Accounting firm price increase: which clients to reprice first, and why the letter comes last

What pricing strategy should an accounting firm use?

Price every client to a written scope, with a written minimum and one fixed date each year for changing fees. The scope is the returns, entities, states and services the engagement letter names, and work outside that list carries its own price. The minimum is set by return or engagement type. The date is when every client’s fee is reviewed, plus a repricing whenever a client’s scope has grown since the fee was set.

The fee basis is a separate choice: hourly, or a fixed fee for a defined scope. A fixed fee holds its value only while the scope it buys is written down and counted each season; an hourly rate needs time records the client will accept. When the cash arrives, whether per return, by monthly autopay or as a deposit plus a balance, is a billing choice made client by client. Whatever the basis, every fee should trace back to something countable in the firm’s own records.

Write the policy on one page, so every partner applies the same rules. A policy that lives only in a partner’s head can be applied differently to each client, and the exports below will show where. The repricing round in the rest of this guide is that page applied for the first time to clients priced years ago.

• The fee basis for each service: a fixed fee per return or engagement, a fixed monthly fee, or hourly
• The minimum fee for each return or engagement type
• The out-of-scope items, each with its price or rate
• The date of the annual adjustment, and who signs off on exceptions

Build one row per client from three exports

A fixed-fee firm may keep no timesheets, and it does not need them for this. The question is not how many hours a client took. It is whether what the client now sends still matches what the fee was set to cover. Three exports answer it, joined by client ID:

• From billing: last season’s total fee per client, the date the fee last changed, every invoice adjustment or write-down, and the days from invoice to payment.
• From the practice-management system: the count of returns, entities, state returns and K-1s handled for each client last season and the season before, the notices answered, and any out-of-scope requests logged in the portal or the inbox.
• From the signed engagement letter: what the fee was set to cover — the returns, entities and states named — and whether out-of-scope work is billable under its terms.

The spreadsheet then has two columns that matter most. Delivered units against the units the letter priced, and the fee against the firm’s own minimum for that kind of client. Where a count is missing — notices answered with no record, requests handled by phone and never logged — that gap is a finding of its own, because the next price conversation will need the number.

Which clients to reprice first

Some fee increase guides suggest starting with the firm’s best clients, on the logic that they value the relationship most and are least likely to leave. That order protects retention. The order below protects margin, and it starts where the records show the fee has fallen furthest behind the work.

• First, clients whose work grew while the fee did not. More entities, more states, more K-1s, more notices — two seasons running — with the fee unchanged. The letter priced a smaller engagement than the one the firm now delivers. These clients are repriced to the scope, not by a percentage.
• Second, clients under the firm’s own minimum. A firm has a fee below which a return costs more to prepare than it brings in, whether or not anyone has written it down. Write it down, by return type, and list every client under it.
• Third, clients whose fee has not moved in several seasons. The date of the last fee change is in the billing system. A fee untouched for years has absorbed every rise in wages, software and insurance since then.
• Fourth, everyone else, with one predictable annual adjustment, announced at the same time every year so it never reads as personal.

Illustrative example: a client was taken on four seasons ago for one individual return and one S corporation return at $3,000 a year. Last season the firm prepared that return, the S corporation, a new partnership, two additional state returns and answered three notices — and billed $3,000. A 5% increase brings the fee to $3,150 and leaves the scope gap untouched. The honest conversation prices the partnership, the states and the notices on their own lines, and the letter shows the old scope beside the new one. The numbers are invented for the example; the firm’s own rows are the only ones that count.

How much: the firm’s own numbers, and one outside index

The amount for the first three groups comes from the firm’s rows: the fee the current scope would carry at the firm’s own prices, and the minimum for that return type. No outside figure can say what a particular client should pay.

For the fourth group, a government index shows what the market did. The Bureau of Labor Statistics publishes a producer price index for Offices of Certified Public Accountants, which measures the change in the prices those offices receive for their services. On the series as published by the Federal Reserve Bank of St. Louis, the index stood at 150.483 in September 2025 and 154.498 in September 2026, a rise of about 2.7 percent. BLS revises recent months, so re-read the figure before quoting it. That is an average across the industry, not a recommendation to raise any fee by that amount, and a firm whose own costs or scope moved more has its own reasons, from its own records.

When to send it: before the engagement letter is signed

For a calendar-year tax practice the right window is the engagement-letter season, roughly November through January, before the organizer goes out and before any work starts. The new fee belongs in the renewal letter itself, so signing the letter is agreeing to the fee. An increase announced in February, after the client has already sent documents, leaves the client feeling trapped and the firm doing the work before the price is settled.

There is a rule-based reason to settle price first, too. For practitioners under Treasury Circular 230, 31 CFR 10.28 requires the practitioner to return the client’s records that are necessary for the client’s federal tax obligations at the client’s request, and says a dispute over fees generally does not relieve the practitioner of that duty, with a narrower rule where state law allows records to be kept in a fee dispute. A price argued about in March, with the client’s documents already in the firm’s portal, is a weaker position than a price agreed in December. How the rule applies to a specific dispute is a question for the firm’s attorney or ethics counsel. Not legal advice.

• Send every renewal letter by a fixed date, tracked like any filing deadline.
• Put the payment link, or the deposit request, in the same message as the signature request.
• Do not open the new season’s portal or organizer until the letter is signed.
• For clients in the first three groups, call before the letter, so the letter confirms a conversation rather than starting one.
• For a large change, give notice a season ahead. One practitioner in the same thread described noting next year’s expected fee on the current year’s final bill, then sending a reminder in the fall.

Writing the accounting firm price increase letter

Keep it to one page and make it specific to the client. A letter that names the client’s own scope survives being forwarded to a spouse or a controller; “costs have gone up” gives the reader nothing to approve.

Sample, to adapt and have reviewed: “Dear [name], your engagement letter for the [year] tax season is attached. When we began working together in [year] it covered [your individual return and one S corporation return]. Last season it also included [a partnership return, returns in two more states and three IRS notices]. The new fee of $[amount] covers the work as it now stands, line by line, starting with the [year] returns. If anything in that list has changed, tell us before you sign and we will reprice it. [Name, phone].”

• The scope as it was priced, and the scope as it is now, in the client’s terms
• The new fee in dollars, and what it covers
• The effective date: the coming season’s returns
• What is billable outside the fee, in one sentence
• A way to change the scope before signing, which is a real alternative to leaving

When a client says no, and when this needs no outside help

Some clients will leave, and for a client below the firm’s minimum that is not the loss it feels like. Release them cleanly: a short disengagement letter, the client’s records returned promptly on request under 31 CFR 10.28, and an outcome recorded for every repriced client — accepted, rescoped, or left — so next year’s round starts from what happened rather than from memory. What the disengagement letter should say is a question for the firm’s attorney or ethics counsel.

A firm with a short client list, a partner who knows every fee, and letters that went out on schedule last year does not need anyone to run this. The three exports and an afternoon are enough. An outside review earns its fee when the price question is one leak among several and the records do not connect: scope counts nobody keeps, letters signed after work started, notices answered for free, invoices that go out weeks after the work. Our Revenue Review takes two weeks. It reads the firm’s own billing and practice-management exports, read-only — counts, dates and stages, never returns or workpapers — and prices the gap where the records support a number. It writes no client letters, sets no fees, and gives no tax, ethics or legal advice; every pricing decision stays with the firm. We are not a CPA firm, and there are no accounting firm client case studies on this site yet.

If it is unclear whether any of this is worth a fee, start with a free 20-minute call, where a firm too small for the arithmetic is told so.