White paper

Advisory services: Is your pricing strategy fact or FUD?

Is your firm leaving money on the table? Without the right business model and pricing structure in place, chances are the answer is “yes.”

Today’s business environment is challenging: client demands and expectations are on the rise while compliance-based services are being squeezed by commoditization. The shifting sands of the regulatory and legislative landscape make it tough to keep pace.

Accounting firms must reevaluate their approach to stay ahead of the curve and remain competitive. In some cases, that may mean bidding adieu to the status quo. Gone are the days of rearview mirror accounting. 

Pivoting operations to deliver forward-looking, strategic insights enables firms to serve clients better, tap into emerging markets, and drive greater efficiencies. It also helps ensure accounting professionals are appropriately compensated for the expertise they provide. The result is happier clients — and a healthier bottom line for the firm.

Change, however, isn’t always easy. It can be downright daunting. In this white paper, we will explore how firms can better meet client demands, get adequately paid for their work, and unlock the door to additional growth opportunities. Let’s take a closer look.

Your baseline

How much time do you spend answering random quick questions from clients? How often do those “quick questions” require you to perform some “quick” research? How much of your professional knowledge and expertise are you giving away for free? Unfortunately, for some firms, the answer is “too much.”

That is why it is vital to establish your baseline. Set boundaries, expectations, and the tone for the relationship from the outset. It all begins with a clear scope agreement.

Create a clear scope agreement

As in any relationship, transparency and communication are key. Your client relationships are no different, which is why setting upfront expectations with a clear scope agreement is so important. The key term here is “upfront.”

As outlined by the Association of Chartered Certified Accountants (ACCA), the global body for professional accountants, there are several reasons why scope creep arises, including:

  • Poor scoping of the original engagement
  • Change in the client’s business or team that requires extra support 
  • Gradual growth in transactions, which goes undetected over time
  • Poor communication in the team
  • Missing documentation outlining the scope of the work
  • Lack of regular reviews of job profitability

Proper expectations help mitigate scope creep and better manage client expectations. As the expert, you already know what is included in each service. However, it should be well documented, and the client must have a very clear understanding — up front — of exactly what the engagement includes.

In the Thomson Reuters State of the Business survey, 72% of respondents said fee structure transparency is highly important. In addition, more than half (57%) said they’ve negotiated the amount clients are paying to the firm, with more than half requesting a reduction because the costs were too high or higher than the initial estimate. These numbers are significant.

Clearly detailing the scope of services enables your firm to reduce waste, increase revenues, and avoid scope creep. So, what should a scope agreement entail? A clear scope agreement means clearly explaining the scope of services — what is included and what is not.

You should consider any service not included within the scope agreement out of scope; those out-of-scope services should be listed as additional fees. You may have clients who consistently want services that extend beyond the scope of service, so it needs to be understood that such services will come with an additional fee.

It is somewhat akin to getting an oil change for your car. How? It is an example from a recent Thomson Reuters webcast and it really helps illustrate the point: 

“What’s included as part of the oil change service may differ depending on where you go. One shop may consider an oil change to be just the oil and a new filter. An oil change service at a dealership or another auto shop might include an oil and filter change, tire rotation, brake inspection, a multi-point inspection, and fluids inspection and replenishment.

“But each shop has clearly defined the scope of its service, so customers know what they’re getting for the price. They know up front what each shop considers to be an oil change. Those services outside the oil change, like replacing a headlight bulb or new windshield wiper blades, are an additional fee.”

Nobody likes surprises — especially on an invoice. A clear scope agreement eliminates sticker shock for clients and removes the hassle of them trying to negotiate prices after you’ve completed the work. It also helps ensure you are paid for all your work. When the client does ask you a question that’s out of scope, treat it as an additional sales opportunity. Don’t let the word “sales” scare you; think of it as helping the client instead of selling. They just happen to be paying you for the additional help.

It is also crucial that your clients have a clear understanding of your business relationship. How many meetings will you have with them each year? When will those meetings take place? What is the best way for you both to work together — for example, whether you will share information via a portal, etc. This type of clarity helps you strengthen client relationships and build trust.

Your customer

It is no secret that clients want and expect more. This shift has been in motion for several years, but the onset of the COVID-19 pandemic undoubtedly fueled it.

As the pandemic forced shutdowns and rocked the economy, clients turned to their accounting professionals for guidance about everything from applying for Paycheck Protection Program loans to managing cash flow in hopes of staying in business. Many accounting professionals swiftly stepped up to the plate and found themselves wearing a multitude of hats in their role as trusted advisors. Today, the rise in client demands and expectations remains and shows no signs of slowing — and clients are still expecting that elevated level of service for no additional fee.

Rethink pricing

For firms that have not yet done so, it is time to ensure you are adequately compensated for all your work. You may think your clients will push back on premium pricing — but think again.

Clients want strategic, forward-looking advice. You have the right to collect a premium for the expertise and value you provide. The key to getting the compensation you deserve is showing clients the value you deliver. Clients will be more willing to pay a premium if they clearly understand the value. In fact, the survey found that 39% of respondents said they are willing to pay a premium for advisory services.

That clients are willing to pay a premium is especially true for firms that operate a niche practice. When firms have a niche — for example, healthcare, nonprofits, and the food service industry — they become the subject matter experts in their respective industries or areas of focus. Having a niche can be an excellent way for firms to grow their practice and differentiate themselves from their competition. Firms should charge a premium for their unique knowledge, tailored expertise, and the value they provide.

Enter value pricing. Under this pricing model, the firm establishes pricing before the work begins and firms charge for the client’s perceived value of a service. In other words, it’s the value of the service that determines your price.

Value pricing arrangements allow firms to have an open discussion with clients about the scope of the engagement and the price and value of the services the firm provides. These arrangements mean no surprises when the client receives your bill. If your firm still relies on hourly-based billing, it is time to rethink your pricing structure.

Bundling services can also be an effective way to mitigate scope creep, as it provides clients with a clear understanding of the price they owe. For firms, bundling services provides scalability and drives greater profitability.

In addition to clients’ desire for the aforementioned importance of fee structure transparency, clients also placed a high priority on the ability to select the type of fee agreement they have with their accounting firms (72%). While these findings all point to clients being willing to pay more for value-added services, transparency is key. But the results also show that clients appreciate choice and flexibility.

Implementing a tiered pricing model can be a great way to provide clients with the transparency and flexibility they desire. For example, a firm may offer three different service levels depending on the client’s needs: silver, gold, and platinum. In addition, bundling services enables firms to scale and drive greater profitability.

As outlined in the Thomson Reuters white paper, “Strategically pricing accounting services: Should you use value-based pricing or fixed fees?,” the tiers and a firm’s value pricing strategy may look as follows:

Tier 1. If the service you deliver brings a direct bottom-line benefit to the client, you can charge the greatest percentage of value for your fee. For example, if it takes 15 minutes to identify $200,000 in tax savings for a client, will you charge the client for those 15 minutes? No, you will give them a price based on the value you delivered.

Tier 2. Services with an indirect movement to the bottom line will have a lesser percentage of price to value. For example, your firm helps a client gain business efficiencies, which means they have more time to generate sales. However, if that business client doesn’t do their part and actually dedicate that extra time to making more sales, then your service has had less of an impact.

Tier 3. Services that deliver a type of protective benefit may have the smallest percentage of value to price. For example, your firm provides a service to a client that makes them less susceptible to fraud or negative audit findings.

The bottom line: clients must clearly understand the services you deliver and the value and expertise your firm provides to them. When clients have a clear understanding of the value, they are more willing to pay a premium.

Visibility of value-add services

To paraphrase an old movie quote, “If you build it, they will come.” Maybe. Offering clients advisory services can only be successful if your clients are aware of the services and the higher value you can provide. But how do you show all your available advisory services to clients? This is a key question every firm should consider.

You need to be aware of the message you convey to clients. If the message revolves around how you can help them with their taxes and financial statements, then that is the expectation that you set.

The reality is that many clients have advisory needs, even if they don’t say it. According to the survey, 72% of respondents said they needed advisory services but had not worked with their accountant on those needs. It is especially interesting that 89% of those respondents said their accountant offered advisory services.

So, where is the disconnect? Why didn’t these businesses turn to their accounting firms for assistance? Perhaps these clients didn’t fully understand the value of their firm's services and how their business could benefit from them. Maybe they thought the price of the advisory services was too high.

If so, this points to the importance of ensuring clients clearly understand the concept of advisory services and the value they can offer.

Many successful firms leverage tools and resources to help communicate the value. Doing this involves having access to resources like customizable, client-facing handouts with your firm’s branding; output generation to help communicate scenarios to your clients; and industry-relevant content and tools like videos, templates, pricing tools, and checklists.

Sales and marketing are terms that may be daunting to some accounting professionals, but they shouldn’t be. In today’s competitive market, it is important to think more like a marketer and take proactive steps to ensure you highlight your expertise and higher-value services.

Next steps

What’s next? How does your firm continue to strategize for success?

For starters, focus on year-long profitability rather than just during tax season. It is a shift in mindset, but it is a significant shift. Focusing on year-long profitability involves implementing a scalable advisory services model and embracing value-based pricing.

Why? It will enable your firm to iron out the peaks and valleys of the busy tax season. Rather than meeting with clients once or twice a year — usually around tax season — you’re regularly communicating with clients and charging a monthly fee for your services. It is a winning scenario that will result in a consistent revenue stream for the firm, more meaningful client relationships, and less stress for the staff.

Consider this: on average, firms that have successfully implemented an advisory services model have experienced a 150% increase in monthly billings for current clients and a 200% increase in billings for new clients. These statistics show the solution pays for itself just two to three months after starting implementation, which is significant.

In addition, clients will appreciate knowing exactly how much you will be billing them each month. It eliminates any billing surprises and helps them budget accordingly.

Streamline services

At its core, advisory delivers customized services designed to address your clients' specific business needs. But there needs to be some level of standardization for the business model to be scalable.

Faced with strained bandwidth and increased client demands, firms today must enable staff to work faster and smarter. An effective way to ensure that advisory services are provided efficiently and profitably is to have repeatable processes in place.

By introducing standardized processes, firms can achieve greater efficiency and reduce the workload on staff, which allows them to provide high-quality advisory services to their clients and generate greater profitability. Firms can achieve greater efficiency by adopting a market-proven roadmap with the tools and customized coaching needed to lead staff to develop and implement an advisory services approach to engaging clients.

Features to consider in a consulting and content offering include:

  • Content that is updated as advisory changes arise, which is undoubtedly important in today’s ever-changing regulatory environment.
  • Financial calculators to provide in-the-moment decision support to help better serve clients quickly and efficiently.
  • Customizable client handouts with the firm’s branding, which is essential to help increase visibility into the services you can provide.
  • Integration with related research and know-how tools, which is yet another way to improve customer service and further solidify your role as a trusted advisor.

Streamlining services and processes also entails having the right technologies to tightly integrate disparate systems and drive greater automation across the firm.

For instance, as noted in the white paper from Thomson Reuters, “Mind the gap: Identifying gaps in your software this tax season,” having a single source of truth across all integrated applications helps firms improve efficiencies and better serve clients. Benefits include the ability to:

  • Enable easy collaboration between staff and the client to request and review documents and approval tasks and provide secure eSignature and online bill pay capability.
  • Create a customizable folder system to manage documents with full-text search and document annotations options.
  • Provide visibility into firm projects and staff assignments to drive productivity and confidence with the client.
  • Provide in-the-moment decision support to your clients.
  • Link to research and guidance tools to provide tailored advice. It provides line-finder integration with your tax research platform and automatically navigates from the return to the appropriate research area.

By streamlining services and automating processes with technology, you can more easily shift your focus to offering clients advisory services that provide forward-looking, strategic advice for sustained revenue in the years ahead.

Be clear

It is important to be clear when it comes to advisory conversations — both internally among staff and with clients.

Let’s first look at the internal shift that must occur. It is imperative that firm leadership is transparent with the entire staff about why the increased focus on advisory is taking place. Doing so will help drive support for the change. What does it mean for them and how will they benefit? How will it benefit the firm? 

As noted in the Thomson Reuters white paper “Bridging your compliance and advisory gap,” another factor to consider concerning motivation is whether the firm is subconsciously deemphasizing or demotivating advisory.

For example, does your firm pay bonuses to compliance staff based on how many returns they complete? If so, the emphasis will not be on finding those advisory opportunities.

The point here is to uncover any subconscious demotivators that may exist in your firm’s culture and make a change.

Then there’s external communication. When communicating with clients, be enthusiastic and benefits oriented regarding advisory. Elevate your role as a trusted advisor and become the valuable partner your clients need.

Proactively communicating with clients also helps ensure that your firm remains top of mind. For example, if there’s a regulation change, let clients know that you’ve heard about the change and you’re reviewing their business and industries to determine what, if anything, needs to happen. They will take comfort in knowing you are keeping pace with legislative developments.

Take advantage of the opportunity to use content marketing like videos, webinars, or podcasts to reach multiple clients at once with your messaging. This one-to-many approach is a significant time saver, and content marketing can be a great way to promote your thought leadership.

Leverage data mining tools and capabilities to help you identify the clients who may be impacted most by a particular regulatory development and uncover additional advisory opportunities.

And as you approach client conversations, think about shifting the discussion away from a pure compliance conversation to one centered on their goals. These client conversations are a great opportunity to learn more and better understand their needs and concerns. Clients may not know what to ask for or how to ask for it but try to hear what they are saying. What do they really need or want?

Tax season is a great time to identify opportunities for advisory. You may not have the extra time to conduct those advisory conversations during the peak of the busy tax season, but mention it to the client if you see an advisory opportunity. Get an appointment on your calendar for after tax season when you have the time to sit down and have that conversation.

With advanced technology in place, you can proactively deliver pertinent information and more strategic insights to clients. This approach can help your firm build more meaningful client relationships and demonstrates that you are a committed partner who supports your clients beyond just tax season.

Avoid pitfalls

Firms that fail to set expectations up front risk running into costly pitfalls that can impact not only client relationships but also the firm’s profitability.

Unfortunately, this is a reality that many firms are facing. According to the survey, more than half (57%) of respondents said they were negotiating the amount to pay their accountants. Nearly all of them (98%) were getting a discount. Half of the time, this was due to an issue they had with the firm.

What types of issues? Based on the survey findings, clients were most often requesting a discount for the following reasons:

  • The cost is too high
  • The cost is higher than the initial estimate
  • The service took longer than expected
  • The service didn’t meet their expectations
  • They did not get the desired outcome

When accountants negotiate and discount prices, they are not receiving proper compensation for their knowledge and expertise. Unfortunately, when you water down the cost of your services, you also water down your perceived value. Not only that, you set a precedent for negotiating your fee in the future.

You can avoid many of these pitfalls by establishing a properly structured scope agreement. Again, this means having a scope agreement that clearly explains the scope of services — what is included and what is not. You should list any service not included within the scope agreement as out of scope with additional fees.

Key takeaways

  • Set boundaries and expectations up front and mitigate scope creep with a clear scope agreement.
  • If a client asks a question that is out of scope, treat it as an additional sales opportunity.
  • Clients will be more willing to pay a premium if they have a clear understanding of the value you are providing.
  • Rethink your pricing structure and consider value-based pricing rather than hourly billing.
  • Bundling services can be a great way to mitigate scope creep and provide clients with a clear understanding of the price they owe.
  • Think more like a marketer and take proactive steps to ensure your expertise and value-add services are clearly communicated and visible.
  • Focus on year-long profitability rather than just during the tax season.
  • Streamline services and automate processes with technology.
  • Ensure that staff understands why an increased focus on advisory is taking place.
  • When communicating with clients, be benefits focused regarding advisory services.
  • Avoid pitfalls like discounted prices by establishing a properly structured scope agreement.


Accounting firms must stay ahead of the curve to remain competitive and better meet client expectations.

New findings from the Thomson Reuters “2022 state of the business survey” offer valuable insight into how firms can better serve clients, tap into additional growth opportunities, leverage technology, and ultimately drive greater success.

By reevaluating their business models and introducing strategic advisory services, accounting firms can improve the client experience and boost profitability.

Change can be daunting, but with careful planning and proactive changes, firms can ensure that their practices thrive for years to come. The time for change is now. The time to stop leaving money on the table is now. Is your firm ready? 

Download our new Practice Forward guide to learn how you can transform your firm to meet clients' needs in the modern era. Visit http://tax.tr.com/practice-forward for more information and resources.

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