How Do You Know if Your Price Is Right?

Why It Matters

Pricing decisions directly affect accounting firms’ profit margins, client retention, and competitive positioning, making strategic fee adjustments crucial for long‑term viability.

Key Takeaways

• Fee freezes act as hidden price cuts amid inflation.
• Reducing fees can attract volume but risk profit erosion.
• Inflation-indexed hikes are client‑acceptable and defend margins.
• Significant price hikes may filter out low‑value clients.
• Align pricing with perceived value to sustain long‑term growth.

Pulse Analysis

Pricing has become a strategic lever for professional services as inflation outpaces wage growth and clients scrutinize every expense. Accounting firms, in particular, must reconcile rising operational costs with the expectation that advisory fees remain predictable. A data‑driven approach—benchmarking against industry peers, tracking cost‑to‑serve metrics, and modeling client price elasticity—provides the foundation for any fee decision. By quantifying the true cost of compliance work and the value delivered, firms can move beyond gut‑feel adjustments toward transparent, defensible pricing structures.

Each pricing path carries distinct trade‑offs. Freezing fees may appear benign, yet in a climate of 5‑7 % annual inflation it erodes real margins and can signal complacency to high‑value clients. Modest, inflation‑linked hikes are often justified by the cost base and are rarely contested, preserving profitability while maintaining client goodwill. Conversely, price cuts can generate short‑term volume but risk a downward spiral that devalues expertise. Aggressive increases, while potentially boosting revenue per engagement, may purge price‑sensitive accounts but also attract clients who equate higher fees with superior service—a tactic employed by the Big Four.

Practices should adopt a tiered pricing framework that aligns fee levels with client profitability and strategic importance. Begin with a thorough cost analysis, segment the client base, and pilot adjustments on low‑risk accounts before scaling. Clear communication—highlighting service enhancements, regulatory changes such as Making Tax Digital, and inflationary pressures—helps mitigate churn. Ongoing monitoring of churn rates, utilization, and client satisfaction will reveal whether the new structure sustains margins without sacrificing growth, turning pricing from a reactive chore into a competitive advantage.

How do you know if your price is right?

By Philip Fisher · 22 Jan 2026

Pricing services correctly is a critical part of running any business and while the weather is grim and you’re feeling under pressure, January could be the ideal time to consider fee structures for the coming year.

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Little difference

When it comes to pricing, that choice makes little difference, since the principles underlying both methodologies are identical.

Most of those running accountancy practices will take the view that there are only two possibilities when it comes to reviewing prices for 2026 and beyond. Should we freeze or should we increase?

However, even if it might be something to dismiss very quickly, the option of reducing prices might also come into the debate.

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Reductions to maximise profitability

Why would any accountant in their right mind think about reducing prices? The answer has to be: if it could be a route to maximising profitability.

To draw a parallel, there are many in our profession who firmly believe that reducing tax rates will increase the overall tax take. Using this logic, reducing our own fees should lead to a higher bottom line.

It would be a brave accountant who went this way across the board. However, it is by no means unknown for a firm’s largest clients to demand fee reductions as a quid pro quo for ongoing business. We are then left with the decision of either accepting even worse recovery rates or filling a big black hole after one of our largest clients departs.

The other rationale for reducing prices is market pressure. If we offer what appears to be an identical service to that of many competitors, it may make sense to reduce fees in order to undercut them and bring in additional work. The danger here is that you end up in a spiral, as others reduce fees in response to your cut ad infinitum.

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MTD Accountability Club: Essential countdown checklist for accountants

Join us on Monday, 16 February at 2 pm, as we discuss the key MTD preparations and actions needed in February and March to ensure clients are ready for April 2026. We will also be joined by Natasha Everard from Bewitching Bookkeeping Services and Sarah Bedford from HMB Accountants, to hear how their practices are progressing towards the MTD deadline.

Register your place

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Freezing is a cut

At a time when costs are rising and inflation stubbornly refuses to meet the Bank of England’s target, freezing fees is effectively a cut.

However, many in our profession are fearful of their clients and worry that if they increase fees there will be a rush for the metaphorical door.

Further, freezing fees is easy and even lazy. You don’t need to do anything, tell anyone or get into fights with clients who object to price rises.

On the other hand, you may be storing up future battles with colleagues, staff members and suppliers when you are unable to reward them in a fashion that they regard as acceptable.

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Managing increases

We don’t need to look very far under the news headlines to discover the greatest advocate of price rises in our lifetimes. The President of the United States might not describe them as such but how else can you refer to tariffs?

Those in our industry will clearly not be comfortable with price fluctuations that vary from week to week and have no basis in logic or anything else.

However, there are many reasons why we might wish to increase fees. The most obvious is that such a move should feed directly into our pockets, unless significant numbers of clients move on.

The more interesting issue is the extent to which we can get away with pushing up our fees.

The conservative approach would be to use a measure of inflation. Whether this is the Retail Prices Index, the rather lower Consumer Prices Index, or possibly some kind of triple lock akin to that offered to pensioners, is a decision for each of us to take.

Being accountants, some might try budgeting their costs for the year, compare those with the previous year and use the resulting percentage as justification to offer to clients.

Since most clients will be expecting an inflationary rise, whichever of these fits the bill is unlikely to be particularly controversial or damaging.

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Significant increases

A more radical approach would be to increase fees by significantly more. On the plus side, if most clients are willing to pay these fees, that will more than offset the loss of those who refuse to do so.

There is also every chance that the departing clients are the ones that you were hoping to lose anyway. If they can’t afford your fees or don’t regard your services as valuable, wave goodbye with a light heart.

It may also seem counterintuitive, but you could also draw in more worthwhile clients, who may previously have turned their noses up at what looked like a cheap and therefore less valued offering. Ironically, this is roughly the model that the Big Four applies, demonstrating consolidating the perception of excellence through inflated charges.

There is no right answer that will apply to each and every business. Instead, partners or directors need to get together, weigh up the pros and cons and make some big decisions that are likely to prove extremely valuable in the long term.