How to Price Your Services (The Episode That Pays for Itself)

Most new tax preparers underprice their services.

They look at what national chains charge, cut the price, and assume that being cheaper will help them win clients. In this episode, Jason Carr explains why that approach can hurt a new tax prep business before it ever gets traction.

Jason walks through a practical pricing framework for new preparers, including:

• Why market-rate pricing matters
• Why flat fees usually work better than hourly billing
• How to create basic, comprehensive, and premium service tiers
• Why new preparers should avoid competing primarily on price
• How annual price increases compound over time
• What first-year, second-year, and third-year revenue can look like with disciplined pricing

Jason also explains why pricing is one of the fastest ways to increase income without adding more clients.

Key Takeaways

• Do not price yourself as the cheaper alternative: Cutting the market rate tells clients you are worth less. A professional price supports a professional perception.
• Use market averages as your starting point: Basic individual returns often fall around the low-to-mid $200 range, while more complex returns with itemized deductions, self-employment income, and state returns justify higher pricing.
• Charge flat fees, not hourly rates: Flat fees give clients certainty and reduce billing anxiety. They also allow you to price based on value and complexity rather than time spent.
• Collect before filing: A clean billing process protects cash flow and avoids chasing clients after the return is complete.
• Use service tiers: A basic, comprehensive, and premium option helps clients self-select based on need and budget. The middle tier often becomes the default choice.
• Raise prices every year: A $25 to $50 annual increase can materially improve profitability without requiring a dramatic change to your workload.
• Average revenue per client matters: A preparer who charges $350 per return can earn significantly more than one charging $200, even with fewer clients.
• Pricing compounds: Better pricing in year one creates a stronger base for year two and year three.

Suggested Episode Timestamps

00:00: Why most new preparers underprice their work

00:45: What the tax preparation market actually charges

02:00: Why franchise pricing should not scare independent preparers

03:00: The case for flat-fee pricing

04:10: Why new preparers should start at market average

05:15: Building basic, comprehensive, and premium tiers

06:45: How to raise prices each year

07:45: The revenue math for years one, two, and three

09:00: Why pricing is the fastest income lever

09:45: How MuseSpring helps new preparers price professionally

Resources Mentioned

• MuseSpring: https://musespring.com
• Tax Business Blueprint Program: https://musespring.com
• The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com 

Transcript

SPEAKER_00 0:02

You trained for the career. Now build the business. This is the New Spring Minute, where aspiring tax professionals learn to launch and scale their own practice. Here's your host, Jason Carr.

SPEAKER_01 0:22

Pricing is where most new preparers leave money on the table. They look at what HR Block charges, cut it by 20%, and think they're being competitive. What they're actually doing is telling the market they're worth less. Let me help you avoid that. First, let's talk about what the market actually looks like. The National Society of Accountants surveys tax preparation fees every year. For a basic 1040 with the standard deduction, the national average is around $220 to $250. For a 1040 with itemized deductions is $300 to $350. Add a Schedule C for self-employment income and you're in the $400 to $500 range. State returns are typically an additional $50 to $75 each. Each and our block and the franchise operations charge comparable rates, but their overhead is enormous. You don't have a storefront lease, franchise royalties, or corporate marketing fees. Your margins are better, which means you can charge market rate and still earn more per return than a franchise preparer does. Here's my pricing framework for a new preparer. Charge flat fees, not hourly. Clients want to know what their return will cost before you start. Hourly billing creates anxiety and discourages people from asking questions, which is bad for the relationship and bad for accuracy. Quote a flat fee based on the complexity of the return, collect it before you file and move on. Start at the market average, not below it. Your instinct will be to discount because you're new. Resist that instinct. A hundred and fifty dollar return tells the client, this person is cheap. A two hundred and fifty dollar return tells the client, this person is a professional. You're not competing on price. You're competing on trust, attention, and accuracy. Create two or three service tiers. This is a technique from value-based pricing that works in every professional service. Offer a basic return, ten forty standard deduction at one price. Offer a comprehensive return, ten forty with itemized deductions, credits in one state at a higher price. And then offer a premium package, comprehensive return plus 30 minute tax planning review at the top price. Most clients will pick the middle tier and some will pick the top. Almost nobody picks the bottom. You've just increased your average revenue per client without doing any additional marketing. Raise your prices every year. Starting in year two, raise your rates by $25 to $50 across the board. Notify your clients in November. Effective January 1st, my standard return fee will be $275, previously $250. Some clients will leave, that's fine. The ones who stay are more profitable, and the new clients coming in are already at a higher rate. Here's the math that matters. If you prepare $50 returns, an average of $250 each, that's $12,500 in your first tax season. At $100 returns and $300 average in year two, that's $30,000. By year three at $150 returns and $350 average, you're at $52,000 just from tax season before any year-round services. That's how a tax prep business grows. Not by cutting prices, but by building value and letting the numbers compound. Pricing strategy is something we spend a lot of time on inside the MuSpring community because it's the single fastest lever for increasing your income without adding more clients. If you're interested in the program, MuSpring.com has everything you need to know. I'm Jason Carr. Thanks for listening to the Mew Spring Minute.

SPEAKER_00 3:49

Thanks for listening to the Mew Spring Minute. Subscribe and leave a review so other future Tex promos can find the show. The Mew Spring Minute is produced by Mew Spring MLC for educational and informational purposes only and does not constitute legal or tax advice. For guidance specific to your situation, consult a qualified professional. Mew Spring LLC is number lumber.