Running a service-based business has a lot of moving parts: sales, marketing, talent acquisition, client retention, and more. But one of the most challenging parts is deciding how to charge for your services—even for accountants, whose work primarily involves financial information.

Pricing for accountants can be tricky as there are a number of options to choose, and each one works well for different scenarios.

We reached out to several CPAs, CFOs, and other finance experts to get the rundown on various ways to handle pricing for accountants, including firm fee structures, technology’s impact on pricing, and tips to inform your pricing strategies. Check out their insights below.

Accounting Pricing Packages

Hourly

Barbara Schreihans, founder of Your Tax Coach, says most firms charge by the hour, during which time accountants may perform a wide variety of tasks. “While common, this approach can be frustrating for clients because it’s hard to predict how large the bill will be for the work.”

Emilia Flores, co-founder of UKBadCreditLoans, says hourly pricing is good for smaller jobs where you can provide a general estimate. “However, you have to keep detailed track of how much time you're spending—both for your own recordkeeping and discerning clients.”

Jasmine DiLucci, JD, CPA, and principal at DiLucci CPA Firm, says an audit is a solid example of a service fit for hourly billing because it’s often hard to quantify scope. Audits vary in complexity and scope, or how much of the company’s financials are being included.

“For larger businesses, an audit may take a year or longer and require a lot of back and forth with the client and the IRS,” DiLucci explains. “Even when you’ve submitted the appropriate documentation, the auditor may not agree with your findings and prompt an appeal, extending the work you’ll need to perform.”

Fixed Fee

Flores says flat fees are good for jobs where you want a fairly accurate measure of how much the client will be paying, even if it takes your team a little extra time than anticipated. “You can choose to let clients pay the fee in scheduled or milestone payments, or charge them all at once.”

DiLucci adds that fixed fees enable more value-based billing, where the price is more about the result than how much work your team is doing. “The team is motivated to work faster for the client, while also ensuring quality because you’ve already agreed to a certain amount for your services.”

Just be sure you come to a clear agreement with the client on the scope of the job, and that you can accurately predict the time required to perform the service—scope creep and internal mistakes can quickly eat into your profits. “Preparing tax returns can often be done on a fixed-fee agreement,” says DiLucci, “as it’s a standard project that typically goes smoothly as long as you have all the information you need.”

Retainer

Some clients may need your services on an ongoing basis. This arrangement often warrants a retainer-based pricing structure, where you bill them at the beginning of every month for a predetermined set of tasks. “Typically, you find this billing most applicable to standard accounting services such as bookkeeping,” says DiLucci.

Mixed

While the other accounting pricing packages are the most prominent industry-wide, it’s not outside the norm for firms to employ a mix of fee arrangements. For example, you may have a situation that warrants having a fixed minimum, with the option to bill additional time as a contingency.

“This may be beneficial at times when most of the work is standard, but the client has unique circumstances where there are unknown elements at play or there is information they don’t have available yet,” DiLucci explains.

How Technology Has Impacted Accounting Firm Fees

“Overall, technology such as cloud-based accounting has added significant efficiency to the accounting function,” says DiLucci. It’s enabled accountants to:

• Perform their work faster
• Better predict how long tasks will take
• Reduce human error
• Focus less on administrative tasks and more on employing accounting and tax expertise to help clients

“Technology has also empowered accountants to create opportunities to bill clients on a fixed-fee basis and ultimately be more profitable,” DiLucci explains. “Being more efficient in their work helps accountants better estimate how long tasks take to complete, which gives them greater assurance when deciding on fees.”

According to Ryan Maxwell, CFO of FirstRate Data, the most common function a company typically uses an accountant for is bookkeeping. “Cloud accounting software dramatically reduces the manual labor of bookkeeping as the software automatically generates most accounting entries. For example, after a completed online sale, the software would automatically create the sales, receivables, and inventory entries.”

Schreihans notes that operating a modern-day accounting firm is getting more costly. “From what I’ve observed, the accounting industry gets more expensive each year. There’s always more software to purchase: tax software, CRM systems, productivity apps, etc. On top of that, you have to spend more on marketing costs and labor. The result is that accounting firms must charge more to stay profitable.”

Stella Cooper, CEO of PaydayLoansUK, says cloud accounting has virtually eliminated paperwork. “While some clients count on a box of receipts and paper bank statements to keep up with their business finances, those who use cloud accounting software have an edge in uploading receipts on the go and importing transactions from their business bank accounts. This keeps accounting firm fees down as their team doesn’t have to work as hard.”

DiLucci notes that some veteran accountants may be hesitant to adopt technology because they don’t understand it or believe that it’s just an extra cost. “But savvy accountants pay the extra money because it helps them work smarter, which ultimately has a positive impact on the bottom line.”

10 Tips On How To Maximize Revenue Through Smart Pricing Strategies

1. Charge some amount upfront.

Regardless of the pricing approach you take, DiLucci says it’s essential to charge some (or all) of your accounting firm fees upfront. “Collecting payment before you start expending man hours ensures clients are invested in the engagement and collaborating with your team.”

Schreihans agrees, noting that charging clients upfront helps you avoid late or nonpayment. “Plus, if the client has 'skin in the game' ahead of time, they’re more likely to get you any information you need to complete required tasks in a timely manner, since they've already paid for your services.”

2. Shift toward fixed fees.

Schreihans says that your default may be to charge hourly because it’s easier, but your goal should be to focus on fixed fees. “Not only does this ease pricing confusion and lead to greater profitability, but it also forces you and the client to be on the same page about what value you’re providing.”

3. Keep tabs on competitors’ pricing approaches.

“You need to know what your competitors are charging for their services,” says Flores. Being aware of the market can give you insight into how potential clients may perceive your pricing. If you know you’re charging more than your main competitors, you can develop your marketing collateral accordingly and prepare your sales team for objections.

4. Offer more advisory services.

Maxwell recommends offering more high-value services, such as advisory services. This can help you shift to more profitable pricing models and grow your business. “For example, forward-thinking accounting firms now offer their restaurant clients a supplier review service that examines all their supplier pricing for cost-saving opportunities. Imagine what you could charge if you’re helping your client save 25% on their produce costs.”

5. Go after clients that make sense for your business.

Cooper says clients’ price sensitivity and perception of the value you provide have a “material impact on the types of clients you attract and how much you can reasonably expect to charge them for your services.”

For example, if you have curated a team of industry veterans, each with 20+ years of experience working with big accounting firms like Deloitte and KPMG, you’ll likely be able to capture the interest of larger clients with higher budgets. However, if you’re the only CPA with notable experience supported by a team of junior-level accountants, these types of clients will likely be more challenging to attain. Either way, charge accordingly.

6. Use technology to drive down internal costs.

“Look out for and use technology to drive efficiency and help you pass savings onto clients,” DiLucci advises. “You can also use technology to reduce friction in the client experience. The easier it is to work with you, the more likely they are to choose you, as clients appreciate it when they can put forth less effort.”

7. Keep your reputation intact.

DiLucci says it’s important to consistently deliver on your service promises because your reputation can have a sizable impact on your market acceptance. “If you want to be able to charge what your competitors are charging—or more—clients need to see you as more valuable and reliable.”

8. Adapt your pricing as your business evolves.

“As you grow your business and face different challenges, adapt your pricing models to suit your changing business needs and operational efficiency,” says DiLucci. “Try out different pricing approaches to see what works best.”

9. Avoid providing discounts.

It can be tempting to provide discounts to secure the sale, but DiLucci says this is a no-no. “Discounting can bring down the perceived value of your services. Don’t be afraid to turn a client down if your services are outside their budget or they’re undervaluing your work.”

10. Focus on value over low fees.

“Don’t try to be the lowest cost option—it’s a quick way to dig yourself into a hole that’s hard to crawl out of,” says DiLucci. “When clients pay you less, they value you less. There are many clients that want their financials given proper time and attention, and are willing to pay at or above market price to ensure quality.”

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