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Congress has built in fee increases for us as they add new forms, revise the intent/use of forms, add more due diligence items, etc. For many of my clients I can point to the new (for instance Schedule D/8949) forms/additional pages from last year to explain a price increase with few words needed from me. (Another reason I print all their worksheets, etc., for the client copy!) If I need to say much, I talk about my increased education, often at the last minute due to Congress delaying, that adds to my costs to provide them knowledgeable and accurate service.

Taxed: This line:"My problem is that I still can't figure out how they will respond." Its not your problem. Really. If you increased all your rates for all your clients by 5%, or $25 whichever makes sense for you, you end up possibly making 5% more or ($25 x the number of returns you prepare) Now, if you are like me, with 350 returns, that would be anywhere from $6,250 to $8,750 in increased billing for tax season. I could lose 4-5 clients at $350 a pop and still be well ahead. Look at it this way: "I have been hired, and I have been fired" Neither of them hurt me.... Rich

Interesting thread. I actually attended the Road Show in Brooklyn on Friday. Jack, Kerri says hello. My specfic question to the assembled employee's of ATX at the Road Show regarding operating a "Peer to Peer" network system was met with a "No". Meaning, that an ATX user can load as many copies of the software on as many computers as they want, but they will not be able to share a common database/Return Manager/EFile Manager,etc. As was available for years with ATX. You gotta go with the MS Server2008 and make that one host the common database/Return Manager. THAT is all I want. I want ALL my ATX clients in ONE place, accessed by ANY of my employee's from any computer in my office, all the time, and without serious time lag or shutdowns. I could not find out about that at the road show. It is promised, but I have NOT seen this happen yet. Much has been promised, but.... The program ran fine at the Road Show on a stand alone laptop. 2.6Ghz processor, and 8Ghz RAM, 64bit. It took about 12 seconds to open an average 1040/SchA/SchB return, and they had a "Large" return that took about 45 seconds to open. But it was big and ugly. Learned a couple of new things, and that will make tax season easier. I purchased the program after I left the road show. The $150 discount was nice, paid for the trip to NYC. I now have to go buy a new server box, with MS Server and some other things. I need a new computer anyway... Rich

I really agree on showing full prices then a discount. Too many times a long time or favorite client is getting preferred rates and anyone they recommend you too expects those rates too.

I show my current prices on my invoices and then include a Loyal Client Discount.

You're right. The cost of retaining an existing good customer is pennies when compared to the cost of gaining new customers of unknown loyalty & reliability. Even when you gain new customers, there is still the aggravation of figuring out whether they are worth keeping. ETA - The above comment by John and those replies below have been moved here from another thread because these points are important and should have their own topic and title. - Judy

Let me tell you what I learned at a "Gear UP" Seminar years ago: The speaker, (I can't recall his name, but he is the baseball card guy...) said that he wanted the "Cringe" reaction when he presented the invoice to the client. If he didn't get a "cringe" from the client, then he didn't bill enough. Sounds harsh, and I am NOT there, yet.... We can get lots of clients, through referrals or from advertising, and we can decide what we want to bill them. And just becasue you started out with a $200 fee 5 years ago, does not mean you have to *STAY* at a $200 fee. I had one client, a corp 1120 return, and 1040 each year. Started at about $800 a year. That was in 2002. He is now up to about $1,200. He complained one day. "Rich we agreed to $800..." And I said, "that was before three different like kind exchanges, four rental properties ago, and an expansion in your business...." Things change. So do my prices. Never heard a word out of him anymore. Some folks have left becasue the price has gone up. But I can count those clients on one hand. When I look down my list of departed clients, I would say less than 10% left because of fees. I have used Qbooks since I started the business, and can track the increase for each of my clients. There are very few that are not paying me a least 15-20% more than thier first return prepared by me.. If they have been here since my start date of June 2003, they are probably 30% or more in increase. I am worth it. Not that I have a "big head" about that, just that *I* wanted to make more money. If I bill more, I make more. And I am not concerned about losing some clients, if it means I am making more money and working less. (the working less hasn't happened yet, but I have replaced *bad* clients with better ones.) Rich

I tell them that it the current year's return is identical to last year, aside from the numbers being different, then their fee will be $xxx. But I qualify that by saying that when i get their info if I see anything different that they forgot to tell me about or that I forgot to ask, I'll let them know before beginning work on the return. That has happened a few times over the years, and in each case the client agreed with me. From everything you've posted, I think your relationships with your clients are similar to mine. I may be wrong, but I suspect your clients would be much more amenable to price increases than you imagine. But as Rich said, and he said it well, their reaction is secondary to what is in your best business interests. (Judy: Nice of you to move the thread. I was aware we were digressing far from the original subject but wasn't thinking of how to handle it. Your solution is good.)

Once your family grows up, it is never right for everybody. Surprisingly, all of mine are going to come to me this year at the same time (including the new Great-Grandbaby). Yeah!!!

My problem is that I still can't figure out how they will respond. I can see your point with younger couples but some of my older couples and retired seniors don't respond well. Besides if I do the rest of their family I have to keep that relationship in mind as well. I get 100% of my new business through referrals. I stopped advertising and taking in walk in. But in general I do agree with you that those who walk away from me after a slight price increase were not meant to be long time clients. Fortunately it has happened rarely.

There are lots of reasons to postpone raising our fees for long term clients. But when you finally do it, the good ones will usually tell you they understand. Some will even tell you they wondered why you waited so long to do it. These are people who really appreciate your efforts and have a sense of fairness. If any gripe and leave, you're better off without them because they weren't nearly as desirable clients as they appeared. And the end result should be that you are earning more money while doing less work. I so think it's best to announce the fee increase in the client letter, rather than trying to introduce it when the info comes in or when you present the bill. In the latter two cases you're explaining and maybe tending toward apologizing. In the former case you're giving them a heads up, so the expectation has already been set. I also think the fee increase should be mentioned in the client letter without comment, other than to say "if you have any questions about the fees, be sure to ask me". Most will intuitively understand. If anyone needs an explanation, or if theirs is a situation which warrants an exception to the fee increase, you can address it one-on-one.

KC, I tried to like your post but 'there was a problem..." Anyway, I have to remember that option at my next hotel stay.

I turned off autocorrect. It caused more errors than it fixed.

I won't post any of my autocorrect mishaps here, but just let me say I could have given one or two of those a run for the money in days past. I've learned to ALWAYS double-check texts before hitting the 'send' button.

I agree, but I did one small change on that. I always showed everyone the "current" charge, then showed their "discount". I don't think you can just assume that they know they are getting a preference unless you show them that on your bill. Plus, if they do make a referral I don't want to have to explain to the new client why he's being charged more than the person who sent him, if his situation is similar. It also makes it easier to gradually increase the fees for longtime clients, while you still give them the same percentage discount.

Don't you just love it when that occasional client thinks they're going to get the entire amount back in tax refunds when they lose money in a business venture? But that same person would never assume they have to pay the entire profit in taxes if the business made money.