What Do You Do When Legacy Clients Pay Half What New Clients Pay?
Reader p, cpa wrote in recently, asking the following question, which is shared with permission; anonymity requested.
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What do I do about clients I’ve had for over 25 years whose rates I’ve never raised, even though I price new clients at much higher (sometimes 150 - 200% higher) rates?
These long-time clients refer a lot of new clients. But they also tell the new clients what they pay, and then the new clients expect to pay that same amount.
I need to increase prices for all my clients — new and old — because I haven’t raised prices in three years. I seem to be gaining clients, but losing money and control.
HELP!!!!!!
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I suggest using tiered prices and standardizing prices across the board.
The gap between what legacy clients pay and what new clients pay is creating more problems than it may seem.
At a minimum, the price discrepancy could be:
creating pricing/billing complexity
creating awkwardness and tension when clients talk to each other and/or you
breeding frustration and resentment
adding mental and emotional load
wasting time and energy
generating a low-price referral spiral.
On top of that, you’re likely leaving meaningful money on the table and working more hours than necessary for the revenue.
So what is a viable path out?
The demand you’re seeing from new clients willing to pay higher prices is a signal that the market values your experience and your work.
If the goal is to regain control and increase revenue, standardizing pricing using tiered pricing will make a big difference.
Set prices that work for you across the board, and let clients choose the price and package that suits them. Clients who perceive value in your experience, expertise, judgment, guidance, and work will stay, while clients who do not have a graceful way to self-select out.
In practice, some long-time clients are loyal to you, while others have been loyal to your low price — tiers helps separate the two.
You may choose to offer grandfathered pricing for a select few legacy clients, though you may not need to.
A capacity plan is essential. Knowing how much space you actually have — and closing the door when you’re full — creates leverage and restores control.
After 25 years, you’ve built a mountain of expertise. Prices ought to capture the value your expertise can create, not just cover the cost of the work.
A note of encouragement:
This is imminently solvable.
The real challenge in situations like this isn’t knowing the options — it’s actually making the decisions. Inside Peak Freedom, we help CPAs talk through these exact scenarios so they know what to do next, feel confident implementing, and get support while doing so.
If you’ve been considering joining but aren’t sure whether it’s the right fit, the right timing, or right for you…
Come to the Open House I’m hosting next Wednesday, 1/28, at 10am MT on Zoom. I’ll do a quick tour and stick around to answer your questions — no pressure, no pushy selling.
Reply to this email with a ‘yes’ if you’d like a calendar invite.
