During post survey discussions, most practitioners expressed displeasure with competing purely on price, stating that they preferred not to provide prices over the phone. A small percentage, however, did admit that they “price shop” the competition at the beginning of tax season to determine how to price their own products. Another small percentage indicated that they would discuss fees over the phone, but that they provided only a lower limit, with typical fees being higher.
Competing with large chains on price is usually a “no win” strategy, cutting into margins and forcing practitioners to work for wages that seem paltry in comparison to the amount of time and energy invested. However, if a low base fee is part of an overall market strategy to gain clientele cross-sell services, then it can be quite lucrative if executed properly. Kirk Ward, Editor at Practice Builder Publishing explains that “cross-selling to existing clients is one of the best ways to gain wallet share and foster long-term relationships. Low prices and ‘bargains’ can be used to get clients through the door, but there must be a solid strategy for retaining and building upon that business.”Competing with large chains on price is usually a 'no win' strategy, cutting into margins and forcing practitioners to work for wages that seem paltry Click To Tweet
Ward goes on to explain that the key to building on business obtained through a “sale” is for the practitioner to make clear how superior his or her services are. In other words, clients should enter knowing that the discount is a way for them to compare the accountant with other firms, particularly large franchises, and recognize that the practitioner’s fees are generally higher as a reflection of the superior quality provided. Under this approach, an accountant can work hard on the discounted return, knowing that it is only a stepping stone to a more lucrative long-term relationship.
One last thing to consider is that individual tax returns may not be the best basis for a practice. Most interviewees in the survey stated that the majority of their return preparation income was from small business owners where they were the keepers of record for all finances. They did not have to quote fees to these businesses because the business owners understood the importance of quality and of long-term relationships that protect their businesses. Small business owners should be a target demographic of any accounting firm as they are willing to invest in services that will ensure the success of their business.
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