You're Saving Money for Clients. Your Fees Don't Show It.
This article will count 0.25 units (15 minutes) of unverifiable CPD. Remember to log these units under your membership profile.
You resolved the SARS query. You saved your client R50,000 in tax. Then you sent an invoice for two hours of work. That gap between the value you delivered and the fee you charged is the real problem facing small accounting practices today. A new piece by US-based CPA H. Randy Hughes makes the case plainly: hourly billing is holding firms back, and the solution is already within reach.
Why the clock is working against you
Hughes argues that billing by the hour punishes the very thing clients are paying for: your expertise. The faster you solve a problem, the less you earn. A 15-minute phone call that gets a R4,500 penalty waived is worth far more than the R400 you might have billed for it. Hourly billing also creates uncertainty for clients, who have no idea what the final invoice will look like until it arrives.
The real shift is from pricing tasks to pricing outcomes. Clients do not buy hours. They buy the ability to sleep at night knowing someone competent is watching their numbers.
Value-based pricing in practice
The idea is straightforward. If you develop a tax strategy that saves a client R50,000, your fee should reflect a portion of that saving, not the one or two hours it took to build the plan. Hughes uses an example of a R4,000 fee on a R50,000 saving. Both sides win. The client keeps R46,000. You earn more than an hourly rate would ever justify. This works because clients are not asking how long you spent on something. They want to know: did you fix it?
Subscription pricing builds predictability
Hughes also recommends subscription-based pricing for ongoing work. Bundling compliance and advisory services into a single monthly fee gives the firm steady income and gives the client a clear, predictable cost. It also shifts the relationship from transactional to continuous, which builds the kind of trust that keeps clients for years.
Practitioners consistently undervalue their services out of fear that raising prices will cost them clients. In reality, the trust clients place in their accountant has significant commercial value and fees should reflect that.
How to make the switch without losing clients
Hughes recommends a phased approach.
For existing clients who are used to hourly billing, the move to new pricing works best when it is framed around a new, broader offering. Bundle compliance work with tax planning or advisory services. The expanded scope justifies a new price point that is not directly comparable to the old hourly rate.
For new clients, set the tone from the start with tiered packages, a good, better, best structure that lets the client choose the level of service that fits their needs. This also protects the firm from over-delivering on a lower-priced package.
The underlying message is simple. If your fees have not kept pace with the complexity of your work or the value you deliver, you are effectively working harder every year for less.
Read more in Small Firms, Big Pressures found, and Stop Billing Hours. Start Selling Outcomes.
Article source: Accounting Today