What Your Fee Schedule Says About You

Your fee schedule is the loudest thing you say to clients. It tells them what you think your work is worth, how much you trust yourself, and whether you plan to be around in five years. For many small tax firms, that message has been stuck in an earlier decade.

Across the profession, the gap between firms that reprice and firms that do not keeps widening. Costs rise, good staff are harder to find and keep, and returns grow more complicated every year. Meanwhile, free filing options keep reappearing and make some clients wonder why they pay a professional at all. The firms that treat the next two months as a pricing project will enter January in a different position from those that copy last year's fees and hope.

Here is a pricing strategy audit you can finish before the season starts.

Step one: learn what you actually earn. Pull last year's billing by client and divide by the hours spent. Most owners are surprised. The returns that felt routine often took twice as long as the quote assumed.

Step two: find the bottom fifth. Rank clients by effective hourly return. The lowest group usually shares a pattern: messy records, late documents, or constant questions. Those are the clients subsidized by everyone else.

Step three: price complexity on purpose. Rental properties, multistate income, partnership returns, crypto activity, and business owners with unreliable bookkeeping should each carry their own line in the fee schedule. A base price with defined add-ons is easier to defend than one number that quietly absorbs every surprise.

Step four: choose a range. Decide your minimum fee per return type and the percentage increase you will apply to existing clients. A modest increase for loyal, easy clients and a larger one for high-effort clients is fair and easy to explain.

Step five: offer a choice. Give clients two or three service levels, from filing only to filing plus a planning session. People accept a higher price more readily when they can see what they receive for it and pick for themselves. Filing plus responding to notices can be a tier on it’s own, especially for clients with my complexity.

Step six: write the message. Send it in the fall, not with the engagement letter in January. Lead with what has improved, name the new price plainly, and skip the apology. A paragraph beginning "I'm sorry, but" invites negotiation. A paragraph that begins "Next year's fee is" invites a decision.

Step seven: decide who you will let go. Some clients will leave over any increase, and that is acceptable. Hours freed up by a departing low-fee client can be filled by someone who values the work. Keep a short list of other preparers you are comfortable referring people to so that leaving feels respectful.

Expect pushback from a small group and relief from a larger one. Many clients quietly assume professionals have already raised prices and, in addition, know that finding a new preparer is not an easy task. They are happy to stay where they are comfortable for a modest increase when everything else has skyrocketing prices.

One last point. Raising fees is not only about revenue. A firm that charges enough can afford better software, better pay, and enough capacity to answer the phone in March. Underpricing does not make you generous. It makes you tired, and tired firms deliver worse work. Do the audit now, send the message in November, and let your fee schedule say what you want it to say.