[IMGCAP(1)]It’s all about the fixed price agreement this year. While we’ve been using fixed (AKA: value pricing) for our corporate clients, this year we are also assigning value pricing to our individual tax clients. In fact, the letter communicating the change went out just this month. Under the new pricing model, we charge a fixed fee, require pre-payment, and offer clients two “value solutions” from which to choose:
• Solution 1 – Simple 1040: includes 1040 preparation and all required email and phone support.
• Solution 2 – Value Package (priced higher): offers tax preparation and support, plus one-on-one meetings and support for IRS notices and issues.
We are not forcing clients under a single fee umbrella, but rather giving them a choice between simple or advanced support. We’ve also given them plenty of time to make a decision. For those who don’t choose—well, they’ll need to find a new firm. Remember, value pricing doesn’t work unless you enforce it. Some clients simply may not be a good fit for your new model.
While it’s never easy to “terminate” a client, it’s critical that firms make changes that enhance the business model and the client experience. I’ve received very few objections to the new pricing structure, primarily because I’ve been careful to explain the value to the client. First and foremost, a fixed price agreement eliminates invoicing surprises and allows clients to budget for the year. Second, under the Value Package (Solution 2), it also eliminates a client’s risk of needed added, costly IRS support. All bases are covered under one fee. Easy for everybody.
Technology is an important part of the equation!
With Solution 2, my firm has removed the risk of potentially mounting fees for additional services. Clients like that. However, what about the risk to the firm? As we all know, it’s been reported that notices sent by the IRS will only increase in years to come. The developers of the IRS response system, Beyond415, indicate that notices have increased from 30 million in 2001 to 201 million in 2011.
To handle notices efficiently, firms need the right technology in place—an application that makes quick and easy work of resolving IRS issues. My firm uses Beyond415 to manage all responses that come through the door. The system offers comprehensive guidance and the necessary tools and documents, such as checklists and template letters. Just a quick shout out, the vendor recently launched its new “research center” version of the product, Beyond415 Guidance (read the article in
Whatever application you use, it’s imperative to have a system in place that is intuitive and provides all the information required to handle IRS notices efficiently (to support value pricing) and in a timely manner (to ease the minds of your clients).
Some of you may be thinking, “I always respond to notices as an added value to the client.” I have also offered complimentary IRS support myself in years past. But now, with a spike in notices being sent, it was time to work this level of support into a value pricing model and develop a proactive solution for clients.
So, my winning formula stands: Value Pricing + Powerful Technology = Elevated Profits & Client Satisfaction. And it’s working for my clients and my firm. Have you taken the time to think about your process lately? Feel free to borrow my formula!
Jody L. Padar, CPA, MST, is a Certified Public Accountant experienced with Complex Federal & State Income Tax Compliance for Business & Individuals. Jody is an adjunct professor at Oakton Community College, where she teaches Taxation and QuickBooks Courses. She is part of Intuit Trainer Writer Network and speaks nationally on various Technologies and Taxation. She can be reached at
