If you got a notice about your tax fees increasing, how do you know if it's a normal increase or not? Here's a look at some of the common reasons for price increases and the signs it's time to shop around.
All prices go up over time. Even in periods of normal inflation, everything still costs a little more each year.
Even when businesses don't want to raise prices, higher business expenses and needing to pay staff enough to match the rising cost of living means price increases are often necessary.
Annual price increases of up to 5 to 10% are fairly normal. If you see more than that and it's not to make up for several years of no increases, something else may be going on.
Many people have increasing tax needs over time. Whether you're a growing business or an individual with more sources of income or new investments, it takes more time to file your taxes and support you during the year.
When your tax needs change, it's just like moving to a house with a bigger lawn and having to pay more for mowing. Fees do vary based on the work needed.
Now in some cases, your new needs may be outside of what your tax preparer usually does. Many tax firms focus on only a few things, so if you need something else, you might get charged more because it's less efficient to work with you. In that case, it may be time to move on.
Many tax preparers get too busy just like any other business. And like any other business, the answer is often to raise prices knowing that a few clients will drop.
So if you get notice of a big tax prep price increase with no other changes going on, it may just be an issue of supply and demand. If you're happy, you might decide it's worth it to stay. If not, it may be time to look around.