Subscription Pricing

Hitherto, I have sold myself as being egalitarian. For instance, first in, first out. I charge an hourly rate and justify it that well-organized clients with the same return should not subsidize the disorganized client. I have a lot of work for one person but not enough to employ part-time staff. So I’m looking at some sort of subscription pricing, whilst retaining hourly rates for the simple returns that are early season bread and butter (I suppose that would be my “Bronze Plan”). I do not want simple returns that come in in March and who want their return without an extension (which is already part of my engagement letter). I do want more complex returns who want to engage with me multiple times throughout the year. I have lost one good client this year and suspect it was to a financial adviser.

Where does one start with subscription pricing? Can anyone recommend some unbiased reading? All I’ve found so far is from those selling services. After my rather bad experience with an automated system, I’m a bit cautious about jumping to another service, or trying to make my current one work, at least until I have figured out if this would work for my old-fashioned clientele.

Whatever I do, I do not want to alienate the good clients that are in and out early in the season and from whom I get over 100% recovery. Mind you, they will not last forever as they are primarily older.

Any and all thoughtful replies would be greatly appreciated.

From your clients' point of view, what's the benefit? Or are you going to simply give them a "take it or leave it" approach, like Intuit, Adobe, and their ilk do with software?

Your "good clients" (in and out early season) won't go for it, and as you said you don't want to alienate them, so yes, offer a "bronze" plan, which seems like it would be an annual payment in advance. For comparison, the vendors who serve us (professional software, CE, and tax research) usually offer discounts for early annual payments (e.g. in May 2024 for 2025 product/service).

I only see the other clients being happy if they are getting some kind of discount or bonus for their advance commitment to you, which is essentially what a subscription has always been (think magazines).

I have a lot of work for one person but not enough to employ part-time staff. So I’m looking at some sort of subscription pricing, whilst retaining hourly rates for the simple returns that are early

I don't see the connection between your two statements. What problem are you trying to solve, or what increased benefit are you trying to acquire? In other words, how will you measure the success of subscription pricing? At least I suggest you do an A/B type test, don't roll it out 100% all at once.

One more thing: having some or all of your clients on a subscription plan may affect selling your practice someday.

I suppose the issue with those who would benefit from more services is that I inherited almost all of my clients from retiring EAs and the clients have been allowed to think that “preparation” is an annual event with ad hoc discussions as and when required. Even my best clients wait until after the event to speak with me. So my thought is that if the bigger clients opt for subscription pricing, they might be more inclined to call me first.

Yes, I imagine there will be some discount involved but my thinking is that it would be a discount based on a higher price that covers more services.

Ach, maybe I’m chasing down a rabbit hole with my old-fashioned client base (including the young ones) but I thought it worth asking the question.

I don’t expect to sell my practice. Most of my list will grow old with me.

I am also a little confused. Subscription is great, but it sounds like you might be in a similar situation to me. i.e. a bunch of old-fashioned clients, who undoubtedly aren't going to be jazzed about a subscription model.

Why don't you simply require that any new clients will be extended?

A few points that might be helpful...


I have not tried subscription pricing for clients only needed tax preparation and tax planning.

I require automated subscription pricing for clients that need help with payroll, bookkeeping, or sales tax (we have a complex sales tax in Hawaii).

By the hour vs flat rates each have their pros and cons. Flat rate is "harder" but it can result in higher hourly income than charging by the hour if you do it right.

Strong scope language and engagement agreements are your friend for flat rate and subscription pricing.

ItDepends, the closest I get to subscription pricing is that I charge a flat monthly or quarterly fee but that doesn't include tax return or planning.

Telaxman, I am moving towards that idea and will probably implement it in advance of next season. My no-charge consultations will also not be available between January and the end of April - at least.

ItDepends, the closest I get to subscription pricing is that I charge a flat monthly or quarterly fee but that doesn't include tax return or planning.

Telaxman, I am moving towards that idea and will probably implement it in advance of next season. My no-charge consultations will also not be available between January and the end of April - at least.

Sounds good. Any change to make tax season less of a time-crunch is a good one.

I am going to attempt scheduling everyone's returns evenly through October 15th next year.

So, after much thought, I have decided to implement the following for next tax season:

Increase my minimum fee substantially. I have decided to try really hard at developing a client base of "100 clients that pay me $300 per year" rather than "300 clients that pay me $100 per year."

Following on from that, extensions for first year clients. Rarely is it the case that what they tell you in the initial meeting in the summer is what you get. More and more, clients seem to be holding information back then springing a new business on you during tax season.

Finally, require a non-refundable deposit of my minimum fee for new clients. (I'm not there with existing clients yet - it's just not my style.) I had a lot of new clients this year, acquired from a retiring EA, who baled after getting a draft return.

I pride myself on transparency. It's important to me as a consumer. However, putting this on my website is something I am wrestling with. I have a personality that is best described as "matter of fact." Heck, I was an association football referee for twenty years. So wording it without coming across as a complete pillock will be tough. For those who require a deposit, first year extensions or both, is this something you declare up front or do you save it for the initial call? Any other observations so that I don't bugger this up completely?

For any change besides an inflation increase, I tell them a couple of months in advance. The notice is short and polite. Works great.

I sold my first client on a subscription arrangement yesterday. I'm definitely looking to transition more folks that direction.
This particular client will be at $225/month starting July 1. Their service package will include two in person meetings, tax planning, and their annual tax return.

I pride myself on transparency. It's important to me as a consumer. However, putting this on my website is something I am wrestling with. I have a personality that is best described as "matter of fact." Heck, I was an association football referee for twenty years. So wording it without coming across as a complete pillock will be tough. For those who require a deposit, first year extensions or both, is this something you declare up front or do you save it for the initial call? Any other observations so that I don't bugger this up completely?

Like you, I also think it's important to let clients know about these policies. I have a page on my website specifically for new clients, and I added my new policy a few weeks ago, so I don't know how it will work out yet. The policy itself is a little less harsh than yours (auto-extension after a specific date and the required deposit is less than the minimum) but it's the same general idea as yours.

To a certain extent, the reason I made the decision to add it to the website was because (1) it might make people feel blindsided if I don't; and (2) a potential client who wants to offload their headaches on me at the last minute and demands it to be done by 4/15 is garbage-tier and I really don't want them in my practice, so if they see that policy and decide to not contact me it's a victory.

If you're worried about the wording, I'd just have your spouse/mistress/priest proofread it for content and tone before putting it up. But that's just me.

I tried the "in by a certain date" thing this year and it didn't work. Part of that was three lost weeks to my wife's illness, but part of it was clients uploading stuff at the last minute or uploading bit by bit. My deadlines are already pretty strict for the locality. That's because a couple of years ago I decided the 16-hour days were something I had to get away from, but I seem to be an outlier locally.

I don't have a priest and I was incredibly lucky to get one woman in my life, so no mistress either. I suppose it'll have to be my wife. She is a former psychiatric nurse who dealt with Megan's Law offenders and people too sick to be tried for murder. You survive in that job by being a good communicator so I'm sure she will smooth off the rough edges of whatever I write.

CaptCook, I decided not to go for subscription pricing for individuals. I have a few decent sized businesses but most of my work is with individuals who have rentals. For the most part, I serve moderate income clients. I am going to develop a plan to bill monthly bookkeeping work (certainly for new clients) on subscription. Hopefully that will encourage them to deliver books timeously.

I sold my first client on a subscription arrangement yesterday. I'm definitely looking to transition more folks that direction.
This particular client will be at $225/month starting July 1. Their service package will include two in person meetings, tax planning, and their annual tax return.

Nice - was that for a 1040? What's the complexity level?

I too am starting to implement subscriptions for new clients and getting basically no push back, but at around $100/month for straightforward Sch. C 1040, tax planning, and two not in person calls. Too low maybe...

Nice - was that for a 1040? What's the complexity level?

This is one Sch C. Not a separate entity filing. I anticipate a little more handholding to start with, but I would never go below $200/month for a subscription arrangement. At $1,200/year...Why bother with subscription pricing?
My thinking with subscription pricing is that you want to end at a place that is greater revenue/client than the existing model would otherwise generate. To do so, I decided I have to come to the client with a package that is in excess of your typical level of service.

My initial goal is 100 relationships at $5K/relationship. That'll be a rather lateral move revenue-wise, but should represent a meaningful step down in administration time/effort. I serve about twice that number of relationships currently.
I'm trying very hard to not let perfection be the enemy of good, which runs very counter to my nature.

I’ve started experimenting with this with new prospects this past week. So far it hasn’t been resonating with them.

1040 with 10 rentals: $250/m for return and 2 planning meetings during the year. Was paying $1,200 previously. But had additional fees for projections and consultations.

1040 + 1120S: same as above, but at $350/m.

Trying to price the model to get full return pricing plus five hours at $350/hour. The pricing has to be high enough to hire a senior accountant that can do tax advisory and maintain firm margins.

If a senior accountant can have 70 to 100 relationships and that’s all they work on, plus they are up to speed due to planning meetings during the year, and make $150K a year, that sounds much easier to recruit and scale.

Still trying to figure out a sellable model that meets that criteria. Small sample size as of now.

I tried the "in by a certain date" thing this year and it didn't work. Part of that was three lost weeks to my wife's illness, but part of it was clients uploading stuff at the last minute or uploading bit by bit. My deadlines are already pretty strict for the locality. That's because a couple of years ago I decided the 16-hour days were something I had to get away from, but I seem to be an outlier locally.

I wasn't trying to imply that your policy is wrong (if anything, it sounds like you're saner than your local colleagues) but was just mentioning the differences in what I'm doing in case the type of policy might affect how clients react to it. We all craft policies specific to our firm and local issues and I'm not facing the same issues you are. At least, not yet.

At $1,200/year...Why bother with subscription pricing?

That's my view as well. In my practice I don't send out invoices under $100, so the math lines up there too.

If a senior accountant can have 70 to 100 relationships and that’s all they work on, plus they are up to speed due to planning meetings during the year, and make $150K a year, that sounds much easier to recruit and scale.

It might be my trauma from a former employer, but 70-100 year-round relationships sounds like a lot unless you're counting the individual separate from the business side.

Just sold my first one at $350/m for S Corp + 1040. Minimal complexity (employee benefits agency), no books or payroll. Includes the returns, an initial planning meeting, and two review meetings during the year.

Seems like a win-win and scalable (we’ll find out as we go). Selling advisory so far seems much easier when it’s an entity return included versus a real estate investor with multiple rental properties or Schedule C.