At a glance
- Many firms are undercharging and overdelivering on scope.
- Profitability improves when pricing reviews and client curation are systemised.
- Firms focusing on client curation and pricing discipline have stronger, more stable margins.
Increased profitability doesn’t typically come from adding more clients or working longer hours. It often starts with something simpler: charging the right price, serving the right clients and having clear boundaries.
But as core compliance services become standardised and powerful accounting software automates much of the work behind the scenes, pricing discipline is increasingly complex. 38% of small and mid-sized firms are now seeing pressure to adjust their pricing or offer alternative fee structures.
Profitability is most often squeezed at the intersection of flat fees, rising workload and falling margins. The most successful firms avoid this by continually rethinking their pricing, focusing on right-fit clients and getting intentional about where their time goes.
Raising your prices
If your fees haven’t changed in years, they probably no longer reflect the value or time involved.
Raising prices isn’t just about protecting margin; it also helps firms lose the wrong clients and create space for better ones.
Heather Townsend, founder of The Accountants’ Growth Club, says too many firms underestimate what’s possible.
“Accountants are often afraid that if they raise prices, 30 to 50% of their client base will leave. In today’s market, if you raise your prices 25% you will not see much client churn,” she says.
For compliance clients, Townsend recommends tying price reviews to your workflow.
“Review your engagement one to three months before your client’s year end so you can talk to them and give them certainty on your fees,” she says.
For new or fast-growing clients, she recommends building flexibility into the quote.
“If you’re offering bookkeeping and you’re unsure of the scope, start with an hourly rate then reprice after a few months with a fixed fee based on the number of transactions,” she says.
Increases above 50% may require a full re-quote and more detailed client communication. But even a simple blanket uplift can have a big impact. It’s often the most efficient lever you can pull.
Targeting clients who pay on time
Firms prioritising reliable, low-maintenance clients tend to see more stable margins and better client relationships. Townsend says getting clear on client expectations upfront makes a difference.
“Setting expectations with clients is the first step to ensuring they pay on time. If it’s ongoing compliance work, we recommend getting clients signed up to a direct debit mandate on a subscription agreement,” she says.
This structure gives firms more control and helps flag poor-fit clients early. Clear terms are key.
“Communicate your payment terms in your sales collateral, especially if you’re offering a subscription structure. Explain when clients will start paying, how much each month will be and what happens if their payment fails,” she says.
Townsend says ad hoc project work like forensic investigations should be treated differently.
“Secure a deposit upfront before you get started and ensure the final installment is paid before you hand over your final deliverable,” she says.
“Many practices don’t know who their unprofitable clients are.”
Heather Townsend, Founder, The Accountants’ Growth Club
Make room for your A-list
Many firms want more of their “best” clients but haven’t defined what that means or acted on it.
Townsend says the first step is understanding your client portfolio properly.
“Many practices don’t know who their unprofitable clients are. They might know the obvious ones, legacy clients who’ve been onboard since the business started, but that’s it. A client portfolio analysis can help you figure out where you have a profitability issue,” she says.
Townsend recommends looking beyond your standard fee structure.
“Analyse all of your clients, their services, how much they are paying and whether you enjoy working with them. This will help you figure out who is paying less than they should and then you can formulate a plan to fix it,” she says.
Letting go of one lower-value client every time you bring on a high-value one is one simple, effective tactic she also recommends.
Repeat the cycle
Successful firms build pricing reviews and client filtering into their processes. Townsend says the key is to make them systematic.
“Creating a task in practice management software like Karbon, Engager or FYI is a great way to systemise your pricing reviews with clients,” she says.
For compliance clients, annual checkpoints work well. For fast-growing businesses, a mid-year pricing review can help avoid scope creep.
It’s also an opportunity to deepen the client relationship. Anna Lake, Director at Client Talk, says firms that gather feedback are better placed to grow with clients.
“Satisfied clients buy more services, stay longer, recommend to others (free marketing!), and are also likely to be less price sensitive. A focus on growth through existing clients is a more profitable activity than business development activity to attract new business and client listening interviews are the cornerstone of any client development programme,” she says.
The IFA’s session on 6 ways to mitigate the NIC increase with EB Now will be held on 30 April. More information here.
