Ask VeraSage: Tax Return Pricing for Sole Props

I received the following email from a sole prop CPA regarding how to deal with low value services and price tax returns.


Just listened to an archived PCPS presentation on value billing from last Nov. 2006.

I also have a copy of your value pricing book, The Professional’s Guide to Value Pricing.

I am a sole-CPA with one part-time bookkeeper. Most of my write-up and payroll clients are already fixed fee. My 1040’s are usually what I charged them last year plus cost of living. My original fees were based upon a budgeted set of hours. As you said, I am generally stuck on what I charged them the previous year plus COL.

My questions for you are:

A lot of 1040 clients perceive a CPA the same as H & R Block. How do I raise the perceived value for a basic 1040 or can you ? How do I know if I am under billing for 1040s, except basing it upon what other CPAs charge per hour?

I agree with you that to be more profitable, you need to capture the value from the client. Are you saying that I should stay away from low value services ? That is the bread and butter of Sole-CPAs.

Any comments would help!!


PS, I threw out my time sheets this tax season because it got too time consuming to keep track of 2 hour 1040 clients.

Hi Richard,

Thank you for listening to the AICPA presentation, and reading my book.

You’re questions are ones we get a lot, and I think we have to start with how you perceive yourself. If you think you’re H&R Block, so will your clients. If you think you’re worth more than H&R Block, so will your clients. And no, I’m not saying you should avoid low level work, but I am saying that you should only allocate so much of your capacity to it, and certainly not add more capacity to take on more of it.

Also, please don’t let what other CPAs charge have influence over you. They are not you. What is your unique value proposition? Why would you let your dumbest competitors set your price?

One innovative method is to offer your 1040 customers a menu option, similar to American Express’ Green, Gold, Platinum levels (some firms use bronze, silver and gold, or some variation).

At the bronze level, you only do the 1040, for a competitive price (but certainly more than H&R Block, you are a CPA and CFP!). At the silver level, you might bundle in tax planning and unlimited phone calls and meetings throughout the year. At the gold level, you might bundle in audit representation and perhaps a financial plan review (something of high value to the customer, but low cost for you to provide, and that showcases your expertise).

This is just a very rough example. You can find more on our Web site,, under Trailblazers. You really have to put some serious thought into your bundles, because they have to match your competitive advantage and strategy. But we have seen this strategy used hundreds of times, with great success.

My colleague, Dan Morris and I, run a 1-1/2 day Sole Proprietor Retreat for the California CPA Education Foundation. This year will be our third one.

We usually have about 7 people (we limit it to an intimate group), and the goal is to provide sole props with a partnership retreat. We call you in advance, and the group sets the Agenda. Most want to cover pricing, strategy, customer service, team members, etc. Then we provide you with a flash drive full of tools to help you implement, and have a follow-up day (usually in January) to get you going for tax season. This year’s retreat is Nov 9-10 in Los Angeles.

We are also running one in June for the Maryland Association of CPAs. We have had great success with them, and they are a lot of fun.

I hope this helps.



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