Calculating the Fee – Value Pricing

With value pricing the fee is based on the value added to the client, not the number of hours you spent working on the client.

The benefits of value pricing include:

• Clients are only paying for the value they receive – so clients are happier as they don’t feel ripped off when you spend a lot of time on work that adds no value and means nothing to them.
• It separates time from profit – your potential profit is no longer connected directly to the number of hours you work.
• Creates an incentive to improve efficiency and productivity.
• Eliminates bill shocks as clients know how much they’ll be charged in advance.

For tax planning, the value added to the client will be the amount of tax savings generated from implementing the selected tax strategies. For example, if the client’s tax savings report shows $5,000 of tax savings, then the value added is $5,000. Our value pricing fee should be set at between 20 – 33% of the value added to the client. So, for the above example, the fee will be set at between $1,000 and $1,667.