How to raise your prices: the timeline, the letter, the pushback

Most firm owners who know they are underpriced are not stuck on the number. They are stuck on the letter, and on the phone call that follows it. So the increase slips to next quarter, then next year, while the work grows and the fee does not.

This guide is the whole job in order: who gets an increase and how big, how much notice to give, a letter you can adapt tonight, scripts for the pushback, and what to do when someone walks. It will not tell you what to charge. That number belongs to you: a benchmark can guide it, but only your costs and clients can set it. It gives you a method you can defend to a client.

A flat increase across the book is the easiest letter to write and the worst decision. It over-corrects fairly priced clients and under-corrects the ones eating your margin. Work client by client, through four lenses.

A flat increase across the book is the easiest letter to write and the worst decision.

The scope creep audit

Pull every recurring client’s engagement letter and put it next to what you actually did for them last year. List the work that was never in scope: the extra entities, the payroll that started mid-year, the “quick question” emails that became monthly advisory, the catch-up bookkeeping you absorbed. Your practice management system (Xero Practice Manager, FYI or whatever you run) shows the jobs; your inbox shows the rest.

Scope creep is the easiest increase to explain because it is not an increase at all. It is the fee catching up with work the client already receives.

Time spent against value delivered

Compare what each client’s work costs you to deliver with what it is worth to them. Time is a cost signal, not a price. If you have not yet moved away from hours, this piece on value pricing bookkeeping and annual accounts is the place to start.

If AI and automation have cut your preparation time, be careful. The time saved is your margin, not the client’s discount. Our piece on pricing compliance work after AI explains why price should track outcome and responsibility, not minutes.

Tier every client

Sort the book into three groups. Keep and grow: good work, pays on time, values advice. Keep and fix: good relationship, badly priced or badly scoped. Reprice or release: late paying, disorganised, disrespectful of your team, or so far below your minimum that no realistic increase would make them worth the capacity.

The size of each client’s increase comes from the gap you found, not from a number you picked for the whole firm. Some move a little, some a lot, a few not at all this year.

Decide who you are prepared to lose

Write the list of clients you would accept losing before you send a single letter, or you will negotiate against yourself on the first difficult call. For the third tier, the new fee is the one at which you would be glad to keep them.

Write the list of clients you would accept losing before you send a single letter, or you will negotiate against yourself on the first difficult call.

Before you pick a date, read your own engagement letter. Its fee variation clause, its termination clause and any minimum term decide how much notice you owe and whether the client can leave. Then check what applies in your region.

• Australia. APES 305 Terms of Engagement (revised September 2024) says the engagement document should cover the basis and calculation of fees, and lists significant changes to the terms of engagement among the reasons to reissue it for a recurring engagement. Separately, the ACCC’s guidance on unfair contract terms gives the example of a standard form contract that lets a business change its price at any time with no right for the customer to exit: likely unfair. The same power balanced by a penalty-free right to leave is likely fine. Penalties for unfair terms have applied since 9 November 2023.
• United Kingdom. The ICAEW Code of Ethics (section 330, as summarised in ICAEW’s fee information helpsheet) requires members to give the basis of fees in writing, normally in the engagement letter, and to provide a fee breakdown if a client asks for one.
• United States. We found no AICPA rule that sets a notice period for changing a fee on non-attest work. Your engagement letter and state contract law govern, so put the new fee in an amended letter and get it signed.

This is general information, not legal advice. If a contract term is doing heavy lifting, have a lawyer read it.

Once the minimum is clear, give more than the minimum. Our view: a notice window long enough for the client to receive the letter, ask questions, have a call and still get through one full billing cycle before the new fee starts. The practical order:

Keep it away from your busiest lodgement or filing period.

If you still bill hourly or invoice after the work, the increase is your best chance to change the model. One letter, one conversation, one new engagement.

Build two or three packages around what clients actually need (compliance only, compliance plus bookkeeping, compliance plus advisory) and state exactly what each includes and what triggers extra work. Offering a choice changes the client’s question from “should I accept this?” to “which one suits me?”. A proposal tool such as Ignition can present the options and collect a signature and payment details in one step. Pair it with getting paid before the work and the increase comes with a cash flow improvement, not just a bigger number.

Short, direct, no apology. Explain what is changing, when, why, and what to do next. Adapt this.

Dear [client first name],

Thank you for working with us over [the past year / the time we have looked after your business]. I am writing about your fees and the way we will work together from [effective date].

Over that time, the work we do for you has grown. [One or two specific lines: for example, the second entity added in [month], monthly payroll, the regular advice calls about [topic].] Our fee has not kept pace with that work, and we need to put that right so we can keep giving your business the attention it deserves.

From [effective date], your fee will be [new fee] per [month / year], covering [plain-language list of what is included]. Anything outside that, such as [example], we will quote before we start.

[If offering packages: You can also choose from [number] options, set out in the attached proposal, so you only pay for what you need.]

Your updated engagement letter is attached. Please review and sign it by [date]. If you would like to talk it through, book a time here: [booking link], or reply to this email.

We value working with you and look forward to [the next year / what is ahead for the business].

Kind regards,
[Your name]
[Firm name]

Name the new fee plainly, not as a change from the old one. Make the reason specific. Send it from a person, not from “Accounts”.

Most pushback is about surprise or fairness, rarely the amount. Listen, answer with scope, and never discount on the call.

Most pushback is about surprise or fairness, rarely the amount.

“That’s a big jump.”

“It is, and I should have raised it sooner. Your work has grown with [specifics], and the fee has not moved with it. The new fee reflects what we actually do for you now.”

“My last accountant was cheaper.”

“They may have been. What matters is what’s included. Here’s what we do each year.” Then walk the scope. Our guide to fee comparisons covers this one in depth.

“Can you hold it for another year?”

“I can’t hold it, but I can help you choose the package that fits. If some of this work isn’t useful to you, let’s take it out rather than do it for less.”

“I need to think about it.”

“Of course. The new fee starts on [date]. Shall we book fifteen minutes next week to go through the options?”

“Why does it cost more when you use software to do it?”

“You’re paying for the result and for us standing behind it, not for keystrokes. The software helps us do more checking, not less.”

Reducing scope is the only acceptable way to lower a number. It shows the fee is tied to work.

Some will, and you decided in Step 1 that you could live with it. Reply promptly, confirm the end date, hand over work in progress as your engagement letter requires, and answer the incoming accountant’s professional clearance request without delay. Keep the door open.

Then use the capacity on clients who value the work, or new clients at your new prices. Track who left and why. If one objection keeps recurring, fix the explanation, not the fee.

Should I raise prices every year or only when I have fallen behind?

A regular review date is easier on everyone than a large correction every few years. Diarise an annual review, rerun the scope audit, and decide client by client.

Do I need a new engagement letter or is the increase letter enough?

Treat the increase letter as the cover note and the engagement letter as the agreement. A signed, updated engagement letter is what protects you in a later dispute.

Should I tell clients the percentage the fee is going up?

No. A percentage invites a debate about the size of the change, not the value of the work. State the new fee and what it covers; if asked about last year, answer honestly and return to scope.

What if a key client threatens to leave?

If they are in the “keep and grow” tier, call them before the letter goes out. If you adjust anything, adjust scope rather than fee, and do it after the call, not during it.

Can I raise prices mid-contract?

Only if your engagement letter allows it, and in Australia a price-change term with no client exit may be unfair under the ACCC’s guidance. If the contract is silent, wait for renewal or agree the change in writing.