What are the 3 P’s of Tax Planning? (Pricing, Product and People)

Accounting firms offer a broad range of services to clients. One such service is tax planning. However, many firms struggle with a range of issues in offering such services. 

According to several firms, some top issues involve developing pricing for offered tax planning services, dealing with the technical aspects of tax strategies, the implementation of these tax strategies, and creating best practices.

Issues with Offering Tax Planning Services

Many firms offering tax planning find themselves not getting paid well for the work. You struggle to get paid the full value of what is offered to clients. In addition, many firms offer tax planning for free in an effort to sell other accounting products in the future.

Unfortunately, offering products for free can actually cause many CPAs and accountants to experience burnout. Trying to manage your paid working hours with unpaid work can feel frustrating and take time away from other productive tasks that offer greater revenue rewards.

To avoid these issues, Jackie Meyers explains that structuring your firm with tax strategies in mind can make a huge difference with scaling your practice, standardizing processes, and creating value in your work. She's broken down the solution as the 3 P's of tax planning: product, pricing, and people.

Pricing

For pricing tax strategies, firms may offer services at too low of a price while taking on a client volume that was too high. (You’ll find our full value pricing guide here.)

You only have so many hours you can work. In addition, the standard hourly billing practices would actually penalize your services. With technological advances making your tasks more efficient, you would put in fewer hours in completing the work, which would lead to less revenue. Instead of hourly pricing, Jackie Meyers suggested changing it over to value pricing structures.

"You have to value price to change your firm and change your life" — Jackie Meyers

With value pricing, you free up both time and energy by offering something of value that has a tangible value price. So instead of being penalized by being efficient, you are rewarded for working smarter.

As an accepted practice by the AICPA, your fees are based on intangible value offered. Value pricing is different from contingent fees, as your clients now feel confident to talk to you about their needs without worrying about being billed when their communication takes up time.

Product

Once you understand that you bring value to the table with your knowledge, you can actually package up your tax strategies and offer them to your clients. Many firms would throw tax advice in with annual consultations which were sometimes free. This process eliminated the value proposition you brought to the table at the get go. 

Instead, you want to look at your tax strategies as the important value that clients are willing to pay to obtain.

"Look at every tax planning strategy as a product." — Jackie Meyers

You can break your strategies down as specific products that can make your tax firm stand out from the rest. Some ways to do this include:

• Recording videos for clients that are repeatable by describing the strategies and giving an overview
• Recording videos for internal use by your team on how to implement the strategies for your team (to learn more about operational efficiencies, you can visit yourcca.com)
• Recording videos for yourself if you only do it once every few years to remind yourself on what to do
• Creating templates flowcharts and worksheets
• Setting up a workflow or process strategy
• Assigning repetitive tasks for clients and team

Once you decide on how to break down the strategies, you can then decide on how to package those products together. Then you can price and offer specialized packages to your clients.

People

Many CPAs and accountants like to do all the work. It can get really hard to deal with other people. You want to micromanage everything and be in the middle of every single transaction. However, you have to let other people in and track your team eventually to scale your business.

"I had to let go of some of that control and rely on others to help so then I could focus on my passion." — Jackie Meyers

To accomplish this task, Jackie suggested that people should think about who in the firm can sell your tax strategy products. If you aren't doing the selling yourself, decide on who you need to hire. At her firm, she assigned a project manager to every key client. In addition, you need to have standardization of processes in the firm, establish strong boundaries with clients, make a robust client communication system, and even know which clients to let go.

Summary

Every firm can obtain benefits when using the 3 Ps to tax planning. Some of these benefits include increasing revenue, decreasing time, and decreasing the complexity of existing processes. Once nailing down these strategies, you'll have the tools available to scale your business for upward growth.