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Pricing?


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I have a story where I lost one.  New clients for 2020 return.  Late 50s retirees.  Realtor made $18,000 selling them an overpriced house here in 2019, and they are still renovating it to this day.  Had an indirect rollover, Sch B, Sch D, two states.  I charged 275 and had to pull all the information out of him for the short statement I do complete explaining dates and accounts for an indirect rollover.  I think it took him three trips to drop off.  No, they don't do e-mail.

This year he comes in and tells me, "There is less this year; it shouldn't be as much."  That offended me, but I said, "Yes, there is only one state."  I charged him 225.  I might have charged less if he hadn't said that, but I doubt it because 2020 was such a real headache.  When he picked up, he was polite, but had to tell me they would go back to Illinois preparer next year because "it's a little too pricey here."

Me:  No problem, that's exactly what you should do.

I often see people who retire before they really should, write big checks they shouldn't, and cry over little checks that don't matter.  I think him setting me straight was his way of doing something.  I mean, the Realtor is long gone, and he's gotta have those remodelers.  Congratulations, Buddy, don't spend the 35 bucks you save next year (maybe) in one place.  😅

 

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1 hour ago, RitaB said:

This year he comes in and tells me, "There is less this year; it shouldn't be as much."  That offended me, but I said, "Yes, there is only one state."  I charged him 225.  I might have charged less if he hadn't said that, but I doubt it because 2020 was such a real headache.  When he picked up, he was polite, but had to tell me they would go back to Illinois preparer next year because "it's a little too pricey here."

Me:  No problem, that's exactly what you should do.

Ultimately, do you really need clients like that?  Considering the amount of work you did for them, if they have the nerve to say "it's a little too pricey here", they're ignorant.  I don't want to minimize how important it is to establish relationships and maintain those relationships moving forward.  With that said, there needs to be a level of respect both given AND received.  If the client does not respect what I do, the service I provide, or the time I spend...good riddance. 

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39 minutes ago, Yardley CPA said:

Ultimately, do you really need clients like that? 

 

No, I do not.  Got a new client yesterday with three years to do.  Lovely lady who had trouble communicating with previous preparer, but is getting back on track, with the help of her kids.  Kids will be coming to me in February 2023.  I won't miss Mr. Penny Wise and Pound Foolish.  

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8 hours ago, cbslee said:

Hopefully there is a vacation included😉

Absolutely.  After next week, two weeks off to ride on my Gator, plant flowers, just read and sleep on a dead end road in the middle of a forest.  Still plenty of work to do,, but they can wait.  If the IRS has a backlog of 16.4 million, as I read last week; I guess I can have a backlog of twenty or so.  I ordered my renewal program yesterday.  See you all next year.

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On 5/16/2022 at 11:54 AM, RitaB said:

I have always wondered if the folks answering pricing surveys are the ones who charge the most, or are exaggerating about their fees ("speaking evangelistically," as one pastor used to say).  But if you're wanting to downsize, I don't see a negative as far as raising your rates.  

I've always wondered the opposite.  I can't believe how low the average is in those surveys. 

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On 5/17/2022 at 11:58 AM, Gail in Virginia said:

Iwould be $85.  Most returns are not basic any more, so prices typically start at $100 and go up from there. 

Turbotax software costs that much and they'd have to spend the time entering the data.  Why charge less than what it would cost them to do it themselves?

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Around here I am not competing with TurboTax as much as other preparers who seem to do this as a hobby based on their prices.  One of the preparers in the area retired and I picked up some of her clients..  She did a farm return with about 20 items of depreciation, a W2, some bank interest and dividends, for $125.  I cannot, and will not price a return like that as cheap as that.  But that is the price that I am compared to. 

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49 minutes ago, Gail in Virginia said:

Around here I am not competing with TurboTax as much as other preparers who seem to do this as a hobby based on their prices.  One of the preparers in the area retired and I picked up some of her clients..  She did a farm return with about 20 items of depreciation, a W2, some bank interest and dividends, for $125.  I cannot, and will not price a return like that as cheap as that.  But that is the price that I am compared to. 

Ouch.   That is a tough sell.   Hopefully your clients realize the value you bring.

Tom
Longview, TX

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1 hour ago, Gail in Virginia said:

. . .  She did a farm return with about 20 items of depreciation, a W2, some bank interest and dividends, for $125.  I cannot, and will not price a return like that as cheap as that.  But that is the price that I am compared to. 

Wow, There is no way I would do that return for less than $500.

 

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I have kept my fees fairly stable over a number of years but raised a bunch this year. I sorta regretted it but am still recovering from the season and now realize that going forward I am going to be forced by age to downsize anyway. I enjoy the work but have finally reached a physical limit and must make adjustments if I plan to go forward. I am long past the point of needing the money but I like being occupied.  

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Remember the maxim: if you double your rates and lose half your clients, you will be doing half the work for the same money.  

YMMV if you are basically working as a hobby, or a ministry, or any other non-financial ultimate purpose.  But for those of us making a living at this insane business, the workman is worth his/her hire.  Anyone who does not agree need not be a client.

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On 5/18/2022 at 3:35 PM, Yardley CPA said:

Ultimately, do you really need clients like that?  Considering the amount of work you did for them, if they have the nerve to say "it's a little too pricey here", they're ignorant.  I don't want to minimize how important it is to establish relationships and maintain those relationships moving forward.  With that said, there needs to be a level of respect both given AND received.  If the client does not respect what I do, the service I provide, or the time I spend...good riddance. 

When clients shop for prices, I tell them “I don’t strive to be the cheapest, I strive to be the best!” 
If they are still on the phone after that, 99% of the time, I’ll get a great client. They are ALL referrals. So, I’m also quick to say that I’m sure they spoke to “so-and-so” and already know the value in my work. 
 

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On 5/21/2022 at 8:14 AM, Donnarae said:

When clients shop for prices, I tell them “I don’t strive to be the cheapest, I strive to be the best!” 

When I get asked if my prices are negotiable, I tell them, "Yes they are - but upwards only!" That usually either shuts them up or makes them walk.  Either way, I'm better off.

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