policy, for the past 6 years.  No payment, no file.  I make no exceptions.  Ask them if the grocery store will let them take the products home, and pay when you can?

[Possi]

I raise my prices every year so it's not a huge jump for anyone. What I'm NOT doing is reducing the price when they don't itemize. My prices are already much lower than tax-in-a-box. 

I do take credit cards, and it has made my life so much easier. It's worth the less-than-3% fee. Well worth it. I use ITransact, which is incorporated into the TaxWise program. One year they jacked me up with added fees and I raised cane about it. No more. I check it every time and the grand total fees remain under 3%. It works perfectly with the program, too. 

Some of my clients can't pay for tax prep until they get their refunds. For them, I insist on holding a check. My client base is rather large, but I have not been burned by holding checks. 

My business is personal. There are no strangers here. I know my clients well, and we are all very happy. I got rid of the PITAs by overcharging them. When overcharging didn't work, I sent a "Dear John" letter and washed my hands. 

 

[Yardley CPA]

After the 2017 returns were completed during the 2018 tax season, I made each of my clients aware that I would be raising my rates 25% to 50%.  I knew my fees were low, but during the past year a few new clients provided me with a copy of their previous year return to review.  Those returns included invoices from the prior preparer.  In every instance, I was moderately to significantly below.  Shame on me. 

[FDNY]

I find pricing to be a difficult and sensitive subject, especially with longtime clients.  I've usually raised prices moderately to keep up with inflation and try to get more in line with what Yardley has been experiencing with new clients.  Although I don't take on new clients other than the kids of present clients, I am starting off with a higher base fee for a standard return. 

I am thinking of incorporating a rate hike notice in my day after New Year's day letter and organizer explaining that rates will go up more than in the past noting that the new tax bill is the reason.  After all, I have been spending an inordinate amount of time trying to make sense of Sec199A, and after looking at the new 1040 and 6 schedules....well, time is money.

[Richcpaman]

Rates are going up, Gotta pay for my VPN...

Rich

 

[SaraEA]

It's going to be tough trying to explain to clients who no longer have to itemize why their tax prep fee went up!  Possi said she is not going to REDUCE the price of those returns, but those planning across-the-board increases will have more explaining to do with these clients.  We all feel that we had to spend huge amounts of time to learn the new law (and we're not done!), but can we really charge the clients more for this when their return is simpler, or do we explain that they now have five or six more schedules than before?  Of course, we're going to have to do a whole lot of work to complete new W4s when clients are upset that their $3k refund is now $30, and it's fair to charge for that.  Sch Cs, S Corps and partnerships should get big increases because of the Section 199A complexity.

I believe that most of our firm's clients don't want to do their own returns and will be okay if their fee stays the same now that they no longer itemize.  If you raise it too much, you may very well push these clients to DIY or to find someone else.

[jklcpa]

Here it's going to depend on the client's situation because DE allows itemizing while claiming the standard deduction for Federal purposes. Also, since DE doesn't allow its own state income tax as a deduction but does allow r.e. taxes and other states' taxes if claimed as a credit as a payment on the DE return, we will also have a prorating calculation to determine the amount of deduction allowed for Federal purposes when that category is affected by the $10K limitation that will be similar to when the Pease limitation affected total Sch A deductions allowed. That is on top of the new pages due to the "postcard" format of the 1040. 

It shouldn't be too difficult to sell clients on an increase since many of my costs have increased including the cost of the tax software itself and internet access. 

[FDNY]

I think most clients will understand and be receptive to an increase as long as it is not overboard or much above what they would pay somewhere else.  They've been bombarded with new tax bill news and will welcome our advice and information to keep them up to date on the changes and how it affects them, they should know we are putting time into this.  My only reserve is raising the elderly on fixed income.    I get too close to them, would be like raising my Mother, and she only pays with love, or so she says.  

[Jack from Ohio]

Institute the increase, then show a discount to those clients you wish to give last year's price.

Everyone is worth their professional fees.  

I am not a charitable operation.

[Randall]

I'm thinking of mentioning an increase in my engagement letter.  Not a specific percentage or amount.  Then be more specific when they bring their info depending on the client's circumstances.  I'm planning on a general $25 or $50 increase for most returns.  More if the return has more work involved.  For new clients, I plan to quote much higher.