CPAs: How To Price Your Services

It can be challenging to know how to price your services when starting as a freelance CPA (or even a CPA with a regular client book).

On the one hand, you want to attract new clients and grow your business. But, on the other hand, you don’t want to spend hours on work that you know you should be paid more for. Even worse is attracting so many clients at low rates that you find yourself overworked and underpaid.

Consider these strategies when determining how to price your services:

Billable Hours: The CPA Standard

The billable hours method is the traditional model for CPA firms. It allows firms to set an hourly rate for their clients and charge based on the time spent working towards fulfilling a client’s needs. It’s straightforward and makes it easy for CPAs—you just run the clock and bill the hours.

For clients, though, it’s not an optimal fee structure—they’d rather know upfront what they’ll be spending. For that reason, some consider this an obsolete way of pricing services.

Billable hours can, though, be best for projects where the scope of work is difficult to estimate and you don’t want to shortchange yourself if the project grows larger than you anticipated. Keeping specific clients on a billable hours method may also be preferable if that’s what they’re comfortable with and it’s not worth rocking the boat.

Fixed Pricing: With Tiers

Fixed pricing allows the client to plan for the cost of their accounting services. When moving away from an hourly fee structure to a fixed pricing model, it's important to truly understand your client’s needs before providing them with a fixed price for your services.

You do that by meeting with them to understand their expectations for your work and their needs fully. Once you have clarity of their requirements, you can provide them with a fixed fee contract that suits both you and them.

Typically a firm or individual CPA will provide a potential client with three different fixed price options. For example, they might be called a Bronze, Silver, or Gold contract. The Bronze level would be bare-bones and provide minimal services with established caps, and the Gold contract would provide the client with a full range of services. The Silver would fall somewhere in between.

When setting up the fees for each contract, it’s essential to understand the time you will be performing the work and make sure not to underprice yourself.

Value Pricing: Customized by Client

Like fixed pricing, value pricing also involves having a conversation with the potential client to understand their needs and form a sense of how much time will be involved to meet their requirements.

However, unlike fixed pricing, this type of pricing is different for every client. Instead, the CPA provides each client with a pricing package-specific only to them.

This tailored pricing structure typically makes clients the happiest since they pay only for services they truly need. However, keep in mind that the value is subjective, meaning the client has to agree they will receive value for the amount you will be charging them.

Also, when it comes to value pricing, it’s important to have a clear understanding of specific transactions or activities that you will handle to avoid extra unpaid work (also known as scope creep).

Have Questions?

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About Dark Horse CPAs

Dark Horse CPAs provides integrated tax, accounting, and CFO services to small businesses and individuals across the U.S. The firm was founded to save small businesses (and their owners) from subpar accounting and tax services and subpar client experiences. These small businesses are Dark Horses among their larger and more well-known competition. Being a Dark Horse CPA means advocating for small businesses by bringing them the tax strategies and accounting insights previously reserved for big business. To learn more, visit our website.