Fee increase letter

[luke]

Someone on here posted about sending a fee increase letter to all their clients?
Would you be willing to share that letter with me so that I may use it as a template?
You may PM me - THANKS in advance!
(I tried to "search" for the post but did not have any luck)

[JohnH]

I just work the notice of the fee increase in at the bottom of a general-purpose letter I send of my clients each year. The focus of the letter is tax changes or admin details - the fee increase is just a part of the overall picture.

Some people seem to think they need to give a lot of explanation to justify the fee increase - I don't follow that philosophy. Just tell 'em the price is going up by x% and be done with it. Most people will understand, and if they have questions they will ask. You might be surprised at how few questions you get.

[ChEAr$]

Cpi

FYI, the increase in cpi from Oct 1 thru sep 30th this year was 1.7%. That is used by SSA of course to adjust monthly benefits.
Good enough for them, good enough for me. usually that is.
Except this year I advertise NO increase in fees, since I closed town office and moved to the house and have much less overhead.

Hmmm, maybe on those two forms 8863 (?) and 8827?

[Jiggers]

Just be careful if you advertise "No Fee Increase this Year" if you bill by the form or schedule.

Clients only see "No Fee Increase this Year" and can't understand why the fee is more than last year when they added 50 new assets on the depreciation schedule, sold a multitude of cows and bulls, and are itemizing this year when they used the standard deduction last year.

[ChEAr$]

Just be careful if you advertise "No Fee Increase this Year" if you bill by the form or schedule.

Clients only see "No Fee Increase this Year" and can't understand why the fee is more than last year when they added 50 new assets on the depreciation schedule, sold a multitude of cows and bulls, and are itemizing this year when they used the standard deduction last year.

That's why the correct phrase is "No fee increase this year for the same amount of work.

[veritas]

Why

Do we need to tell clients when we raise prices?

[smithtax]

Fee Increase Notice

Do we need to tell clients when we raise prices?

I never do, and rarely receive any complaint.

[JohnH]

Somebody I deal with only once a year? Yes, I'd want to know if they're increasing their fees, and by approximately how much. So I do the same for my clients as a courtesy.

I don't apologize or explain why fees are going up - I just give them the percentage in my client letter. I think it's best to increase them some each year rather than doing a "catch up" increase all at one time. This year I went up 8%. Still thinking about next year - probably in the range of 5-8% again.

[Bees Knees]

Last year I included the following in my letter:

Fee increase. The IRS now requires all paid tax return preparers to be registered and subject to new regulations. Due to the increased cost associated with these new regulations, all tax preparation fees will be raised approximately 25% this year. If you would like a price quote before doing your taxes, please call.

I maybe lost one or two clients. The reason I announce the fee increase in the letter is if they don't like it, I'd prefer they find another preparer BEFORE I waist my time with them in the interview or filling out their return.

[ChEAr$]

Actually I've always been with Veritas and Mike on the subject, simply telling them how much to make my check for. (I don't print invoices!)
Was only thinking out loud above with a view to making client feel good re my move, since most have to travel further.
So then, I still won't increase fees, like always when asked how much to write the check say "same as last year, xx$, or xxx$

But John... 8%? (grin

[JohnH]

If I keep it up I may finally get the client list down under 10 while maintaing the same level of revenue. That way I can continue refusing to efile. That will save the trouble of getting those pesky hardship provisions.

[Black Bart]

Sound wisdom, John.

If I keep it up I may finally get the client list down under 10 while maintaing the same level of revenue. That way I can continue refusing to efile. That will save the trouble of getting those pesky hardship provisions.

Less work for the same money is a workable plan -- I've been phasing it in as my clientele has been dying out. While they may not appreciate my efforts on their behalf, I've been appreciating it for them the last couple of years by raising prices (sometimes drastically) as the IRS red tape mushrooms.

Last summer an older lady brought me a CP2000 and a prior year's brokerage-house statement (100+ stock sales/$80K proceeds) saying "I completely forgot about this" (draw your own conclusion). Since I'm in Veritas' camp on raising fees (no pre-announcements), I just said it would take lots of time and be expensive. At pickup I gave her a $450 bill (twice her "regular" fee) and almost had to break out the smelling salts. But I think she'll be back -- where else is she going to get such complexity done for less (assuming she doesn't "forget" Merrill-Lynch again)? A client who left me in 2011 came back this year saying "I thought you were high, but Jackson-Hewitt's fee knocked my socks off."

Regarding Luke's question about advance notification of a general increase, my experience is that customers who resent increases get mad at you either way, so I prefer to be a paid rather than unpaid former preparer (yes, yes, there's the ethicity of it all, but I'm getting older and broker). If they ask in advance I tell them the new price; if not I tell them at pickup. A few (not many) will brace you, but it's necessary to build up a little protective brass-plating around yourself to get through this crazy business -- just say "My costs, like yours, have gone up."

You may wish to take such cynical advice with a grain of salt since I've occasionally lost 25-50 customers in one year with a 25-35% raise , although they were generally replaced and, so far, I've made the same money or more. One byproduct is a plus -- it weeds out much of the PIA crowd.

[Matt Sova]

Preference

I really like it when Wal-Mart sends me their price increases also. Ask yourself this question. Is the work that you do and the knowledge you have worth the fee? If the answer is yes, your clients will realize it too. The ones that do not, never will appreciate you or your knowledge.

[Roberts]

Do we need to tell clients when we raise prices?

No requirement to do so.

If they are getting charged an increase yearly, I can't imagine why they would expect notification it's happening again.

[JohnH]

I really like it when Wal-Mart sends me their price increases also. Ask yourself this question. Is the work that you do and the knowledge you have worth the fee? If the answer is yes, your clients will realize it too. The ones that do not, never will appreciate you or your knowledge.

Your point is valid, but not the analogy. If I were Wal-Mart I wouldn't think it was necessary to notify people of my price increases either. (Sorry, you teed it up so I had to swing).