My Fee

[dyne]

Recently a young lady came by to pick up the tax returns I had prepared for her. I THOUGHT
she asked me what the date was and I answered 2-24-10. When she gave her personal
check to me it was made out in the amount of $224.10 (2-24-10) My fee was only $120 so I
returned her check and she wrote a corrected one for me. The point is she did not complain.
I believe I could double my fees and few clients would complain. I need to ponder this
and probably should raise my fees although with the economy so bad this seems to be
a bad time to do so.

[BHoffman]

When I first started out, I made the mistake of undervaluing my work and did not charge very much.

My friend, a fellow tax preparer, got sick one tax season and I went to her office twice a week to help out. I saw that her fee schedule was at least double of what I was charging. She gave me a copy of her per-form fee schedule, and I imput that into my software for the next season.

The change in billing was at times so very dramatic that I discounted most of the bills for existing clients and still slowly increase them. I did show the fees and the discount so clients would see. It is always easier to discount less than it is to raise fees.

I started getting very choosy about new clients. They had to have a good notion of their substantiation responsibilities. I don't let them make me decide or guess. I give them options when options are available (Sec 179 or MACRS, etc). I definitely started courting more business clients - that is where the real fun and profit exists! Corporate tax returns are, for me, much easier than 1040 forms. Much more straightforward, much less given to the twists and variables of personal returns. And, I just plain like to prepare financial statements and business tax returns.

I did not discount for new clients and winced periodically at what I considered to be very large fees and hoped they would not scream at me.

Lo and behold, no screaming and I maintain a good level of repeat business and referrals. I have chased out some of the high maintenance, low paying clients and am very happy about that. Life is so much easier without them, and my income actually did increase. I have fewer clients and more income than before I started charging a good fee. They don't mind the higher fee because I am very accessible to all of my clients. My unspoken motto became "I want all of my clients to feel like they are my only client." That has worked.

Some new clients come from the franchise tax offices. Sometimes the bill is in with the prior year tax return so I can see the fees. Fees I consider to be pretty high are still lower. So, I'm beating the franchises and still making a good living.

Referrals - I don't advertise and work only on referral. Since raising my fees, I'm noticing that the clients coming to me are better informed and higher income and I prefer that. I'd rather prepare a few high dollar complex returns than many low dollar short forms. I have a home office and no employees, so that is almost necessary for me. I don't want a whole bunch of strangers traipsing through my house.


Hope this helps, but a lot depends on geography and the type of practice. Home office vs. storefront is a big difference. Niche specialties are another.

dyne - I think you are not a newbie to tax prep, so a lot of what I'm saying is probably old hat for you . Just thought I'd share my experiences. I found it is true that if you raise your rates you will lose some clients but will still make at least the same amount of income.

[ChEAr$]

My usual practice has been to "revise" fees every two years, so THIS was the year.
And I pondered the recessionary effects also, debated with myself during many happy hours, considered the fact that I don't really need more fees due to my life style (no more high dollar cruises for wife and me now), What to do; WHAT to DO?

When work is completed and client signs the forms and is about to write the check,
I've always looked at last year's fee, mentally adjusted for more or less work this year, and come up with the amount which is never questioned, except maybe jokingly.
(What? 7 minutes and you're charging me $50?) (grins)

A person can use freeturbotax.com to file the federal free; BUT.. state returns cost and most of my clients have two states to do, GA and AL; not all, but most.

Then I thought about my clientele, and how stable they are, overwhelmingly not affected by the recession....

Yep. I raised my fees and thus far, enjoy about a 6% average higher fee than last
year.

[BP.]

debated with myself during many happy hours

Good thing you two debated during happy hour- 2 for drinks, right?

[BHoffman]

Free pretzels

[ChEAr$]

Free pretzels

Come to think of it, I once won a world series bet with a tax lady in PA and she sent me pretzels.

Now, about those Phillies NEXT year......!

[superman]

8% increase!

I to have rised my fees this year so far 8% and not one complaint yet. I have not raised my fees in 4 years and thought is was time to do so. Now I am hinking that since it is March I will raise 10% because the early bird gets the worm right?

My thought is that when I go to the store and they raise their prices I can not argue with he clerk and would not even think about it so why can't we raise our fees and not get grief for it. Most independants are still cheaper than the big chains and most of us do undercharge. I know I'm guilty of this. Is anyone else?

Superman

[BP.]

Come to think of it, I once won a world series bet with a tax lady in PA and she sent me pretzels.

Now, about those Phillies NEXT year......!

Pretzels, the Phils, YES!!! No need to bet, if we win again I'll send you pretzels.