Ready to raise your fees? Download the Price Increase Letter Templates from Poe Group Advisors, with ready-to-send versions for a 20% and a 30% fee increase.
Key Takeaways
- Most accounting firms under-bill, often because a small group of vocal clients skews their sense of what clients will pay.
- Accounting clients are generally service-sensitive, not price-sensitive.
- Brannon Poe, founder of Poe Group Advisors, recommends moving to market rates in one step rather than through small incremental increases.
- Firms can test a price increase on a random 5% of clients before rolling it out more broadly.
- Poe Group Advisors offers two price increase letter templates (20% and 30%) to help firms communicate new fees clearly.
The Art of the Bill: What Accountants Can Learn From Lawyers
Say what you will about lawyers, they are not afraid to bill. Brannon Poe, founder of Poe Group Advisors, learned this early in his career as an auditor. One of his first jobs as a staff person was reviewing the legal and professional account for an audit client. One invoice stood out: a long statement with an inordinate level of detail for each block of time. The very last line item said it all: “Preparing this bill: 1/2 hour.”
No one is suggesting accountants imitate that practice. But the story highlights a sharp contrast between how other professionals bill and how accountants typically bill. Good billing requires courage and diplomacy, and according to Poe, the majority of accounting firms don’t bill with the confidence they should. Instead, they under-bill.
Why Do Accountants Under-Bill?
The biggest reason is perspective. Accountants tend to be a frugal group, and Poe admits he has been accused of being “financially prudent” (or worse) more than once. Thrift is a wise trait in life and business. It works against accountants, however, when deciding what their professional services are worth.
It’s human nature to assume others share the same point of view. A careful spender may assume clients are careful spenders too. In reality, most clients are not. In public accounting, price is a relatively unimportant consideration. Clients are service-sensitive, not price-sensitive, a finding that national client surveys have consistently supported.
How Vocal Clients Distort Accounting Fees
Every accounting firm has clients who complain about their bill every year. Every business that serves the public has customers who push back on price, so this should be expected.
The real problem is when that vocal minority starts influencing what the firm bills everyone else. It’s a classic case of the tail wagging the dog. Poe recommends going through the client list, isolating the vocal few, and putting them in proper perspective.
Poe Group Advisors has seen countless firms roll out price increases with little to no pushback, which tells them they had been underpricing for years. No client will tell a firm it is charging too little. It’s up to the firm to find the boundary.
Are Accountants Worth More Than They Charge?
In most cases, yes. The accountants Poe Group Advisors works with are typically highly skilled, conscientious, and deliver excellent service. Yet they consistently leave money on the table.
Under-billing affects the entire profession. Low fees suppress staff salaries, which pushes many young graduates toward other fields. University accounting professors see students making that choice every year.
Accounting is also a demanding, multi-faceted profession that requires substantial training and talent. Accountants invest heavily in their education, whether a bachelor’s, graduate, or terminal degree, and pay considerable dues as entry-level staff.
Tax and accounting may come easily to experienced professionals, but for most clients it is unfamiliar and sometimes intimidating territory. Helping clients navigate financial and legal complexity is an indispensable service. The question is whether accountants value that work as highly as their clients do.
Poe compares it to how people view their personal physician. Most people could never do what doctors, nurses, and medical technicians do, and they respect them for it. The best accounting clients see their accountant the same way, and they are content to pay a reasonable market price for a difficult job done well.
How to Raise Your Accounting Fees in 5 Steps
For firms that know they are under-billing but hesitate to raise fees across the board, Brannon Poe recommends five steps.
1. Start small
Randomly select about 5% of the client base. The selection should be random so it includes clients expected to respond negatively. Plan to bring this group to market rates. (This assumes the firm knows its local market and what it will tolerate. If not, research comparable pricing first.)
Then analyze each client in depth. What value does the firm add to their business? How much time do they require? What additional services could the firm offer? Are current fees in line with the service delivered? Summarize the findings in a simple schedule and let the numbers tell the story.
2. Take action
Many firms are tempted to raise rates incrementally. Poe advises against it. Move to market value in one step. For many clients, the increase will be small and easy to accept. A well-written letter is often all that’s needed, and modest increases frequently go unnoticed. The Poe Group Advisors Price Increase Letter Templates provide ready-to-send language for both a 20% and a 30% increase.
3. Be direct
Clients facing larger increases should hear about it in person, at the next scheduled meeting. The accountant should explain that the account has been analyzed in detail and that the fee will be raised to a specific amount next year, then explain why.
The order matters. Opening with a long list of everything the firm does and ending with “by the way, the bill is going up” backfires. It raises the client’s anxiety, invites them to imagine a bigger increase than the one proposed, and makes the firm look defensive about whether the increase is justified.
4. Get creative
The client analysis often uncovers additional services the firm can offer. Presenting those in the same meeting means walking away with both a fee increase and new work. It’s also a good time to ask for a referral. Most clients won’t be fazed, and many firms are pleasantly surprised by the response. Again, it’s not all about price.
5. Repeat as necessary
Once the test group confirms the market will support higher fees, apply the same process to the next segment of clients.
Frequently Asked Questions
How much should an accounting firm raise its fees?
Firms should raise fees to current market rates in a single step rather than through small annual increases. Poe Group Advisors offers templates for both 20% and 30% increases, two common ranges for firms that have been under-billing.
Should accountants raise prices incrementally or all at once?
All at once. Brannon Poe recommends moving directly to market value, since small incremental increases prolong under-billing and require repeated client pricing conversations.
Will clients leave if an accounting firm raises its prices?
Most will not. Accounting clients tend to be service-sensitive rather than price-sensitive, and Poe Group Advisors has seen many firms raise prices with little to no pushback.
Should a fee increase be communicated by letter or in person?
Both have a place. Modest increases can be handled with a letter. Larger increases should be discussed in person, stating the new fee first and then explaining the reasons.
Where can accountants find a price increase letter template?
Poe Group Advisors offers two Price Increase Letter Templates, one for a 20% increase and one for a 30% increase, through its Accounting Practice Academy.
Download the Price Increase Letter Templates
Poe Group Advisors created two Price Increase Letter Templates to help accounting firms test their pricing strategy with confidence:
- 20% Fee Increase Letter Template
- 30% Fee Increase Letter Template
This article is adapted from Accountant’s Flight Plan by Brannon Poe, originally published by CPA Canada and the AICPA.
