Price Check

I'm an EA in Hawaii and currently charging $3600 flat rate for 1040, 1120s, payroll for s corp owner/employee only (additional employees are extra), and I include various support, such as estimated tax planning, with this "inclusive" rate.

Scope is very well written and defined to defend against flat rate "support and peripheral work creep" problems.

I bill monthly ($300/month).

I truly try to provide excellent, caring, and attentive services. High level of customer service.

No bookkeeping or sales tax, etc, is included with this rate, however, and clients must provide a completed P&L and/or worksheets for everything.

I just talked to a CPA friend in Florida who charges about half that, and insists that I'm too expensive, and that I will lose clients (due to poor retention). He says that the competition is too fierce to charge so much where he is and he doesn't understand how or why I could be so high.

What are your thoughts and prices in comparison?

You're in Hawaii, he's in Florida. I'm in Illinois and I am not a CPA. I don't think you're overcharging.

That price seems pretty reasonable especially in Hawaii. Is any sort of year-end tax projection or year-end tax planning included with this price?

I first thought you were curious if you were undercharging.
You might be.
The better barometer is whether you are having retention issues not what someone in a very different market thinks.

Some practitioners view themselves as a cost center as it relates to clients, others view themselves as a value proposition. And the truth is that these two practitioner groups target two very different demographics of clients who have very different expectations regarding cost, value and service level. The "miserly" practitioners never seem to grasp this, because they've lived their whole life on just one side of the fence.

I agree with CaptCook. Look at your retention, growth, and conversion ratio to determine if your fees are too high, or conversely too low. Those are much better and actionable feedback.

I dare say you are low depending on difficulty of the returns. I added up what I charge for payroll, 1120S, and 1040 for a client and it is more than you stated, and is generally pretty clean and simple to do. Another client is $6800 for same work, but I also maintain their books (very simple, all bank feed activity and I know what everything is at this point).

Is there any planning or projection included in your flat fee besides estimated tax payments, which are pretty predictable unless a client with rapidly increasing income?

I can't remember from our discussions--do you have a flat fee for 1040-only clients?

I agree with CaptCook, best measure is your retention rate and not opinions of people in other markets. Also, we all know there is decreasing supply of tax preparers/accountants/CPAs/EAs relative to demand. Every prospect and new client I have received outside of referrals was told by numerous Firms that they are not accepting new clients.

I am a sole prop but sometimes I search the interweb to see if my rates compare to anyone that posts theirs. Now this link is a multimember firm in CA (an expensive state but it's not as high as HI). Based on their rates you may be undercharging.

https://www.liebcody.com/fees#:~:text=T ... %20records.

Interesting what they post on their website. I like some of it and may add similar info to my own site. Perhaps it'll knock out price shoppers before they even contact me.

I also like their basic but informative client assessment. I imagine some of the answers trigger an automatic "no" response for being able to offer services.

Yes, end of year tax planning is included, but the client must help (guess) with any projections and estimated net profits. It's mostly about just getting estimated taxes paid correctly for them.

Difficulty of returns is "simple". My target is professionals with $300-500K in gross sales and $200-$300K net profit. For clients grossing a million and netting $500K, I get an extra $1200 or so. More than this and I refer them away.

I also get another $1200 to $3600 for "turning bank statements into financial reports" (some might call that bookkeeping, but the service is very limited).

Flat minimum fee for 1040 clients is minimum $550. Sole props are $900. But I charge additionally for multiple states, rentals, etc.

In analyzing my own retention history at this price, there are technically no retention-related issues with these clients.

Sometimes clients expect me to be their personal assistant in spots (you all know these spots) and when I decline I get snarky
(sometimes angry) comments like "with all that I pay you!", etc.

"I'm not calling your child's day care places to pull your invoices for the child care credit", for example. "You must give me a number".

There is definitely some fee resentment-related feedback from a good-sized portion of clients. Maybe 10 to 20% will make these remarks form time to time.

Maybe this is a normal and reasonable ratio.

I almost never have any fee related remarks from clients but I am also not forcing them into specific fees, and they know in advance what my minimums are. If 10-20% do that with you, it may be a good indicator of your fees being on high end for the demographic...or they could simply be entitled jerks.

There is definitely some fee resentment-related feedback from a good-sized portion of clients. Maybe 10 to 20% will make these remarks form time to time.

Maybe this is a normal and reasonable ratio.

I feel like 10% is a pretty good indicator you're pushing the boundary and maximizing your value. As a friend of mine once put it: Is the pain worth the pay?
In other words, is handling complaints from 10-20% of your clientele worth the additional revenue? I think this is a personal preference dynamic.

I've lived in Hawaii and now live in Florida. Florida is a much lower cost of living state than Hawaii, so all expenses would be much higher in Hawaii.