“Surge Pricing” for Tax Preparers?

Surge Pricing for Tax Preparers

If you look at the February 16th IRS Filing Statistics, you will see that Tax Professionals are down by 8.1% this tax season in the number of e-files we have sent to the IRS, as compared to the same dates last season.

Yes, part of this is due to IRS starting e-filing a week later this year.

However, part of this is also due to:

  • The “DIY Robots” (online self-preparation software) and the “Cousin Vinnies” (non-professionals who do taxes for other people but then write “self-prepared” on the 1040, a.k.a. “Ghost Preparers”) are doing more of the “relatively easy tax returns” that arrive early in the tax season.
  • This is visible in the fact of self-prepared e-files only being down 3.7%, as opposed to Tax Professionals e-files being down by 8.1%.

What’s happening, then, is that Tax Professionals are faced with more and more of the trickier tax returns, which come in after March 1st.

In general, this trend feels like a positive development for most of us–we get to invest more of our time working with clients who truly need expert level help.

However, this trend does cause a situation where, from March 1st – April 15th, we are asked to do an absolutely ungodly amount of work in a very short period of time.

In response to this trend, many Tax Professionals are taking a page from Uber’s playbook and using “surge pricing.”

Meaning that prices increase as we get closer to the March 15 and April 15 deadlines–similar to how Uber’s prices increase during times when there is a lot of demand for Uber drivers.

If you’re not already doing surge pricing, it’s a strategy that’s definitely worth considering in this New Era of Tax.

If you are already doing surge pricing, here are three quick tips that you may want to consider if you’re seeking to improve your surge pricing strategy:

  1. Communicate ahead of time with clients as to the date that prices will go up. Clients who want to save money on fees will be incentivized to get started NOW. Anyone who doesn’t take action by that date can’t claim “you didn’t tell me, you should have told me.”
  2. Believe in the increased value that you provide by being willing and able to do tricky tax work in an environment of considerable chaos. Clients will only believe in the increased value if WE believe in the increased value. If we don’t actually believe that we’re providing more value, we feel non-confident asking clients to pay more money–correct?
  3. Charge money to file extensions. Any distraction from the work at hand costs us time and, this time of year, time is money. While clients may feel that filing an extension “takes two seconds,” we know that’s often not true.

Note please that these are not “recommendations” for you, just things that are worth considering–our role is to share ideas with you, share strategies we see other tax pros using with success, and then trust you to make the best decisions for yourself and your clients.

    If you need any help with developing, implementing, or improving a surge pricing strategy, or you need help with anything else, we’re here!

    1. Pronto Tax School Members — jump into the Tax Preparer Teamwork Group and let’s discuss together the best surge pricing techniques. Let’s educate, empower, and encourage each other.
    2. Not Yet Pronto Tax School Members — we’d love to earn your trust enough to have you join the party! We believe tax pros win more when we team up more, and we want to be a trusted teammate for you. Click here to see all the benefits available to you as a Pronto Tax School Member and join today.

    We hope this helps your level of client service and your profits surge ever higher!!

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