The War on Small Practitioners

[JON]

I think

as said before the main point in billing is bill the the market will allow. Now you cannot spend too much time trying to to figure out the billing, but I do not want clients to come to me because they heard I was cheap(er). If we would raise our invoices 1/3 and not lose 1/3 of the customers would we not be better off. What the market will bear has its down side with a few of my customers who I have worked with for years and probably never should have been my client. They have become friends and not the profit center I wanted, but I did that to myself, I do not let other people do it to me.?? or do I?

[Black Bart]

Underpaid, overworked, etc.

I think the real problem is our poor billing habits...We are still stuck charging someone a couple of hundred dollars for a tax return when the rest of the professional world won't even shake your hand for under $500...

I guess you're right about underbilling -- my last audit a few years ago (billed at $300 and prompted me to quit) should have been at least $800/$1,000.

Somehow we (or I, at least) have become used to "trying to help out a small guy," but later resent having done it too cheaply. Example: consultation two days ago (tax on IRA withdrawal) -- figured it would last a few minutes, so told him $35 and it lasted an hour (yak-yak-yak) of course. My fee's $50 per hour (don't know how that stacks up to others).

Client back again yesterday -- now wants taxes on multiple withdrawal amounts and will return next week. I'm charging $50 per hour for this but can't really make up for my $35 front-end, lowball price now without looking bad.

Just got mad at myself all over again thinking about it. Yes, he's a "nice guy" but I'm helping him handle his $100K IRA and I am feeling sorry for him and working for peanuts? Aw, the heck with it -- my $50 is going to $75 per hour (and I'm not sure that's enough) for this job and from now on.

What does everybody else charge per hour?

P.S. Does anybody here charge according to the...umm...magnitude or importance of the job to that customer? I mean, thinking about it, this thing (plan) is vital to him and I have to put quite a bit of thought into it just to discuss it seriously with him as well as just running the numbers through the computer. My point is, whether it's $35/$50/$75, that's no real money compared to the importance of the job, so would we be justified in billing for "the big picture" overall (say $200/$300/$400) for things like this?

[joanmcq]

I charge $125/hr and will probably go up next year. Audit rep is $150. I have to support myself completely through the biz now, where it used to pay for living expenses beyond mortgage and utilites. and the living expenses are higher because I don't have a job and am paying $550/month for health insurance where I used to pay $20.

Besides that, I know from where you are coming. This year was an eye-opener when I gave quotes to same-sex couples (some of whom were coming from Turbo-tax self prep) and when I quoted "well, every return is different, but so far returns such as you are describing (1040 & Sch A) have been in the $200 range, apiece" as in $400 for the couple, and most of my new clients haven't batted an eyelash. I know I'm probably the lowest rate for a preparer truly knowledgable in these types of returns in the area, and probably northern CA.

My advice to you is to a) tell them right off the bat what the consulting charge per hour is, so if he wants to make a lot of small talk, he knows its on his dime.
b) tell this guy what your hourly rate is, and say you misjudged the time for the initial consultation when you gave the quote, or something else. You don't work for free or cheap. I've started telling people when they come to my home office, "I charge for my knowledge, not a fancy office".

[JohnH]

When they want to make small talk or ask endless questions, you could tell them you charge by the question rather than by the hour. The first question is free but every question after that is billable.

When they ask
"How much does each question cost?",

you can answer
"$100 each. So now, what's you second question?"

[luke]

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Bees - this may be the BEST POST that has ever appeared on this forum! Thanks...