As valuation practice leaders, maintaining profitability in the face of rising costs is a critical challenge. A recent report by Ignition offers a compelling reminder: fee increases aren’t just necessary for covering operational expenses—they’re a strategic tool for growth. If your firm hasn’t considered revisiting its pricing strategy, 2025 may be the year to act.
Survey Highlights: The Need for Fee Adjustments
The 2024 U.S. Accounting and Tax Pricing Benchmark report surveyed 345 firm owners and decision-makers, uncovering a clear trend: the majority of firms plan to raise fees across all services in the coming year. Here’s what the data shows:
- 57% of firms plan to increase fees across all services.
- 90% will increase fees for individual tax returns.
- 87% will increase fees for business tax returns.
- 70% will increase fees for tax planning and advisory services.
- 85% will increase fees for bookkeeping and accounting services.
- 76% will increase fees for CFO and controller services.
While covering rising business costs is the primary driver behind these adjustments, only 5% of firms are increasing fees with the explicit goal of boosting revenue—highlighting a missed opportunity for many.
Implications for Valuation Practice Owners
Although the Ignition report focuses on accounting and tax firms, the findings are highly relevant to valuation professionals. Rising operational costs, from software subscriptions to retaining top talent, make fee adjustments essential. Ignoring this reality risks eroding your margins, especially as fixed costs climb.
Moreover, the shift away from hourly billing toward fixed-fee and value-based pricing presents an opportunity for valuation firms to align pricing with client outcomes and perceived value. This model not only ensures profitability but also strengthens client relationships by providing transparency and trust.
Pricing Models in Practice
The report notes a growing trend toward fixed-fee and value-based pricing across various services:
- 54% use fixed-fee or value-based pricing for tax preparation services.
- 67% adopt these models for tax planning and advisory services.
- 79% apply them for bookkeeping and accounting services.
- 75% use them for CFO and controller services.
For valuation practices, transitioning to fixed-fee pricing can enhance predictability for both the firm and its clients. Value-based pricing, particularly for complex engagements like M&A or litigation support, allows you to command higher fees by emphasizing the strategic importance of your expertise.
Strategic Fee Increases: A Win-Win
Adjusting your fees isn’t just about staying afloat; it’s about positioning your practice for long-term success. Here are a few key steps to consider:
- Analyze Cost Trends: Review your firm’s operating expenses to identify areas where inflation or increased investment (e.g., technology, training) has impacted costs.
- Benchmark Your Pricing: Compare your fees to industry standards to ensure competitiveness. For example, some firms charge less than $500 for tax planning services, while others charge over $2,000, depending on their client base and value proposition.
- Communicate Transparently: When raising fees, be clear with clients about the value you’re providing. Position fee adjustments as a reflection of your commitment to delivering high-quality, results-driven service.
- Adopt Value-Based Models: Shift focus from hours worked to the strategic outcomes your expertise enables. This approach not only justifies premium pricing but also aligns with client expectations for long-term value.
A Call to Action for Valuation Leaders
In an era of rising costs and increasing client demands, ignoring fee adjustments is not an option. As the Ignition report demonstrates, thoughtful pricing strategies can do more than cover operational expenses—they can drive growth, foster stronger client relationships, and ensure your firm’s sustainability.
For valuation professionals, the message is clear: Evaluate your pricing models, embrace transparency, and don’t hesitate to align your fees with the value you deliver. A strategic approach to fee increases isn’t just smart—it’s essential for your practice’s continued success.
