2022 Drake Software Price Survey

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#1
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These prices are so insane (low)!

Who here charges only $480 for a federal tax return with a schedule C and one state?!

Preparers with no designation (no CPA/EA) average price for a form 1065 is $427 and for a 1041 is $382.

Firms who prepare more than 1000 returns/year average 1040 price is $165 (and $264 for a 1040 with a schedule C) [no state]


https://www.drakesoftware.com/content/d ... ry=TSDRAKE


wow
 

#2
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Someone from this forum contacted me last night about these averages and we had a brief rant about it. I know this has been discussed in prior years...don't they only survey Drake users? I have a suspicion the average Drake user charges far less than a lot of us are willing to charge for tax compliance (I know plenty on here are also Drake users). Also, how many of these companies are predominately tax vs. other services?

Even if you pay for unlimited returns in tax software, think how many returns need to be prepared at $165 for a 1040 before breaking even. THAT is insane...not to mention overhead and the value of mental sanity.
 

#3
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Almost all of my clients are in the 95th income percentile for the USA. A respectable portion are in the 98th income percentile. It makes sense that I'm well above the average in these reports when we take that into consideration.

Strip mall preparers who don't have a professional designation and focus on volume aren't in the same business as us and they're not comparable. Because of this I consider these surveys pretty useless. They might be useful if they segment based on target client demographic or firm type.
 

#4
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I have the same line of thought--this is beneficial for retail preparers, not those with designations/licenses. A PTIN does not count. Still, I know plenty of CPAs that are completely willing to kill themselves with work while charging 30-50% of what they should be charging, while other CPAs are at asinine fees. I try to land in the middle.
 

#5
AlexCPA  
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CornerstoneCPA wrote:...other CPAs are at asinine fees.


Alex here from the "asinine fees" camp -- I'm dictating this response to be posted by my assistant and humble servant Francoise as I enjoy a caviar breakfast after having completed my morning routine.

In the shower, I use a water-activated gel cleanser, then a honey-almond body scrub, and on the face an exfoliating gel scrub. Then I apply an herb mint facial masque which I leave on for ten minutes while I prepare the rest of my routine. I always use an after-shave lotion with little or no alcohol because alcohol dries your face out and makes you look older. Then moisturizer, then an anti-aging eye balm, followed by a final moisturizing "protective" lotion.
Even more of my antics may be found on YouTube:
https://www.youtube.com/channel/UCXDitB ... sMwfO19h7A
 

#6
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There is an idea of an AlexCPA. Some kind of abstraction. But there is no real you. Only an entity, something illusory.
 

#7
AlexCPA  
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Haha, yes! I gotta go, I...have to return some videotapes. :D 8-)
Even more of my antics may be found on YouTube:
https://www.youtube.com/channel/UCXDitB ... sMwfO19h7A
 

#8
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USA
Those must be Drake users only. That fee schedule made me cringe.
 

#9
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The new survey is out, and once again, I can't help but to be amazed and even a bit upset at what practitioners are charging.

41% of Drake users are CPAs.

25% are EAs.

Out of the CPAs (only), the average fee for a 1040 with Schedule C and a state return is $573. That's the average CPA-specific rate for a Scheduled C return!

For EAs only, the average fee is $428.

The regional differences are not drastic.

Also, out of all surveyed, 25% of them answered that they would keep their fees the same in 2024 (not even a 1% increase).

I understand that not everyone will raise their fees each year. But 25% surprised me. 1 in 4 professionals will not even raise by 1%?

It seems that many tax professionals significantly undervalue themselves and the market. Maybe it's just Drake users because Drake is cheap (note: I use Drake - I'm not calling you cheap).

https://info.drakesoftware.com/l/995112 ... raphic.pdf
 

#10
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I think the fact this is a Drake survey of Drake users significantly influences the data. While I know a lot of credentialed tax preparers undercharge, I have a hard time believing the profession as a whole resembles this survey. Additionally, not even a 1% increase? I'm increasing tax prep by 20% in 2024 unless existing clients prepay what they paid for TY2022 (a good chunk have since we're all worn out with price increases).
 

#11
Beagle  
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Why do people care so much about what someone else charges?
 

#12
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I don't care that much. But, there's no doubt it distorts expectations for those prospects who walk across the tracks and want a change to a higher caliber tax professional. And it takes time (our time) to reset those expectations.
 

#13
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Beagle wrote:Why do people care so much about what someone else charges?


Excellent point. Here is the most important reason I detest people undercharging in our industry...it creates a narrative that people don't make enough money for what they do. With rates like this, that might be the case for them. I don't feel that's the case for me, but it makes it very difficult for our industry to be attractive to the next generation of professional when there is enough evidence to support that fact.
If someone wants to be a discount provider, that's their prerogative, but many of these folks aren't what I would consider discount providers even though their rates suggest that's the case.
~Captcook
 

#14
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Beagle wrote:Why do people care so much about what someone else charges?


Simple--it impacts EVERY SINGLE INDIVIDUAL in the profession, current and future. Charge based on your actual value. If you suck, be the cheapest (or better yet, EXIT). If your niche is blue collar, be inexpensive. If your niche is higher net worth or business owners, charge a heck of a lot more!

My MIL uses an EA to prepare her taxes. Out of curiosity, I asked her if she would mind telling me what she paid for her tax prep for 2022. Granted, it is a very basic return and I would have charged my current minimum of $550, but she paid literally half that and thought it was "a lot" despite making $100k. Actually, she paid less than my minimum fee for one return because she also paid for my SIL's tax prep at a little bit less than $275 (my SIL had "maybe" $28k of income from 2-3 jobs that year).

My tax prep fees TY2022 ranged from minimum of $550 to over $7k for an S-Corp that was severely behind. Most fall in the $800-4,800 range, which covers all returns I prepare. Can you imagine a Drake user charging that much? Not based on the survey!

Create value and increase the perceived benefits of your profession. If not, you are ruining it for the ones that do care and absolutely suppressing the market value of our businesses.
 

#15
smtcpa  
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Beagle wrote:Why do people care so much about what someone else charges?


I agree with CaptCook and Cornerstone. It's the competition and it's important we understand what we're up against. I don't know any business that does not benefit by knowing it's competition. We don't operate in bubbles. If you're lower than the data, then you should be significantly raising prices. If you're a lot higher, you should know you need to compete on the value you provide.
 

#16
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Beagle wrote:Why do people care so much about what someone else charges?


A major practitioner in my area is an EA with a volume practice. They are past retirement age and charge less than $100 for an itemized return including state. This creates extreme downward pressure on tax return pricing throughout the county and that anchors pricing expectations.

I spend a lot of time each year talking to potential new clients who hate the service they get from that practitioner, but aren't willing to pay for better service -- although I'll admit that it's not the worst thing to not serve these clients. I'm just worried about what happens when that practitioner retires (willingly or unwillingly).
 

#17
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missingdonut wrote:I'm just worried about what happens when that practitioner retires (willingly or unwillingly).


I wouldn't be worried. That's where I gained many of my clients last year. In some cases, I was tripling their rate, but I was the only professional that called them back.
The market will reset to an appropriate rate, but these folks that give away their service aren't doing anyone a favor including themselves.
~Captcook
 

#18
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missingdonut wrote:
Beagle wrote:Why do people care so much about what someone else charges?


A major practitioner in my area is an EA with a volume practice. They are past retirement age and charge less than $100 for an itemized return including state. This creates extreme downward pressure on tax return pricing throughout the county and that anchors pricing expectations.

I spend a lot of time each year talking to potential new clients who hate the service they get from that practitioner, but aren't willing to pay for better service -- although I'll admit that it's not the worst thing to not serve these clients. I'm just worried about what happens when that practitioner retires (willingly or unwillingly).


Quote your value and don't look back
 

#19
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CaptCook wrote:I wouldn't be worried. That's where I gained many of my clients last year. In some cases, I was tripling their rate, but I was the only professional that called them back.


warnickcpa wrote:Quote your value and don't look back


Oh, I did not communicate that well :oops: I have no problems with quoting my value -- it's so much easier when the other practitioner's charges aren't remotely close to my own -- I'm more worried about my phone blowing up with people who will never be happy with me! :lol:
 

#20
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missingdonut wrote:I'm more worried about my phone blowing up with people who will never be happy with me! :lol:


I get that for sure. I had to create some low burden screening mechanisms last year to keep myself from spending 20-30 min on the phone with dozens of people who were not a good fit at all.
After I implemented my questionnaire, I could easily let my admin email them back that we weren't a good fit.
~Captcook
 

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