you bought a tax practice! but they charge less than you do. now what?
by ed mendlowitz
the 卡塔尔世界杯常规比赛时间 practice doctor
question: i bought a tax return practice in december from a person who was charging $180 per hour. my rate is $300 per hour so i did not make money and i would like to know what i could do to raise fees so i don’t continue to lose on it.
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answer: after a long discussion, it appears that he bought a good practice with good fees charged for the returns. his problem is that he has no employees and did all the work himself – about 750 tax returns, and was totally overwhelmed with non-stop work.
most of the level of work he did was for a person that typically would be billed at $120 per hour. so he was doing $ 120-hour level work, getting paid at $180 hour and he is unhappy because he is not getting $300 an hour.
his problem is that he has no leverage; has no one to pass most of the lower-level work on to; and had no fun working around the clock. however, he expects to retain about 80 percent of the clients because he met most of them and feels he established relationships with them.
i told him that he is performing services beneath his level and should be thrilled he is realizing $180 per hour for the type of work he is doing. if he can’t or doesn’t want to hire someone at a lower level to do the work, then he should get past the thought that he is a $300 per hour person and realize he is a $120 per hour person getting paid $180.
a few suggestions i gave him:
- try to hire per diem people during tax season so he could have some relief;
- spend less time than he was with clients and not try to do the return while they are sitting with him;
- next tax season he should keep this year’s fee and tell the clients that and just increase it 5 percent to cover increased costs, assuming it is the same type of return.
i also told him it seems that he purchased a winner and shouldn’t do anything to screw it up, and should call every client in the next month to touch base with them and ask if there is any financial matter they need help with and point out that he has a cpa practice and does many other cpa types of services and they should keep him in mind and not hesitate to call him.
he also told me he is studying to get his securities licenses and wants to offer financial products. i told him that the money spent to hire people to do the work is an investment that will enable him to spend the time doing what he thinks will be more lucrative work, and by having a staff person he will be elevated professionally in the eyes of his clients.
one response to “merge in lower-priced work without losing out”
frank stitely
wow! 750 returns prepared by one person. he definitely needs to hire someone – probably two people. if you’re doing mostly data entry work, expect to get paid commensurately. he should focus his time on higher $ tax planning and consulting.