the future of fees

are you raising yours to close a salary gap?

by 卡塔尔世界杯常规比赛时间 research

when the 2024 rosenberg national survey of cpa firm statistics asked prominent consultants what’s coming down the pike in the accounting profession, an upheaval in fee structure came up a lot.

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first, the good news: net fees are growing rather nicely.

  • net fees at firms billing more than $2 million jumped an average of 10.7 percent.
  • growth at firms billing over $20 million leaped by 12.5 percent.
  • even small firms, those with $2-5 million in revenues, grew by 9.1 percent.


don’t get excited

but don’t get too excited. one of the rosenberg survey consultants, michelle golden river at fore llc, says revenues aren’t increasing fast enough to bridge the salary gap – the difference between what an entry-level accountant earns and what he or she could earn in a related field, such as finance or information technology. that gap explains some of the reason why it’s so hard to hire and retain talent.

“to offer commensurate starting pay (and raise legacy salaries, accordingly), we must change our revenue model,” river writes. “our current 5-10 percent annual increases cannot get us there. we fell behind more than a decade ago and, at this pace, we’ll never catch up.”

to increase revenue, river says, practices need to position their prices on “something other than time, especially as technology continues to facilitate dramatic time reduction.”

she’s right about the impact of technology. as automation and artificial intelligence whittle down the time it takes to perform a given task, any firm basing its fees on time is whittling down its revenue, not to mention its viability as a going concern.

one big mistake firms make is to tell clients that prices need to go up because costs have gone up.

that, she says, isn’t the appropriate approach. she calls it defensive and not of concern to clients. clients don’t care about their cpa’s costs; they care about their own bang for the buck – the value they receive.

that value isn’t time.

rivers says, “firms that ignore the hourly billing model’s weaknesses will continue to leave a lot of money on the table that they could otherwise use to solve a great many problems.”

a saving grace or a coup de grâce?

jennifer wilson, at convergencecoaching, is thinking along the same lines.

“ai will blow people away with its application to traditional services,” she writes, “reducing time and cost of service delivery, opening up all sorts of opportunities and screwing up firms that charge based on time (don’t do it anymore!) and freeing up firms that get it.”

in other words, ai can be an incredibly powerful tool for the firm that adjusts its pricing model appropriately but a coup de grâce for the firm that clings to the obsolete time-based model.

the combination of ai efficiency and a proper pricing model offers an opportunity to raise fees and revenue, generating the funding needed to attract and retain professionals. if ever there was a time to ditch time-based pricing, it’s now.

2 responses to “the future of fees”

  1. cathleen volk

    “using ai” is a rather broad statement. using it in what manner?

    reply
    • mark vandeveer

      agreed. and what is a “proper pricing model”
      need to explain terms. other wise all the article says is we need to raise fees, as if that is some big, new idea!

      reply

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