Let’s face it: Telling clients about a fee increase isn’t anyone’s idea of a fun conversation. But as an accounting professional, it’s something you may need to do from time to time. Whether it’s due to rising costs, improvements in your services, or simply aligning your rates with the market, how you approach this topic can make all the difference.
So, let’s dive into how to determine a reasonable fee increase, craft a thoughtful CPA (Certified Public Accountant) or accounting fee increase letter, and justify that change to your clients in a way that feels right for everyone involved. Plus, I’ve got a handy fee template to share with you!
How to Determine a Reasonable Fee Increase for Your Services
Before you start drafting that letter, let’s figure out what a reasonable CPA fee increase letter looks like for your services. Here are some things to consider:
1. Research Market:
Take a look at what other accounting firms are charging for similar services. If your rates are on the lower end, you might find that you have some room to increase them.
For example, if your competitors charge $150 per hour for bookkeeping services and you only charge $120, this could indicate a potential increase of around 25%.
2. Improvements in Your Services:
Have you added new features, tools, or training that enhance your services? If so, this is a good reason to raise your fees.
For instance, if you started using advanced accounting software that automates many tasks, you could argue that this efficiency will save clients time and reduce errors, warranting a higher fee.
3. Require for Business Growth:
Has your client base expanded or has the scope of services you offer grown? If so, it might be time to revisit your pricing.
For example, if your firm grew from managing 50 clients to 75 clients in a year, the increased workload may necessitate a fee adjustment.
4. Inflation:
With inflation affecting everyone, periodically raising your rates to keep up with the cost of living is a legitimate strategy.
If inflation is at 3%, a modest fee increase of the same percentage can help maintain your profitability without shocking your clients.
5. Value Provided:
Reflect on the value you bring to your clients. If they’re seeing significant benefits from your services, they might be more open to a fee increase.
For example, if you’ve helped a client save $10,000 in taxes through diligent planning, they might be willing to accept a $500 fee increase for your services.
How to Write a Fee Increase Letter
Now that you’ve figured out why you need to raise your fees, let’s get to the writing part. Here’s a step-by-step guide to help you draft a letter that feels personal and professional.
Step 1: Schedule the Conversation Between You and the Client
Before you hit send on that letter, it’s best to have a face-to-face chat (or at least a phone call) with your client. This personal touch shows that you care about your relationship with them. Start by expressing your gratitude for their business and let them know you want to keep them in the loop.
Step 2: Make It Personal
Every client is unique, so tailor your letter to each situation. If you’ve worked closely with them, mention specific projects or how you’ve helped them in the past. This kind of personalization shows that you value their business and understand their needs.
Step 3: Emphasize the Value You Provide
Your clients need to know what they’re getting for their money. Talk about the quality of your services, your expertise, and the positive outcomes you’ve achieved for them. When clients see the value, they’re more likely to accept a fee increase.
Step 4: Anticipate and Address Potential Objections
Think about any concerns your clients might have. Maybe they feel the increase is too much or they don’t need the extra services. Address these concerns directly in your letter. Reassure them that you’re committed to meeting their needs and providing even more value.
Step 5: Clearly Communicate the New Investment
Be upfront about the new fees. Clearly outline what the new rates will be and when they’ll take effect. Transparency helps avoid surprises later on, making the transition smoother.
For instance, “Effective March 1, 2024, my hourly rate will increase from $120 to $150.” Providing this information upfront allows your clients to plan accordingly and avoids any surprises later.
Step 6: Update Your Invoicing Process Accordingly
Once you’ve communicated the fee increase, make sure to update your invoicing system. Clients appreciate consistency, so ensure their future invoices reflect the new rates.
Accounting Fee Increase Letter: Free Template
Here’s a simple template to help you draft your accounting fee increase letter:
[Your Name]
[Title]
[Company Name]
[Address]
[City, State, Zip Code]
[Email Address]
[Phone Number]
[Date]
[Client’s Name]
[Company Name]
[Address]
[City, State, Zip Code]
Dear [Client’s Name],
I hope this message finds you well. I want to take a moment to express my gratitude for your continued trust in our accounting services. It has been a pleasure working with you, and I truly value our partnership.
I am writing to inform you of an upcoming change in our fee structure. As you may know, the costs associated with running our business have risen due to various factors, including increased operational expenses and inflation. Additionally, we have made several enhancements to our services that allow us to provide you with even greater value.
Starting [Effective Date], our hourly rate will increase from [$Current Rate] to [$New Rate]. This adjustment is necessary to ensure that we can continue to deliver the high-quality services you expect and deserve.
I want to reassure you that our commitment to your business remains our top priority. This fee increase will help us maintain and improve the level of service we provide. We are dedicated to offering the best possible support to help you achieve your financial goals.
If you have any questions or would like to discuss this change further, please don’t hesitate to reach out. I am here to assist you and address any concerns you may have.
Thank you for your understanding and continued partnership. I look forward to our continued collaboration and supporting your business’s success.
Best,
[Name]
[Title]
[Company Name]
How to Justify a Fee Increase to Clients
Once you’ve sent that letter, your clients may want to know why you’re raising your fees. Here are some good reasons to share with them:
Improving the Quality of Service: If you’ve made recent upgrades to your services—like adopting new technology, offering additional training, or enhancing customer support—let your clients know. Explain how these improvements will benefit them directly.
Business Growth: If your firm has grown—whether by adding new team members or gaining new certifications—make sure your clients are aware. Let them know how this growth will enhance the service they receive.
Rising Overhead Costs: Be transparent about any increases in your operational costs. If things like rent or software fees have gone up, it’s completely reasonable to adjust your pricing. Clients will appreciate your honesty.
Market Alignment: If your rates haven’t changed in a while, it’s time to align them with industry standards. You can provide market data or comparisons to help them understand this shift.
Pricing Adjustment: Sometimes, it’s just time for an adjustment. If your fees have been the same for years, a price change may be necessary to maintain the quality of your services.
4 Key Elements to Ensure Your Price Increase Is Well Received by Clients
To make sure your clients take the fee increase in stride, focus on these four key elements:
Express Appreciation: Always start by thanking your clients for their loyalty. A little gratitude goes a long way in maintaining a positive relationship.
Give Enough Notice: Let your clients know about the fee increase well in advance. This allows them to adjust their budgets and prepares them for the change. It shows that you respect their financial planning.
Be Clear: Clarity is essential. Make sure your clients understand the reasons behind the increase, what the new fees will be, and when they’ll take effect. Avoid any vague language that could lead to confusion.
Welcome Further Questions: Encourage your clients to ask questions or voice their concerns. Opening up that line of communication shows that you value their input and are willing to work together to address any issues.
Need Help Managing Your Accounting Workflows?
If you’re feeling overwhelmed with managing your accounting workflows and client communications, know that you’re not alone. Many businesses struggle with this. Consider reaching out for support, whether it’s through outsourcing or specialized tools, to streamline your processes and improve client communication.
By following these accounting fee increase letter strategies, you’ll be better equipped to handle a fee increase while keeping your clients happy. Remember, effective communication is key to maintaining trust and ensuring your clients feel valued—even when your fees change. You’ve got this!
Ready to Elevate Your Accounting Experience?
At Intellgus, we understand that managing accounting fees and workflows can be challenging. If you’re looking for expert assistance to streamline your accounting processes or need help communicating fee adjustments to your clients, we’re here for you!
Contact us today to discuss how our tailored outsourcing solutions can add value to your business while allowing you to focus on what you do best. Let’s work together to enhance your financial operations and drive your business forward!
