A recent 2024 U.S. Accounting and Tax Pricing Benchmark survey by Ignition highlights a significant shift in pricing strategies across professional services, offering crucial insights for valuation firms, many of which operate as part of CPA practices or independently. With 57% of firms planning to raise prices in the coming year, this trend signals both opportunities and challenges for valuation professionals.
Key Pricing Trends for Professional Services
The survey reveals a clear trend: most firms are increasing their fees across various services to address rising costs, enhance revenue, and align pricing with the value they deliver. Here are some notable statistics:
- 31% of firms are implementing a 10% fee increase, while 37% plan smaller adjustments of 5%.
- A bold 6% are raising prices by 20% or more, signaling confidence in the value they provide.
For valuation firms, services like business valuations, intangible asset appraisals, and transaction advisory could follow a similar trajectory.
Services Seeing Price Adjustments
The survey indicates widespread price increases in several service areas. For valuation firms, comparable categories may include financial analysis, strategic advisory, and litigation support:
- 90% of firms are increasing fees for individual services (e.g., tax returns). Similarly, valuation firms may adjust pricing for entry-level appraisals or standardized reports.
- 87% are raising fees for business services, which aligns with valuation services tied to M&A, financial reporting, and estate planning.
- 70% are increasing fees for advisory services, which resonates with higher-value offerings like strategic consulting and litigation support
Strategic Pricing Approaches
Professional services firms are moving away from traditional time-based billing toward more strategic pricing models, such as fixed-fee and value-based pricing. Here’s what the data shows:
- 79% of firms use fixed or value-based pricing for bookkeeping and accounting services.
- 75% apply these models to CFO and controller services.
For valuation firms, adopting value-based pricing can reflect the unique insights and strategic impact of valuations, particularly in areas like business valuation for M&A or litigation support.
Drivers Behind Pricing Changes
The main reasons for price adjustments include:
- Covering Rising Costs: With 58% of firms citing cost increases as a primary driver, valuation firms may also face higher expenses for hiring, retaining talent, and investing in technology.
- Strategic Client Selection: 12% are using price increases to phase out low-value clients and focus on high-margin relationships.
- Recognizing Value: Ralph Lazanis, CPA and CEO of Future Tech, emphasizes, “Too many professionals undercut themselves, charging far less than they should for the value they deliver. This leads to two major problems: They’re overworked and burned out.”
Practical Tips for Valuation Firms
- Assess Current Fees: Benchmark your fees against competitors for services like business valuation, intangible asset appraisals, and M&A advisory.
- Adopt Value-Based Pricing: Reflect the strategic impact of your work by emphasizing client outcomes rather than hours worked.
- Communicate Value: Clearly articulate the benefits of your services to clients, especially in areas where your expertise supports critical decision-making.
- Consider Strategic Increases: Use pricing adjustments to align your client base with your firm’s growth and profitability goals.
The Bottom Line for Valuation Firms
The growing trend of fee increases reflects the rising recognition of the value professional services deliver. For valuation firms, this is an opportunity to reassess pricing strategies, align fees with value, and communicate that value to clients. As the industry evolves, staying competitive will require a strategic approach to pricing that balances rising costs, market expectations, and the unique insights valuation professionals bring to the table.
Are you ready to charge what you’re worth and grow sustainably? Now is the time to evaluate your pricing strategy and take action.
