H&R Block Up-Front Transparent Pricing

I've had new clients come to me (usually via referral from one of my existing clients) after being 'burned' by a surprisingly high tax prep cost from H&R Block.

Based on this new strategy, which indicates they know they had a problem -- I wonder if they will now see a spike in client retention.

I think they’ll have better retention, but lose many new clients. In our market they are more expensive than most EAs and CPAs (for simple 1040s).

I just had a cancellation and the fellow told me that he went online at HRB and got a price lower than mine! I was only charging this fellow $130. For 2017 it was a 1040 MFJ with Sch A. So I asked him what quote he got, he says $75. I don't think that is correct because I have NEVER seen such a low price from HRB.

Concerning HR's flat rate. Its a little "bait and switch" if you investigate their site. Sure its $59 for fed and $59 for a state (local and school not included). So roughly $120 for a "Postcard" 1040 and state. Now when you read the fine print, they point out all other forms and schedules vary in price depending on complexity. So they really have not changed anything other than they give a flat rate for what was a 1040EZ return. Same crap in a new package.

I attended the IRS National Forum - in one class behind me were 2 managers of 7-Jackson Hewitt Offices, they said their "average" return was $400

I think it might vary by market, but I believe the "online" version of their service is well below $100 for federal and one state for a simple tax return.

They have to be careful here because they can easily cannibalize their own base...once the franchise owners start seeing YTY profits decline by double-digits they will start to bail out.

You are correct. They lure folks by quoting a fee below $100 and then as you enter more W2, 1099-R etc. it keeps on going up. They they have those add on products that cost extra. By the time you are done you may be close to $200!

$130 for a tax return? It would not even be worth my time to consider it. Someone that has a return that simple just needs to buy TurboTax.

If anyone brings up consideration of H&R Block or LIberty, I start to encourage it. Those filers have a different mindset I do not enjoy dealing with, even if they actually would pay me less in the end. Rarely have I seen where H&R ended up being cheaper than I would have been because their practices are so misleading.

I think it might vary by market, but I believe the "online" version of their service is well below $100 for federal and one state for a simple tax return.

They have to be careful here because they can easily cannibalize their own base...once the franchise owners start seeing YTY profits decline by double-digits they will start to bail out.

The H&R Block in my town closed up shop (although thankfully there's another preparer in town that will sponge up those returns).

It's not just anecdotal. Per the most recent 10-K, the number of returns prepared by an H&R Block human has decreased over the last couple years, especially at the franchise locations, and the number of franchises have been declining. I would expect that the franchised locations are less ideal in general than the company stores, which when compounded with a 30% royalty fee makes the entire business model of a franchisee extremely difficult at the best of times.

In my area - Yelp reviews are big - HRBs are awful, angry folks who rage about being ripped off - its fun reading.

$130 for a tax return? It would not even be worth my time to consider it. Someone that has a return that simple just needs to buy TurboTax.
.

Well in depends on the market. $130 is about the average for a non itemized return in my neck of the woods!

Well in depends on the market. $130 is about the average for a non itemized return in my neck of the woods!

Wow. $225-250 is about as low as you'll get around here with a CPA for the most basic 1040.

$130 for a tax return? It would not even be worth my time to consider it. Someone that has a return that simple just needs to buy TurboTax.
.

Well in depends on the market. $130 is about the average for a non itemized return in my neck of the woods!

Same here. Unless they go to HRB then its more. We have a good reputation for not raking people over the coals and treat them as family.

$130 for a tax return? It would not even be worth my time to consider it. Someone that has a return that simple just needs to buy TurboTax.
.

Well in depends on the market. $130 is about the average for a non itemized return in my neck of the woods!

Same here. Unless they go to HRB then its more. We have a good reputation for not raking people over the coals and treat them as family.

I am in a small town and word spreads faster than fire! We do a lot of family and friends so we have to be very careful not to get labelled same as chain stores. Honestly there is no reason to engage a CPA to do your run of the mill 1040 returns

I work out of my home, I have no employees and my profit margin is over 90%. My retention rate is over 90%. I laugh when I pick up a client who paid $600 for a $200 tax return. $130 is not unusual.

I am in a small town and word spreads faster than fire! We do a lot of family and friends so we have to be very careful not to get labelled same as chain stores. Honestly there is no reason to engage a CPA to do your run of the mill 1040 returns

Agree, but some clients feel more comfortable with a CPA doing their simpler 1040s. I freely tell people if they have a simple 1040, use TurboTax and avoid the tax chains.

On a side note, was working on a new client's taxes yesterday and saw his 2016 invoice from a non-CPA preparer. Good grief, it was two pages long with itemized prices per page or form. I cannot fathom coming up with costs that way, let alone presenting it to clients.

I am in a small town and word spreads faster than fire! We do a lot of family and friends so we have to be very careful not to get labelled same as chain stores. Honestly there is no reason to engage a CPA to do your run of the mill 1040 returns

Agree, but some clients feel more comfortable with a CPA doing their simpler 1040s. I freely tell people if they have a simple 1040, use TurboTax and avoid the tax chains.

On a side note, was working on a new client's taxes yesterday and saw his 2016 invoice from a non-CPA preparer. Good grief, it was two pages long with itemized prices per page or form. I cannot fathom coming up with costs that way, let alone presenting it to clients.

Agreed! Some people like the letters after the name and feel more comfortable. But then they need to pay the freight!

I have seen invoices with a per form charge and generally speaking these preparers at one time worked for a chain store or other shop that based their billing on the # of forms, W2 etc. I just saw one invoice where the basic 1040 was $75 and then a $5 to $25 charge for other forms. This return had 4 W2 and 1 1099-R so they paid $5 per input of those.

it was two pages long with itemized prices per page or form. I cannot fathom coming up with costs that way, let alone presenting it to clients.

Charging by the form/worksheet is quite common, which is why it is supported by the major software packages for tax pros. I agree that presenting the detail to the client rarely makes sense. The benefits of this charging method are that it takes little time, it's easy to give the client an estimate of the fee before the work is complete, and it's easier to explain a big change from one year to the next, since the exact extra forms and worksheets will be part of the invoice detail.

$130 for a tax return? It would not even be worth my time to consider it. Someone that has a return that simple just needs to buy TurboTax.

If anyone brings up consideration of H&R Block or LIberty, I start to encourage it. Those filers have a different mindset I do not enjoy dealing with, even if they actually would pay me less in the end. Rarely have I seen where H&R ended up being cheaper than I would have been because their practices are so misleading.

Same here. When I encounter a potential client who is constantly asking me why my fees are so much higher than Hr Block, I don't even explain it to them and advise them to go with HR Block.

Some newer to the business accountants may take a client like this, but thankfully, I'm in a place where I can be selective about the types of clients I take on.

In my neck of the woods a few tax preparers hand out $20 discount coupons to just about anybody who asks for one! One fellow told me that he basically prices with that $20 discount factored in because people like to see an invoice that has a discount and they feel they got a deal