You’re Creating More Capacity. Does Your Pricing Reflect the Value?

In my recent newsletters, I’ve encouraged you to think differently about automation, AI, and offshoring. Each can help your firm create capacity. Together, they can give your people more room to think, develop advisory skills, and spend meaningful time with your clients.

But that opportunity raises another question.

If you change how your firm delivers services, how will you change the way you price them?

For years, our profession has relied on a familiar calculation: hours multiplied by an hourly rate equals the fee. Your costs and time matter when you manage your firm. But that calculation tells you more about your effort than about what your client values.

If your team completes an engagement more efficiently, has the benefit to your customer (client) necessarily declined? (Note that I will be using ‘customer’ throughout where you might say ‘client’. A nuanced way to shift the narrative from what I call ‘practice-thinking’ to thinking of your firm as a business).

I don’t believe it has.

Your client may still receive the same dependable compliance service. Or your team may now have time to identify a cash flow concern, explain a business trend, or help your client consider an important decision.

That is where I believe your pricing conversation needs to evolve.

What Does Your Client Actually Value?

This is where the rubber meets the road. Value is personal. Two clients buying a similar service may care about very different things.

One wants confidence that deadlines will be met. Another wants fewer surprises. A business owner may need reliable financial information before approaching a lender. Another may want someone who understands the business well enough to challenge an expansion plan.

For your compliance services, value can include reliability, clarity, convenience, and confidence. Your advisory services may include better decisions, stronger cash flow, or preparation for an ownership transition.

You won’t discover those priorities by reviewing last year’s time report. You discover them by talking with your client.

Ron Baker has advocated this approach for years. In his Journal of Accountancy article, “Pricing on Purpose,” he describes a process that includes a value conversation, service options, an upfront agreement, and a review after the engagement. I had the pleasure of first meeting Ron many years ago when promoting the novel concept of pricing services based on value rather than hours. I got goosebumps. This concept opened my mind to a new way of thinking.

More recently, Baker and Paul Dunn explored ongoing relationships and lifetime client value in their 2022 book, Time’s Up! The Subscription Business Model for Professional Firms.

You don’t have to redesign your entire firm tomorrow.

Here are five practical places I would start.

✅ Have the Value Conversation First

Before you discuss your fee, ask your client what matters.

What are you trying to accomplish this year? What concerns you most? What would solving this problem make possible? Where would better information help you make a decision?

Then listen carefully. As I like to say, “Let silence do the heavy lifting.”

If your client wants financial statements, ask what decisions those statements need to support. If your client wants tax preparation, ask what made the previous year difficult.

TIP: Your goal is to understand the benefit your client is seeking before you propose the work.

✅ Pilot One Service With a Few Clients

Choose an engagement you understand well and a handful of customers willing to have a different conversation. You know who they are.

You might start with a recurring accounting package, a tax preparation and planning engagement, or a defined advisory project.

Consider your customer’s priorities, available alternatives, and willingness to pay. Then check whether you can deliver the agreed service profitably.

Your costs remain essential to managing the business. They simply don’t tell you everything about the price your customer will consider worthwhile.

TIP: Review what you learn before expanding the approach.

✅ Give Them Meaningful Choices

Instead of presenting one proposal, consider offering three clearly defined options.

For a tax client, you might offer preparation, preparation with proactive planning, or preparation and planning with regular business discussions.

Explain the benefit of each option in plain language. What additional support does your client receive? What questions will you help address?

Every option must meet the professional standards applicable to the engagement. The differences should reflect additional scope, access, and support.

TIP: You are helping your customer choose the relationship that fits their needs.

✅ Agree on Expectations Upfront

Define the service, price, timing, and responsibilities before you begin.

What will your team deliver? What information must your customer provide? What happens when they request additional work?

Clear agreements protect your capacity and give your customer greater certainty.

Remember that a fixed fee is not automatically value pricing. Neither is an annual fee divided into monthly payments. Value pricing considers the customer’s perceived benefits; a subscription creates an ongoing relationship with recurring payments.

The 2024 CPA.com and AICPA CAS Benchmark Survey reports that 84 percent of respondents are shifting toward fixed-fee billing, while value billing remains rare.

TIP: That suggests an opportunity to deepen the pricing conversation.

✅ Make the Value Visible

At appropriate intervals, review progress with your customer.

What decisions became clearer? What problems did you help anticipate? What has become easier?

Document measurable benefits where you can, while recognizing outcomes your firm cannot control.

TIP: Use those conversations to improve your service and inform future pricing.

Some Final Thoughts

The capacity you create is an opportunity.

How you use it, communicate its benefits, and price your services will help determine what that opportunity becomes.

 Where could you begin that conversation in your firm?

Until Next Time!