Consequences of Overcharging?

What if you were getting a ton of referrals in a certain niche, and had to turn most of them away.

Due to supply and demand, your fees ended up grossing you about $600+ per hour.

Clients are not companies, but middle class taxpayer-types.

I'm not talking about billings from a big firm here - just mom and pop.

Quotes rates are very clear in advance. Services provided are accurate, polite, and responsive - but priced well on the very high side for the work being done.

This could be bad why?

Sounds like an excellent business model to me. It's not so much about how much you bill or earn per hour, as long as the value you deliver to the client matches what they perceive and pay for, it's a win/win.

IMO, it's only bad if you (or your employees) brag about it. If this is your business, then congrats. It's not like you're bulling out every hour, such as training and seminars.

IMO, it's only bad if you (or your employees) brag about it. If this is your business, then congrats. It's not like you're bulling out every hour, such as training and seminars.

I agree with Cathy. I will just add one point. If by chance another tax preparer makes in roads into this niche you will have to adjust your fees to match what the market will bear. As you say it is supply and demand

Good for you - I see nothing wrong with honest, full disclosure Tax Preparation and Tax Representation.
Be well versed when informing clients of their reporting obligations (under the Penalties of Perjury)
to report all cash transactions (and to file Form 8300) if they received more than $10,000 in a transaction,
and for the crime of "structuring cash transactions" (2-or more parts over 10-grand).
You are in a tourist economy with mega cash transactions, big risk and horrible consequences, if they don't comply.

I'd be willing to say that if you're being inundated with prospects willing to pay you those rates, it's because they're seeing value that perhaps you're not.

Maybe your professionalism and communication is above and beyond your local colleagues, and they have no problem paying for that level of service.

I think it's a strong opportunity to move into that niche further. And possibly shed some low-margin, high-headache clients in the process. I wouldn't pass it up.

This could be bad why?

Sometimes people get ornery when they see their service in a dollars-per-hour context (just like when their auto mechanic charges $110 per hour, they go nuts). But if you don't give them reason to see it in a dollars-per-hour context, they wouldn't even think that way.

But honestly, it's fine. You're providing value to the client and billing for it. All good.

Nova - are you assuming facts that are not in evidence? Accepting cash is not a crime as far as I know.
Sounds like you are charging fairly for the value received.

Nothing wrong with it, it is called value pricing which should not be mistaken for "budget pricing." I have quite a few tax returns with an effective rate of $400-700/hr. I also have routine monthly work with similar effective rates. I avoid hourly billing structures, though I still communicate my "technical" hourly fee but my clients know I rarely charge by the hour. I could triple my hourly fee but it would not really alter my billings.

I think your premise needs changing.

Are your clients complaining about your rates? They is the only real arbiter of value and the only party that could make a statement regarding "overcharging".
How many times have you charged your hourly rate for work and had the client complain about the bill being too high? That means that an hourly rate is no more "true" determination of value than a spot on a dartboard. Most of us aim to ensure the value we deliver is higher than the price we charge. If you're running somewhere below that line and making a profit, you're doing it right.
Dump the low margin work; grow the high margin work; work less; make more money. Everyone is happy!

Can you share what the niche is = that's a very nice hourly rate for a modest size firm with middle class clients.

Missing i like your comment - i think the clients that are not self employed can get a little sticker shock when you put in an hourly rate.

Hawaii General Excise Tax preparation and filing services (among other Hawaii specific issues such as non-resident withholding on property sales [HARPTA])

Hawaii GE tax is like a sales tax, but it's imposed on all self employment, business, and rental incomes (very far reaching).

We have verified practitioner access to e-file them, and through 10 years of trial and error (blood and tears), and a back-line communication with the technical form creating department, we know a lot about the ins and outs of this tax, which is not always straight forward.

We are getting $99 per filing and we often have out of state inquires that need multiple filings. Sometimes 4, 8, or 12, just for example.

I've blogged and blogged about it and recently made a YouTube video and the inquiries come in nearly every day for help with them.

Some inquires say it's too expensive and do not proceed, but some of them do.

We can file 8 of them for one client, for example, in just a few minutes.

But I don't feel like the value clients are getting us is from "how hard we work".

They are paying for "what we know".

You're open and up front, and people value that service, and your ability to get it done easily and correctly.
Hopefully you don't turn them around the same day, let the people think you worked for the money a little bit, but I see no reason to change. I would likely happily pay someone $100 to file a form I had no idea how to file and needed it done.

But I don't feel like the value clients are getting us is from "how hard we work".

They are paying for "what we know".

I know a lot of people who work really hard and get little in the way of results. I would not rely on them to do very much and wouldn't pay them much to do it.

People want results. You deliver that. You made an investment of time and now that is your asset you leverage well. There is nothing concerning here and you are very transparent about it. As Recked said, I'd happily pay $100 to get a form done right.

Yeah but if they need 8 of them it's $800. But still, based on these replies, I don't plan to lower the fee.

Yes, we stall on delivery a bit, and if someone comes in person, we never "knock it out" while they wait.