Quality vs QuantityJul 24, 2023
In this blog I want to talk about Quality v Quantity.
I've shared the angst being directed at agents when clients' 2023 refunds weren't as high as anticipated due to no LMITO. Typically the fees for such returns tend to be on the lower side and the same is similarly applicable for BAS's especially for micro and small business clients.
My practice model was to offer services to both these markets, but at a price point which ensured I could prepare that work to a high level of accuracy and quality and at a price to ensure I could remunerate my team members well as well as myself.
In accordance with my Pricing Guide and Menu of Services, I'd like to share what I was charging in 2016 which was my last year in practice (incl GST) and what that fee would be now after just effectively applying CPI. Yes we have perhaps a little more technology at our disposal but nothing significant that would warrant fees going backwards as we had all our clients on a cloud accounting solution.
Individual Tax Tax Return (2016 fees)
- $180 for a basic return
- an extra $130 per rental property
- an extra $260 per "new" rental property which saw me provide my client with a CGT schedule for that property and enter a detailed depreciation schedule into my tax software
Individual Tax Tax Return (2023 fees)
- $250 for a basic return
- an extra $175 per rental property
- an extra $350 per "new" rental property
BAS (2016 fees)
- from $385
BAS (2023 fees)
- from $485
Whilst some may think these fees are high, when I prepare tax time bundles, there are definitely practices charging more than this.
I based my fees on a combination of:
- hourly rate ensuring an appropriate multiple of staff wages (for myself, I aimed at recovering $385 incl GST per hour)
- considered the value to my client of the service being provided
- considered the opportunity cost of providing that service (for instance doing a single ITR didn't give me the greatest return and some services I was prepared to make less money on, however being able to do a couple of returns at once and a rental in an hour would yield me significantly more than my "target hourly rate").
- considered the mix of services provided so based on price charged and my availability perhaps that meant organically I lost clients but I was OK with this as I knew I had easily enough higher value work I could do or chase that higher value work.
I would encourage you to think about these factors as you set your 2023/2024 prices. I would encourage you to track the number of hours taken for a task and crunching the numbers to ascertain things like job profitability, multiple of wages you are achieving on that job, has the scope of that job changed, what is your process from start to finish, what level of quality and accuracy do you expect. And it is these things that are relevant when coming up with your pricing, not what others are charging, not what your clients expect or are willing to pay, not what you have always done, not what your previous employer have charged.
Also do some modelling. Let's say you increase your prices 10 or 20% across the board. How many clients could you lose and still maintain your level of fees? From experience, such a strategy will actually result in more fees and think about how many less emails you will have in your inbox and the reduction in phone calls you will have to take.
And I will leave you with one last thing. When I did a BAS, these are the tasks we carried out and this was non-negotiable as if I was declaring that all information in the BAS was complete and accurate, I didn't want to miss anything or have to make major adjustments once I prepared year end financials.
For fee sensitive clients, I would get them to do their own BAS and I would attend to these tasks at year end.
✅ Client communication (before and after)
✅ Instructions to Staff (including their time budget)
✅Review Bankfeeds (allocate where needed)
✅ Review & Reconcile Bank Account(s)
✅ Review & Reconcile Clearing Account(s) eg Stripe, Paypal, Cash Drawer [these days with e-commerce clients I would be reconciling to third party reports and not just take net income from Paypal as we all know that personal expenses could be coming out of gross sale proceeds!]
✅ Review & Reconcile Loan Account(s)
✅ Review & Reconcile Credit Card(s)
✅ Review & Reconcile Petty Cash
✅ Review & Reconcile Debtors to ledger
✅ Review & Reconcile Creditors to ledger
✅ Review & Reconcile Superannuation
✅ Review & Reconcile PAYG
✅ Review & Intercompany Loans
✅ Review Directors Loan Account for any mis-postings or incorrect GST codes used
✅ Analytical Review of Profit & Loss Statement and reallocate where necessary
✅ Review & Reconcile GST
✅ Send queries to Client / Discuss Queries with Client
✅ Action Queries
✅ Prepare BAS
✅ Prepare BAS Letter
✅ Chase ELD
✅ Lodge BAS
Food for thought... I'd welcome your feedback.
To access my 2023 Pricing Guide click here.