2023 Price Increase (And What It Means For Your Small Business)

Jan 11, 2023 | News & Updates

Prices going up these days is no surprise. Far too often, though, getting your money’s worth is.

Our dollars are having to stretch further and further, but we seem to be getting less and less in return.

Some companies try to hide increases by keeping the price the same but giving you less. Others play games by showing you low prices upfront but conveniently not telling you about all the other costs until it’s too late.

It’s not a fun way to live, and we think you deserve more honesty and value than that.

We take a “no surprises” attitude when it comes to your money and taxes, and the same is true for what we charge for our services. Even though we’ve resisted raising our rates for the last few years, we now find ourselves right in the middle of a tough economy needing to make adjustments along with everyone else. 

2023 Price Increases

We take price increases very seriously, and have only done them throughout our 40+ year history after a lot of reflection and analysis. Typically, we hold our prices steady for two to three years before adjusting them. 

A lot of CPA firms do regular price increases by simply adding $50 every year to their tax preparation fee. Some tack on 5% year after year. Others just pick arbitrary numbers!

That’s just not right. As trusted advisors, we believe we should be more transparent and that our clients deserve better than random annual rate hikes. 

We understand the perception that goes along with arbitrary annual increases, and we feel that an adjustment is usually only warranted because of changes in an economy that has traditionally moved at a glacier-like pace (around 2% per year).

However, the past couple of years have been anything but slow in regard to finances.

average cost of tax preparation by cpa

Why A Rate Increase Now?

The tax and accounting world hasn’t been immune from rising interest rates and the laws of supply and demand. In fact, some studies show that our industry is being hit especially hard.

The Securities & Exchange Commission (SEC) recently issued a report on their concern over the future of our profession (as well as financial safety and accountability in general) due to the severity of the supply of students entering the profession.

Additionally, nearly 47% of current CPAs are from the Baby Boomer generation, and they are retiring at rapid rates. When you combine that fact with fewer students sitting for the accounting exam, you can quickly see that our industry has a vast “supply” issue.

The remaining workload is being spread among fewer and fewer accounting firms every year. And while they aren’t unique to our industry, several factors contribute to tax professionals doing more while making less:

  • Housing – Home prices are through the roof. In West Tennessee, where we have 6 regional offices, the current median sale price is $375,000. Just a couple of short years ago, in 2020, that number was around $260,000…an increase of 44%.
  • Salaries – According to Robert Half, an employment agency for the accounting and finance industry, a senior tax accountant earned between $56,250 and $74,500 in 2010. Today, that range is $68,820-$128,205.

    What is interesting about those numbers is that the ceiling has increased at a much faster rate than the floor. There has been a 72% increase at the top end, but only a 22% increase at the low end.

    Because of this, fewer students have chosen to enter the specialty of tax and accounting (down 36% in the past few years). This has only added to the supply and demand issues we mentioned above.
  • Inflation – From 2010 to 2022, the cumulative U.S. inflation rate is 36.2%. Based on that, a tax return 12 years ago that cost $365 would be $500 today.

The challenges facing our firm (and many others) is hiring qualified talent and being able to pay wages that are commensurate to a high skill level and ever-rising costs of living.

What About the Competition?

The internet has done a couple of big things to the practice of tax and accounting.

  1. It has created a landscape for a relatively small firm like CRS CPAs to pioneer remote accounting services and serve as “online accountants” for clients across the U.S.
  2. It has eliminated “geographical highway robbery.” There was a time when a certain price would be a bargain to someone in Los Angeles (for instance) and extremely high to someone in another area. The trouble is, they wouldn’t know it!

    Even as recently as 20 years ago, it was difficult to know if you were paying too much for something. However, thanks to the blazing speeds with which we are able to get information from anywhere in the world today, we have a much better idea of what goods and services should cost.

Even though we compete on a national level with hundreds of other tax and accounting firms of all sizes, our primary client base is still in the Mid-South. We specialize in serving small businesses (more on that in a minute), farmers, and nonprofits instead of casting a wide net in an effort to catch any kind of accounting customer we can snag.

As such, we try to find a price range that makes the most sense to the people we serve while string to stay competitive and overdelivering in value.

Our up-front pricing has been a huge part of our success that sets us apart from firms both locally and across the nation that have access to our customers too, thanks to the Internet.

Doing business this way has done a couple of things:

  • The prospective client has a solid cost structure to plan around for the services they need. No guesswork when it comes to budgeting.
  • Price is taken off the table. Far too often, the discussion of price only comes after the deliverable (i.e. tax return) has been completed. We think that is insane!

    Imagine buying a car without a sticker price. We believe that at the time of delivery the associated fee should be a distant memory.

How Does CRS CPAs Compare To The Competition?

It is often said that competition validates your product. So, naturally, looking at your competition is a great litmus test. It helps you know how your product, services, and pricing fit in with your particular marketplace. 

In 2020-21, a survey conducted by the National Society of Accountants found that the following prices were typical for tax preparation services:

  • Form 1040 + Schedule C (small biz) – $670
  • Form 1040 + Schedule E (rental) – $576
  • Form 1040 + Both – $778

CRS CPA’s price range for these types of individual tax returns is $400-700.

Based on that, our rates already fall within (and often well below) what other similar firms are charging. 

how much is an accountant

Beware of Low Advertised Rates

Many companies build their business model around advertising low rates just to get customers “in the door.” Then, later in the transaction, they find ways to add on other fees that were conveniently left out of the initial conversation.

For example, Southwest airlines may advertise “$39 oneway to Las Vegas!” That sounds great, and it definitely gets people’s attention. You might rush to book that flight and discover later that it will cost you $329 to get back home again! But all people really see is $39.

In our industry, H&R Block has a similar strategy.

Many of their offices are located inside Sam’s Club warehouses. The immediate perception is that everything at Sam’s is cheaper (i.e. “a good deal”). Therefore, the tax services being offered there must be a good value too.

However, an H&R Block manager once admitted to us that a third of their services are below market rates, a third are on par, and a third are significantly higher. The price you see at the beginning probably won’t be the final price you pay at the end.

Their individual tax return filing service (Form 1040) is very inexpensive compared to other firms, so people automatically assume that their other services must be cheaper as well. That’s not the case, and it only takes a small business owner with rental property income (for instance) once to realize how expensive the total fee can be.

H&R Block is just one example. They fill a need in the accounting industry, and we’re glad they exist. They do their job well. We simply use them as an illustration of how our policy of upfront pricing saves our clients from a lot of confusion and stress.

how much does a cpa cost

We Deliver a Better Product

Whenever a company wants to set itself apart from the competition, they have to provide a product that is better.

Whenever a company raises its prices, it’d definitely better deliver more value!

Whenever we’ve announced rate increases over the years, we’ve been well aware that we are under increased scrutiny. Our clients want to see that they are still getting top-notch service for their hard-earned money.

Therefore, we are renewing our commitment to you, our valued customer, that we will be continuously improving our client experience in order to deliver tax, accounting, and business development services that help you succeed.

We specialize in small businesses that generally have fewer than 100 employees. We believe that being able to directly help you, the owner, allows us to make sure you’re getting the most out of your business for yourself and your family. 

We continue to provide expert personalized advice in the areas of

  • Tax Planning
  • Bookkeeping & Payroll 
  • Strategic Business Planning
    • Entity Structure
    • Business Operations & Documentation
    • Cash Flow Planning
    • Benefits
    • Income Strategies
    • Rental Property Operations

…to name a few. Take a look at our Services page for a complete list of what we can do for you.

Next Steps

Ready to connect with us and gain a business partner dedicated to your success?

  1. Schedule a call. We’ll discuss your needs and ensure that we’re a proper fit for each other. No strings attached.
  2. We’ll tailor a solution for you. You’ll receive a custom accounting solution based on your specific needs, and you’ll have a total fixed annual upfront price.
  3. You get results. Watch things come together as we stay in regular contact with you: keeping you informed, making adjustments as needed, and finding a rhythm that fits your business.

Let’s Get Started On Something Great

To learn more about what our team of accounting professionals and tax experts can do for your business, schedule a call. Discover peace of mind that comes through honest up-front pricing and what it means to “expect more from your CPA.”

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