Busting some popular CPA pricing myths
Don’t let these myths prevent you from charging what you’re worth.
November 4, 2013
Editor’s note: Pricing myths abound in the CPA profession. David W. Cottle, CPA, explores several of these myths and debunks them in his book, Bill What You’re Worth. This column is an excerpt from that book.
Myth: CPAs should do the job first and worry about fees later.
Reality: There is always time to discuss prices.
You don’t work in the emergency room of a television hospital where clients are frantically wheeled in the door on a gurney with blood spurting from severed arteries. “Quick, she needs a financial statement for a meeting with her banker on Monday!!!”
You must make a profit to stay in business, even in recessionary times. It is in the best interest of clients for you to be solvent and prosperous so you can remain in business to serve them.
It is also in clients’ interest for the profession as a whole to be profitable enough to continue to attract high quality people to the profession to protect its future ability to serve the market.
Most accountants don’t understand that all they have to sell is time and information. Giving away either one reduces financial success and sends the wrong message to clients.
Myth: If CPAs raise their prices, they will lose many of their clients.
Reality: If CPAs raise prices, some clients might leave, but far fewer than anticipated.
I have coached hundreds of accountants through price increases ranging from 10 percent to 35 percent. Clients notice only when the increases approach 20 percent or more.
When I was a teenager, I was very concerned about what my peers thought of me. If you have teenagers, you may recognize this characteristic. I had to wear the right clothes and have the right hairstyle. I had to listen to the right radio station and dance the right dances. My father used to bring me down to earth by saying, “Son, you wouldn’t worry so much what other people thought about you if you knew how seldom they think about you.”
By the same token, I say to accountants, “You wouldn’t worry so much about what clients think about your prices if you knew how seldom they think about them.”
After 12 years of practicing accounting, followed by 30 years as a consultant to the profession, I have concluded that accountants are more price conscious than their clients! The clients who are most price sensitive are frequently your least desirable clients—the ones you would be better off without.
Myth: CPAs should raise prices only if demand exceeds supply.
Reality: If CPAs work smart, demand should never exceed supply.
No CPA should want to be booked every available hour because the result is the following:
David Cottle, CPA, consults with professional firms on profitability improvement, partner compensation, marketing, client service improvement, and strategic planning and management. He also provides advice at retreats, speeches, and seminars.