Pricing?

[Yardley CPA]

I am a CPA with over thirty years of experience in the suburbs of Philadelphia.  Would some of you be willing to share your pricing?  I recognize there are many variables that go into what it costs to prepare a return, including the area in which you practice.  Just trying to get a sense of how you determine your charge.  Is it a rate based on time spent on the return or do you charge by form, or maybe a combination of those.  For new clients, I have established a minimum fee for a basic return and one state, Schedule A included, of $250, Schedule C, D and E clients are charged more.  Established clients may not pay that full amount, but its close.  That price is still low compared to what I see other preparers charging in my general region.  Some firms in the area charge a minimum of $350.  I'm sure some full-time preparers have higher costs than me, a single preparer doing this on weekends and evenings. 

I appreciate your insights on this topic. 

[BulldogTom]

Yardley - I am an EA, MST with over 20 years of experience.   I work off of a $ per form basis, but I structure the form costs so that I generate gross billings of approx. $150 per hour for individual, straight forward (if there are any of those anymore) 1040 tax returns.

For individuals with Sch. C, Sch. Es, K-1s from partnerships, Non Resident States, etc, (the more complicated returns) I try to bill about $200 per hour.

For Corps and Partnerships, I try to bill about $350 per hour.

I practiced in Central CA for most of my career, but I am in rural Texas now, so we will see if I can hold this pricing structure.   

This past tax season, I did mostly CA returns from my prior clients, and I did not advertise in TX.   This year, I am planning to do an ad campaign where I will give new TX clients a 25% discount off of last year's invoice if you bring me the invoice from last year's preparer.  I did this in Lodi CA several years ago.  I did some very cheap returns that year.  I also picked up a few really good clients.   What I really got was market research.  I found that the cheapest preparer in town was extending most of her clients to stockpile as much work as she could for the off season, I was lower than the chain preparers and much lower than the CPAs in town.   Raised my prices the next year to get to par with the chains.

This probably does not help you but it is the best I got.

Tom
Longview, TX

[mcbreck]

When someone declares their rate on the internet, I'm always very skeptical. It's pretty common for people to declare they charge astronomical rates ($1k for a basic return). There are firms that advertise on the internet their rates and there are averages put out by the industry. The NSA put out a 400+ page survey with average pricing.

[BTS]

44 minutes ago, mcbreck said:

When someone declares their rate on the internet, I'm always very skeptical. It's pretty common for people to declare they charge astronomical rates ($1k for a basic return). There are firms that advertise on the internet their rates and there are averages put out by the industry. The NSA put out a 400+ page survey with average pricing.

After looking over the NSA report, it seems we need to charge more !!!  May loose a few clients but, we need to downsize anyway.  Getting too busy, which is a good and bad thing.  But thanks for posting about the NSA report.

[RitaB]

21 minutes ago, BTS said:

After looking over the NSA report, it seems we need to charge more !!!  May loose a few clients but, we need to downsize anyway.  Getting too busy, which is a good and bad thing.  But thanks for posting about the NSA report.

I have always wondered if the folks answering pricing surveys are the ones who charge the most, or are exaggerating about their fees ("speaking evangelistically," as one pastor used to say).  But if you're wanting to downsize, I don't see a negative as far as raising your rates.  

[BTS]

2 hours ago, RitaB said:

I have always wondered if the folks answering pricing surveys are the ones who charge the most, or are exaggerating about their fees ("speaking evangelistically," as one pastor used to say).  But if you're wanting to downsize, I don't see a negative as far as raising your rates.  

Location has a lot to do with pricing too.   So we can not raise our fees too much.  But realistically we could loose about 200 clients and raise the prices to compensate.   Getting rid of 200 clients would be a huge relief.   But maybe loose 100 each year for the next two years, and raise prices those next two.  We have not had a significant increase in standard fees in the past 10 years.  Maybe $15 average per client in 10 years.   But our clients are long time clients.   Grandparents, parents, children, etc..   We have watched everyone get old and their kids too !!  So thats a delima too.  Who do you cut loose.  But something has to be done to lesson the stress.  

[TAXMAN]

Can you post a link to that guide. I tried to find but no luck thanks.

[BTS]

I just googled NSA Tax Prep Fees and it came up.  Here is the link to the pdf though.  https://higherlogicdownload.s3.amazonaws.com/NSACCT/725010a8-142f-4092-8b5d-077c2618c728/UploadedImages/Membership/IncomeandFeeSurvey/NSA2020-2021_IncomeandFees_FullStudy.pdf

[Lee B]

2 hours ago, BTS said:

Location has a lot to do with pricing too.   So we can not raise our fees too much.  But realistically we could loose about 200 clients and raise the prices to compensate.   Getting rid of 200 clients would be a huge relief.   But maybe loose 100 each year for the next two years, and raise prices those next two.  We have not had a significant increase in standard fees in the past 10 years.  Maybe $15 average per client in 10 years.   But our clients are long time clients.   Grandparents, parents, children, etc..   We have watched everyone get old and their kids too !!  So thats a delima too.  Who do you cut loose.  But something has to be done to lesson the stress.  

IMHO, it's much better to consistently raise your fees a small amount every year.

For example a $200 return increased just $ 5 a year is a $250 return after 10 years.

When you do that your clients expect their bill to be a bit more and most won't complain.

When you don't increase your fees, you have trained your clients to expect their fees to remain the same.

[Yardley CPA]

8 hours ago, mcbreck said:

When someone declares their rate on the internet, I'm always very skeptical. It's pretty common for people to declare they charge astronomical rates ($1k for a basic return). There are firms that advertise on the internet their rates and there are averages put out by the industry. The NSA put out a 400+ page survey with average pricing.

I guess preparers are less inclined to share rates, and that's fine.  I have no problem declaring what my minimum is.

In my post I indicated that some firms charge a minimum of $350 in my area.  That's not coming from the internet, that's coming from colleagues who are also in practice and shared what their firms charge.  I completely understand that some preparers/firms have high overhead and that impacts their rates.  

In any event, thanks for those who chimed in but didn't share any pricing info.  

[Sara EA]

The CPA firm I work for in CT has decided that the new minimum is $350, but in reality that can only apply to new clients.  I have many long-term clients who are paying $225-275 for returns that aren't hard to complete, and a few really easy ones that are $150-200, so it would be shocking to them to boost their fees that much.  From time to time we raise fees across the board maybe $10 or so, because costs go up every year, especially software.  (An accountant who came to us from a neighboring town says his company raised fees 10% a year, and their minimum was $750.)  The majority of my clients pay way more than $350, and I raise those fees if complexity increases one year from the prior.  You also have to consider how much off-season attention clients demand.  Clients who pay $1-2k often contact me multiple times throughout the year, which is fine.  The $275 clients who contact you once a month deserve a big fee increase.

Obviously, pricing is subjective.  It's easier for me to price estates and trusts.  Minimums are $500 and $450, respectively, and the fees increase with complexity and number of K-1 packages.  Knowledge level simply has to play a part too.  It takes time to learn to complete FBARs, foreign earned income exclusion, crypto, and the ever-changing landscape of business credits.  Clients should pay for that, even if we've become so good at them that we can just whiz through.

[BTS]

Definitely will raise rates for the next few years to get back to the "average" prices in our area.  Not raising rates for the past 10 years was crazy on our part.  But we have low overhead and do fine.  But less work and stress is what we need, so hopefully we can reduce client count, while keeping income close to the same.  May take a couple years to get there, but it has to be done.  

[Gail in Virginia]

17 hours ago, Yardley CPA said:

I guess preparers are less inclined to share rates, and that's fine.  I have no problem declaring what my minimum is.

In my post I indicated that some firms charge a minimum of $350 in my area.  That's not coming from the internet, that's coming from colleagues who are also in practice and shared what their firms charge.  I completely understand that some preparers/firms have high overhead and that impacts their rates.  

In any event, thanks for those who chimed in but didn't share any pricing info.  

I did not share fees because I am inclined to think that what I charge in rural Virginia would be a far cry from what you charge in the suburbs of Philadelphia.  I price by the form, and a basic 1040 with a w2 and no itemized deductions or earned income credit would be $85.  Most returns are not basic any more, so prices typically start at $100 and go up from there.  A family with each spouse working, and two children (no EIC, but with CTC), and standard deduction, savings interest and no investments to report would probably run around $125.  I find it difficult to articulate the price of a tax return, but a $200 or $300 return is not uncommon.  Some of the returns that I see from other preparers make my prices look high for this area but I am okay with that.  I have been trying to inch my prices up, and did do a more major increase this year since Virginia has raised their minimum wage and my cost for someone to help with filing, copying and answering the phone went up accordingly. 

[RitaB]

On 5/16/2022 at 7:11 AM, Yardley CPA said:

I am a CPA with over thirty years of experience in the suburbs of Philadelphia.  Would some of you be willing to share your pricing?  I recognize there are many variables that go into what it costs to prepare a return, including the area in which you practice.  Just trying to get a sense of how you determine your charge.  Is it a rate based on time spent on the return or do you charge by form, or maybe a combination of those.  For new clients, I have established a minimum fee for a basic return and one state, Schedule A included, of $250, Schedule C, D and E clients are charged more.  Established clients may not pay that full amount, but its close.  That price is still low compared to what I see other preparers charging in my general region.  Some firms in the area charge a minimum of $350.  I'm sure some full-time preparers have higher costs than me, a single preparer doing this on weekends and evenings. 

I appreciate your insights on this topic. 

I am in a commercial building, alone, in TN, and I talked to a young lady who came in yesterday mad at the local CPA she thought prepared her return last year.  I looked at it with her and told her who prepared it.  "You mean I talked to the CPA, and the assistant did it?"

She is clueless and in trouble with TN Dept of Revenue, sales tax division.  She's a pet groomer, opened a business after working for another pet groomer for several years.  Obviously, she knows everything there is to know now, why be an employee??   /s 

Her issues are not at all related to the income tax return, and I told her as much.  Me:  "If you're gonna do your own sales tax returns, then do them.  I can cut my dog's hair, but it'll look a lot better if you do it.  And I won't ask you to borrow your $1,710 clippers either.  Hahaha.  Ha." 

That said, the firm charged her 250 for the federal income tax return, no state.  Single, no dependents, one W-2, and seven entries on Sch C.  I see nothing wrong, but I would not use bonus depreciation with a business netting 11,000; I'd want the deductions in future years, when taxpayer thinks she'll make 72,000.  I suspect the preparer just went with the software default.   

I'm an EA, and this is about what we'd all (in this town) charge her as a new client.  There were twenty or so business receipts in the pocket of the folder, no sign that the taxpayer knew how to summarize data.   I would teach her to do that. 

I know I talked a lot up there, but there is a feeling you all reading this have for this client.  Some want her; she may shape right up.  She might not. 

 

[Lee B]

I have never priced by form since tax preparation isn't my main source of revenue, monthly writeup/payroll provides most of my revenue.

I price based on my perception of value delivered to my client. A few examples of none writeup related tax returns.

The least expensive Form 1040 that I did was $375 - Retired Single client with Schedule B and state Schedule A plus QCDs.

i did a MFJ - 1 W2 plus Home Daycare Schedule C plus CTC for $450 ( Probably underpriced this one).

My minimum fee for a simple Form 1065 is $500. All of the rest of my 1120 and 1120S returns are writeup related clients.

[Yardley CPA]

59 minutes ago, RitaB said:

I am in a commercial building, alone, in TN

 

You're the only one in the commercial building??  Do you walk around the building occasionally?  Say hi to imaginary friends?

Thanks very much for your reply.  It's very helpful. 

[RitaB]

13 minutes ago, Yardley CPA said:

You're the only one in the commercial building??  Do you walk around the building occasionally?  Say hi to imaginary friends?

Thanks very much for your reply.  It's very helpful. 

I talk to you guys and text @Donnarae40 times a day.  I do walk to the kitchen area about every hour.  Mailbox a couple times a day.  

You're very welcome!

[BulldogTom]

2 hours ago, Yardley CPA said:

You're the only one in the commercial building??  Do you walk around the building occasionally?  Say hi to imaginary friends?

Thanks very much for your reply.  It's very helpful. 

I drove by the building she is in, I worry for Rita.  Like right out of a Friday the 13th movie set, surrounded by forest.  I think she should be packin' working in that building.

Tom
Longview, TX

[M7047]

4 hours ago, Gail in Virginia said:

I did not share fees because I am inclined to think that what I charge in rural Virginia would be a far cry from what you charge in the suburbs of Philadelphia.  I price by the form, and a basic 1040 with a w2 and no itemized deductions or earned income credit would be $85.  Most returns are not basic any more, so prices typically start at $100 and go up from there.  A family with each spouse working, and two children (no EIC, but with CTC), and standard deduction, savings interest and no investments to report would probably run around $125.  I find it difficult to articulate the price of a tax return, but a $200 or $300 return is not uncommon.  Some of the returns that I see from other preparers make my prices look high for this area but I am okay with that.  I have been trying to inch my prices up, and did do a more major increase this year since Virginia has raised their minimum wage and my cost for someone to help with filing, copying and answering the phone went up accordingly. 

I'm in very rural PA (as in I have no visible neighbors) and my pricing is similar to yours. Obviously I would love to get more for a basic return, but given where my office is and there are two other accountants in "town" with similar pricing, I just cant.

[RitaB]

5 minutes ago, BulldogTom said:

I drove by the building she is in, I worry for Rita.  Like right out of a Friday the 13th movie set, surrounded by forest.  I think she should be packin' working in that building.

Tom
Longview, TX

Where else can you be in the city limits with one side four lane road, three sides Wild Kingdom?   

No, you're right, my friend  - the woods on one side were a little sketchy.  Happy to report that Farm Bureau has cleared it out, and it's for sale.  Hope somebody puts a donut shop in there; I'll expand my travels.  

[Lion EA]

Measure out where the donut shop entrance needs to be so your round trip uses up the amount of calories in a donut.

[BulldogTom]

28 minutes ago, RitaB said:

I'll expand my travels.  

Are you saying that you need a new "hug garden"?  Hope they don't find the clients you hugged when they start on the new building site....Just sayin'.   

Tom
Longview, TX

[mcb39]

23 hours ago, Gail in Virginia said:

I did not share fees because I am inclined to think that what I charge in rural Virginia would be a far cry from what you charge in the suburbs of Philadelphia.  I price by the form, and a basic 1040 with a w2 and no itemized deductions or earned income credit would be $85.  Most returns are not basic any more, so prices typically start at $100 and go up from there.  A family with each spouse working, and two children (no EIC, but with CTC), and standard deduction, savings interest and no investments to report would probably run around $125.  I find it difficult to articulate the price of a tax return, but a $200 or $300 return is not uncommon.  Some of the returns that I see from other preparers make my prices look high for this area but I am okay with that.  I have been trying to inch my prices up, and did do a more major increase this year since Virginia has raised their minimum wage and my cost for someone to help with filing, copying and answering the phone went up accordingly. 

This comes the closest to me.  In central Wisconsin, partially rural; pretty low income.  I don't have a base charge unless it would be $95.  I am the odd girl out as my price is based totally on the person, situation, ability to pay, etc.  We grew up poor, have always been low income, but we have done well and live the life we want to live.  We have managed our money, Karma paid us several times and we feel rich and fortunate.  My business has paid its own way and built a cushion.  My husband's business has built equity and paid its own way.  Therefore,  my pricing is not to make a fortune, but to provide a quality service for rich and poor alike.  I like money as much as the next person and I treat myself to something every tax season, but I am running out of wants at my advanced age.  I don't compete with anyone.  My small business filed a total of 253 Federal tax returns this year.  Anything from simple Homestead claims to High end Partnerships, and everything in between.  Lots of LLCs, many Rentals and many, many state returns.  I don't charge for kids in school; because I want to keep them with their parents and I don't charge for Active Military.  So,, I charge by the situation and pull a number out of my head.  Now that I have an assistant trainee; I bring her into the pricing decision as, hopefully, she will carry on where I leave off.  Happiness to all of you!

[mcb39]

By the way, last year it was a John Deere Gator to help my weary legs around our 40 acres of Forest Land.  This year it was a new refrigerator and a reset and shine for my 62 year old wedding rings.  Life is good.

[Lee B]

16 minutes ago, mcb39 said:

By the way, last year it was a John Deere Gator to help my weary legs around our 40 acres of Forest Land.  This year it was a new refrigerator and a reset and shine for my 62 year old wedding rings.  Life is good.

Hopefully there is a vacation included