Fee Increase Re-visit

[KBTS]

There was quite a bit of response to Bee's fee increase post - all of which I found very interesting. Thought I would start another thread, maybe just to let off some steam.....

It is bad enough with TaxAct, TurboTax, etc all offering "free" returns every time you turn on the TV. Then the IRS Newswire shows up in my email today reminding me about Free File through their approved partners (or whatever they call them). I get it - do your easy return for free..no tax knowledge necessary, blah, blah, blah.

So I am still deciding on how to set pricing this year. Definitely thinking of an increase for the hassle (and $500 fine) with EIC returns and Form 8949 for investment sales. Then I talked to someone who had called another local preparer for a price quote. They were told a 1040 with Sch A, state & local return would be $65. Really, $65, are you kidding me??? This is not some back room kitchen preparer either. I would consider it one of the "main" preparers in town - not a CPA or EA - but well known by everyone around. Another example is a client I picked up in the off-season. Previous preparer had charged $75 for 1040, Sch C (with terrible records), EIC plus state and local.

I am an EA and have nearly 10 years of experience in tax prep. I realize that tax fees in a small rural town are not going to be anywhere near the national average, but how do you compete with prices this low?

[geekgirldany]

The only way I've found is to explain in detail what it takes to prepare their return, about being a enrolled agent, and how much continuing education it takes.

A long time client is more than likely have to file a estate return next year. I explained that I did not usually do them as I do not like to get involved with family matters. But after some more discussion I told him I would file it for him. This is after I told him what most preparers, CPAs, EAs, charge to prepare estate returns. I offered to prepare it at half that price.

What I got in return was... "It should not be that complicated as my return and so should not cost that much". To which I responded by telling him how complicated a estate return is to complete.

When he comes to pickup his personal I will be telling him I won't be preparing the estate return. He can find out what it will really cost. See this happens even with clients that have been coming to me for years. They know my prices are reasonable but still try to get me to go lower.

I don't know....

[S T]

Me Too

I am thinking the same.

Turbo Tax with their new advertising on "Guaranteed" and talking with a Tax Expert such as an EA or CPA (at least that was the qualifications mailed to me to participate in "their" new program) is going to make some people think about trying Turbo Tax, and the pricing is a lot less expensive than our charges. Of course the Taxpayer is spending the hours for whatever $$ amount we charge for our expertise and our hours

Not quite getting the thinking behind all of this.

I also received the IRS email - "Do Your Federal Taxes for Free with IRS Free File" today.

I lost 2 good tax clients in 2011 (2010 filings), I suspect I will lose a few more for 2011 thanks to Turbo Tax. Clients would rather use Turbo Tax than pay my $ 250-$300 fee (average long form with Sched A, B, maybe minor Sched D, maybe minor 2106 expenses, and associated Kids returns (simple)?

Sandy

[superman]

Fees

This my two cents worth on fees. I will not compete with other peoples fees to just get the client because if they are shopping on fees then they will not be back next year and who needs the one year people? Most of my clients have been coming to me for over 5 years and if I was to raise my fees I am still about half of what the national chains cost in my area.

As I said in previous posts when I started out I under priced myself and still regret that. Most good clients know that the best does not charge the least and also do not overcharge. I do consider myself knowlagable and pride myself on doing more education then I have to so if someone wants cheap or quick I say that is not me.

I feel that most of us on this board are in touch with what is reasonable to charge someone and I do offer a cheap 1040ez but this is only in hopes to gain this client for a long term client that will work into a "long form" person for many years to come.

That is my take on fees. I know it is a little disorginized but when fees and fee shoppers come up it just makes me so mad. How can you expect to get quality when you just want cheap?

Superman

[oceanlovin'ea]

I think that in the changing times we live in now we will see clients come and go and new ones will come. Some of my clients have gotten to the point that they no longer have to file. But I am hoping that if their circumstances change and they need help they will call me again.
Even though I lose some clients each year, I get new ones. Last week I had 2 new people call based on recommendations from other clients.
I charge lower than other firms and preparers but my clients get good service for their money. I have my own business so that I can set my own fees. I have raised some fees last year and will raise some others this year. I am starting new clients out at a higher fee.
I did have one of my clients, S corp who told me a couple of weeks ago to give myself a raise this year. I had been charging him the same price since I started doing his books. I told him he was a perfect client.

Linda, EA

[Jiggers]

I am an EA and have nearly 10 years of experience in tax prep. I realize that tax fees in a small rural town are not going to be anywhere near the national average, but how do you compete with prices this low?

I am in a small South Texas town.

I do not compete with those cheap places.

I set my fees, increased every year, and live with it.

I pick up clients from local CPA's firms every year, though I really don't want any more clients.

This past tax season, my average 1040A was $137 and my average 1040 was $422.

1040, Schedule A, Schedule E Royalty, Taxable SS, Form 2210, Estimated Tax Vouchers $390 last year. By time, that return calculated at about $173 per hour.

This year I raised my fees about 6% more than last year.

The key to your fees is service, service, and more service. Return phone calls. See clients and visit with them in the off season.

[joanmcq]

I've picked up a few clients just recently that said they had contacted someone else first, but didn't get calls or emails returned timely or at all.

I've also picked up a few that did TurboTax last year (one for which I'm finishing up his CP2000 notice right now). As I told him, he'll have a complicated return for 2011 as well due to a foreclosure, but after that, his return will be simple, since it is literally a single W-2 return. But I do have his reciept from TT: Basic 1040 online prep-$16.95, CA return-$36.95, efile free. Total of $53.90. I'd do the same EZ for $55 if done before Feb 15.

I'm going to push fees up a little this year; no Sch M, but will increase some of the other fees because of increased due diligence (and not just for EIC). There's a lot of knowledge in my brain, and it costs.

[Jiggers]

I'm going to push fees up a little this year; no Sch M, but will increase some of the other fees because of increased due diligence (and not just for EIC). There's a lot of knowledge in my brain, and it costs.

I have a sign in my office:

"I don't charge for the time that it takes to do the work. I charge for the 42+ years of education and experience!"

[kpangelinan]

I am in a small South Texas town.

I do not compete with those cheap places.

I set my fees, increased every year, and live with it.

I pick up clients from local CPA's firms every year, though I really don't want any more clients.

This past tax season, my average 1040A was $137 and my average 1040 was $422.

1040, Schedule A, Schedule E Royalty, Taxable SS, Form 2210, Estimated Tax Vouchers $390 last year. By time, that return calculated at about $173 per hour.

This year I raised my fees about 6% more than last year.

The key to your fees is service, service, and more service. Return phone calls. See clients and visit with them in the off season.

My prices are pretty much in line with these and my town, considered a larger rural town in Maine is a population of about 8,000 and about 40% of those are college kids as I live in a college town. Pretty small town in rural Maine. I raised my fees 5% this year.

I have a sign in my office:

"I don't charge for the time that it takes to do the work. I charge for the 42+ years of education and experience!"

I like it! Hope you don't mind me borrowing it! I'll need to change the 42+ years though and put a much lower number down, plus use my EA card...

[Jiggers]

I like it! Hope you don't mind me borrowing it! I'll need to change the 42+ years though and put a much lower number down, plus use my EA card...

Sure, go ahead and use it. I "borrowed" it from a car repairman!

[kpangelinan]

Sure, go ahead and use it. I "borrowed" it from a car repairman!

Haha....awesome...that's funny.

Oh and on the fee thing.....we have seen some attrition to fees, but not a whole lot...over the last 8 years, I've seen much more new and longer lasting business come in then all the ones that leave because of price. I know that may not work in every city because of demographics and what not, but I also deal with the $50 1040's and $100 schedule C's and have done just fine over the years.

[ttbtaxes]

I'm shocked every time an H&R Block client migrates over to me and I see the fees they charge. I believe they are very high for a modestly complicated return.

It begs me to inflate my fees across the board.

[FEDUKE404]

The freebies

I'm shocked every time an H&R Block client migrates over to me and I see the fees they charge. I believe they are very high for a modestly complicated return.

It begs me to inflate my fees across the board.

I think you have made a valid point.

While Block may tell you about a "$65 return" (I'm quite surprised they even gave a price!) rest assured they can get very creative on fees if you happen to have dependents, or EITC, or any number of various "worksheets." My guess is simple things such as Form 1099-INT (how many, how much) can add to fees - even though they are doing the same amount of "work." They likely charge extra for Soc Sec taxation worksheets, state income tax worksheets, et al. And then there is the expensive "fluff" separate from anything related to preparing the actual return.

Long ago I learned that clients who are more concerned about cost than quality will bolt at the first opportunity. That's the way it is these days. For my own clients, cost of preparation is rarely discussed. They are paying for my skills, not some (whatever) typing numbers into a computer.

OK - mini-rant is now concluded!

FE

[KBTS]

I think you have made a valid point.

While Block may tell you about a "$65 return" (I'm quite surprised they even gave a price!) rest assured they can get very creative on fees if you happen to have dependents, or EITC, or any number of various "worksheets." My guess is simple things such as Form 1099-INT (how many, how much) can add to fees - even though they are doing the same amount of "work." They likely charge extra for Soc Sec taxation worksheets, state income tax worksheets, et al. And then there is the expensive "fluff" separate from anything related to preparing the actual return.

Long ago I learned that clients who are more concerned about cost than quality will bolt at the first opportunity. That's the way it is these days. For my own clients, cost of preparation is rarely discussed. They are paying for my skills, not some (whatever) typing numbers into a computer.

OK - mini-rant is now concluded!

FE

The $65 price was not H&R. Their fees are probably the highest around here. I could raise fees considerably and still be less than them. Agreed that for most current customers, fees are not an issue - they understand they are paying for knowledge and experience. That point is hard to get across to lots of other people though.

[BP.]

how do you compete with prices this low?

You identified one of your competitive advantages:

for most current customers, fees are not an issue - they understand they are paying for knowledge and experience

My first thought was, do you think you are getting enough referrals and word of mouth business from your satisfied clients? Maybe there's some opportunity for you there?