Page 16 - JoFA_2022

FIRM PRACTICE MANAGEMENT

‘You can highlight the RECOMMENDED STEPS FOR RAISING FEES
Economic disruptions or not, there are some
ways you’ve delivered value steps practitioners can follow when approaching
fee increases.

in the past and discuss Set policies and aim high
When he ran his firm, Peterson set and stuck to
certain fee principles. For example, he advised
future opportunities to do raising fees every year, even if only by $5 per hour,
to prevent stagnating or backsliding. Failing to
the same.’ do so could mean that fees for current clients fall
below market fees or don’t keep up with the rate
of inflation, he said. “Clients are smart and expect
to have annual increases as inflation impacts every
Jon Lokhorst, CPA, a coach and consultant at Lokhorst Consulting LLC in other part of their life,” he said. “CPA services are
Andover, Minn.
no different.”
Peterson also recommended billing as much
as firms two to three times larger than yours do.
“There’s no value in being the lowest in town,” he
said.
CONSIDER EXCEPTIONS AS NEEDED That’s especially true if you plan to be involved
Raising fees does not mean that firms can’t pro- in merger or acquisition negotiations down the
vide a discount to certain clients if circumstances road, since many potential M&A partners won’t be
require it, said Carl Peterson, CPA, CGMA, interested in a firm with below-market fees. Low
AICPA vice president–Small Firm Interests. That fees can also make it harder to offer compensation
way the firm can keep fees at market level while that will attract and keep quality staff, he said.
making an exception for some as appropriate. To learn more about average fees in your
Another option for valued clients experienc- region, the benchmarking information in the
ing cash flow issues is to offer them deferrals or AICPA PCPS/CPA.com 2021 National Manage-
payment plans, Lokhorst said. “In those cases, be ment of an Accounting Practice (MAP) Survey
clear about the exception you’re making and your (available at tinyurl.com/ycknq28o) “is the
plan to get back to your normal financial terms premier place to find out what others are charg-
down the road,” he said. ing,” Peterson said. In addition, most metro areas
Remember that discounts or deferrals should have formal and informal networking groups of
be the exception and not the rule, said Peterson, firms run by state societies or local chapters that
who previously owned a six-person firm. In share best practices, he said. Once prices are set,
addition, “it is not good practice to have different firms can use the PCPS Pricing Tool (available at
rates for new clients versus old, since you will run tinyurl.com/s5a54jbu).
into problems keeping track of who is charged Koch has found that competitive bidding situ-
which rate.” ations can also offer great insights. When his firm

IN BRIEF ■ COVID-19 has brought financial an increase for clients who may have
hardship to many, but it has also trouble paying, but be mindful of how
■ With analysis and planning, raising increased the value of services firms exceptions are handled.
your fees can be a smooth process for provide, so don’t let those concerns ■ Research comparable fees and assess
you and your clients and maintain the deter your plans for a fee increase. client relationships to help guide fee
health of your firm. ■ Deferrals and discounts can help ease increase decisions.

To comment on this article or to suggest an idea for another article, contact Chris Baysden, a JofA associate director, at
Chris.Baysden@aicpa-cima.com.

14 | Journal of Accountancy January 2022