It comes with the territory during tax season: The taxpayer who calls or drops in just to see if you offer the lowest price for tax prep – or worse, just to confirm that the price they’ve found elsewhere really is the lowest.

While some may welcome the new business, many preparers object to this kind of price shopping, and are on the lookout for ways to avoid it.

“When I meet with prospects, I share a range for my services. I provide a minimum fee that I’ll work for. This is usually the best way to weed out price-shopping clients,” said Kathleen Fitzpatrick, owner of Padgett Business Services in Princeton, N.J. “My prices will not be the lowest and will not be the highest. I try to offer mid-market pricing.”

Enrolled Agent Martha Nest of Westview Tax Services, Bardstown, Ky., does not advertise and takes all new clients by referral only. “And I still get phone calls asking my price from shoppers,” she said. “Here’s my standard reply: My base price for a 1040 with state return is $160, the turnaround time is 10 days and I do not do refund anticipation loans nor do I prepare a return without a W-2.”

Those merely shopping then “hang up,” Nest added. “Works for me.”


‘Call various firms’

Taxpayers are actually advised to make such contact. “If you are searching for the lowest price, the best thing to do is call various tax preparation firms and get a feel for their price ranges,” reads the primer on About.com’s Taxes page. “The business might not be able to give you an exact price quote, but they should be able to quote you either an average price or a price range for your tax situation.”

Then again, how do your prices compare? The average fee for preparing a tax return, including an itemized Form 1040 with Schedule A and a state tax return, will increase a few dollars to $273 this year, a 4.6 percent increase over the average fee of $261 last year, according to a survey by the National Society of Accountants.

Price shoppers can suddenly turn the conventional you-versus-your competitors matchup into you versus the prospect. In such a contest – and to avoid wasting time you could devote to preparing the returns of paying clients – maybe it’s best to anticipate your opponent’s first moves.

For example, About.com recommends several questions for comparison shoppers to ask. Many are commonsense and perhaps ultimately good for both you and the potential client, but nevertheless, you should be on your guard if you hear variations on:

  • Exactly what’s included in your fee?
  • Do you charge extra for e-filing?
  • Do you charge extra if I need a copy of my return or have questions later in the year?
  • Does your fee include a consultation?
  • How much do you charge if I’m audited?

Additional tantalizing About.com tips for taxpayers: “You may be able to obtain a lower price quote during a less busy part of the season,” and “It’s easier to negotiate prices up front before work has begun on [your] return.”

Heading off the problem

Sometimes making your freebies and discounts clear is the best way to head off bargain hunters and comparison-shopping potential clients. “I do not discount for the present year or following year,” said EA James Berardi in San Antonio. “I used to give free pizzas from my store, but you know … .”

“I no longer provide discounts,” said Susana Lozano, a CPA in San Antonio. “I used to take off about 33% for new clients. For about five years now, if potential clients are not willing or cannot pay what I charge, then I cannot help them.”

Some new-client procedures can block the problem, too. “My firm accepts new clients on a referral basis only, so this is not really an issue for me,” said Andre Jerry, president of MTG Incorporated Financial Management Services in Atlanta. “When it comes to new clients, I prefer quality over quantity.”

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