Ask Ron Baker: Tax Return Pricing for Sole Proprietors

Ask Ron Baker: Tax Return Pricing for Sole Proprietors

I received the following email from Richard, a sole proprietor CPA, regarding how to deal with low-value services and pricing tax returns.


I just listened to an archived AICPA PCPS presentation on value pricing and I also have a copy of your book, Implementing Value Pricing. I am a sole-CPA with one part-time bookkeeper. Most of my write-up and payroll customers are already fixed price. My 1040s are usually what I charged them last year, plus cost of living. My original fees were based upon a budgeted set of hours. My questions for you are:

A lot of 1040 customers perceive a CPA the same as H&R Block. How do I raise the perceived value for a basic 1040, or can you? How do I know if I am underpricing for 1040s, except basing it on what other CPAs charge per hour?

I agree with you that to be more profitable, you need to capture the value from the customer. Are you saying that I should stay away from low-value services? That is the bread-and-butter of Solo CPAs.

Any comments would help!!


P.S. I threw out my timesheets this tax season because it got too time consuming to keep track of 2-hour 1040 clients.

Hi Richard,

Thank you for your email. Your questions are ones I get a lot, and I think we have to start with how you perceive yourself. If you think you are H&R Block, so will your customers. If you think you’re worth more than Block, so will your customers; you are your first sale and you’ll never get paid more than you think you are worth.

I’m not saying you should avoid low-value work; instead, you should only allocate so much of your capacity to it and certainly not add more capacity to take on more of it. You want to reserve your capacity for your best customers and for new “A” customers.

Please don’t let what other CPAs charge have influence over you. They are not you. Why would you let your dumbest competitors set your price? What is your unique value proposition?

One innovative method is to offer your 1040 customers a menu option, similar to American Express’ Green, Gold and Platinum levels:

  • At the Green level, you only do the 1040 for a competitive price – but certainly more than H&R Block; after all, you are a CPA and CFP!
  • At the Gold level, you might bundle in tax planning and unlimited phone calls and meetings throughout the year.
  • At the Platinum level, you might bundle in prepaid audit representation and, perhaps, a financial or retirement plan review – something of high value to the customer, but low cost for you to provide that showcases your expertise.

This is just one example. You really have to put some serious thought into your bundles because they have to match your competitive advantage, strategy and positioning in the market. However, it’s worth the work since we’ve seen this strategy used many times with great success.

I hope this helps.



Editor’s note: This is the first in a series of "Ask Ron Baker" articles for the Firm of the Future blog. Please send your questions on value pricing and practice management to