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Transforming tax advisory with value pricing

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Traditional billing models like hourly and fixed-fee billing often fall short of delivering true value to clients. Misaligned incentives, lack of transparency, and a disregard for the actual value provided are just a few of the inherent flaws. By adopting the “ROI Method” of value pricing, you can enhance client satisfaction, boost your firm’s revenue, and reduce the time spent on engagements. 

Here’s a guide to start implementing this transformative pricing strategy in your tax advisory services. The first step in transitioning to value pricing is identifying which of your services deliver the most significant value to your clients. Focus primarily on tax planning and advisory services, and fractional CFO services. These areas provide substantial tangible and intangible benefits, making them ideal candidates for value pricing.

  • Tax planning and advisory services. These are at the core of delivering value. Through strategic tax planning, you can help clients minimize their tax liabilities and maximize savings. This might involve advising on tax-efficient structures, leveraging tax credits and deductions, and ensuring compliance with ever-changing tax laws. Clients see direct financial benefits from reduced tax payments, which form a solid basis for your value pricing calculations.
  • Fractional CFO services. These extend beyond traditional accounting to include comprehensive financial management, budgeting, forecasting, and strategic financial advice. By acting as a part-time CFO, you help clients improve cash flow management, optimize their capital structure, and make informed financial decisions. This service is highly valuable for small and midsized businesses that need expert financial guidance without the cost of a full-time CFO.

By concentrating on these high-impact services, you can demonstrate the significant value you bring to your clients, setting the stage for successful value pricing.
Financial and non-financial aspects

The ROI Method integrates both financial and non-financial aspects to determine the value of your services. Financial benefits include direct savings or increased revenue, such as the tax savings achieved through strategic planning. For instance, if a tax strategy saves a client $25,000 in the first year, this figure becomes a cornerstone of your ROI calculation.

Intangible benefits, such as handling complexity, urgency, and risk management, are equally important. These might include the peace of mind and time savings your clients gain from your expert services. 

The fee you propose should reflect these combined benefits, ensuring the client’s investment corresponds to the expected ROI. For more complex engagements, aim for a minimum ROI of 200% for the client, potentially reaching up to 400% for simpler tasks.

Implementing the ROI Method 

To successfully implement the ROI Method of value pricing, you need a structured approach that emphasizes thorough analysis, clear communication, and transparent agreements.

1. Proposal preparation. Begin by doing an analysis of their documents such as tax returns, financial statements, or wherever you can identify savings easily. Consider half a dozen strategies to package into Phase 1 of planning. If you’re concerned that the client might take advantage of your time, you can charge a flat fee, perhaps $2,000 for an initial tax plan. Then you can upsell the implementation of the plan, which is in high demand, and where the true value of the tax plan lies. 

Then prepare a detailed value-based proposal. This document should outline the anticipated ROI, including both tangible financial benefits and intangible benefits like reduced risk and improved business stability. By presenting a clear picture of the expected outcomes, you help clients understand the true value of your services.

2. Client communication. Effective communication is critical in gaining client buy-in for value pricing. During your discussions, clearly explain the value proposition, highlighting how the anticipated ROI justifies the proposed fee. Use real-world examples and case studies to illustrate how similar clients have benefited from your services under a value pricing model.

Address any concerns the client may have about the transition from hourly or fixed-fee billing to value pricing. Emphasize that the fee is based on the value delivered, not the hours worked, ensuring that their investment aligns with the benefits they receive.

3. Agreement and payment. Once the client agrees to the value-based proposal, formalize the agreement. Ensure that the payment terms are transparent and clearly documented. Adding ACH collections is great for minimizing accounts receivable. The client should understand that the fee is fixed and based on the expected ROI, not the time spent on the engagement. This approach fosters a value-centric relationship, where both parties are aligned towards achieving the best possible outcomes.

Real-world impact

Consider the scenario of a midsized company looking to optimize its tax strategy. Under the hourly billing model, the firm charges $200 per hour, totaling $2,000 for a 10-hour engagement, with limited insight into the ROI. By transitioning to value pricing, the firm might charge a $6,000 fee based on an estimated $25,000 in tax savings. The actual engagement, completed in 12 hours, results in $30,000 in tax savings. The client enjoys a 400% ROI, and the firm benefits from a higher net profit margin with several thousands more in cash collected, and a more efficient work process.

This transformation highlights the superior, mutually beneficial nature of the value pricing model over hourly billing. It demonstrates how clients can receive greater value and satisfaction while firms enjoy increased efficiency and profitability.

Conclusion

Adopting the ROI Method of value pricing can revolutionize your tax advisory services. It shifts the focus from time spent to value delivered, fostering a true partnership with your clients. By identifying valuable services, applying a comprehensive value assessment, and communicating the benefits clearly, you can drive exponential growth and client satisfaction.

Embrace this opportunity to transform your practice, enhance client relationships, and achieve sustainable success.

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Accounting

IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Accounting

Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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Accounting

At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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