Why doesn't a flat price increase fix underpriced clients?

Because it applies the same percentage to every client regardless of how underpriced they actually are. A client whose fee has drifted far below their real cost to serve stays underpriced — just by a slightly smaller margin — while fairly priced clients absorb an increase they didn't need.

What's the alternative to a flat percentage increase?

Reviewing each client's actual delivery effort against their current fee before setting the next year's price — so some clients get a larger increase, some get none, and every figure has a clear reason behind it grounded in real effort data.

Why do most firms default to flat increases?

Because reviewing effort against fee client by client requires visibility that most firms don't have readily available. A flat percentage is simple to apply and explain, even though it doesn't actually address the underlying pricing gap.

Why a Flat Price Increase Doesn't Fix Underpricing

Two firms are both raising prices this year. If you run a fixed-fee accounting practice in Australia, you're probably in one of these two positions right now.

Firm A's approach

Firm A reviews each client before the renewal letter goes out. Not from memory. From what the work actually took to deliver last year — by client, by service. Some clients get a modest increase. A handful get a larger one, because the effort clearly outgrew the fee. A few get no increase at all, because the numbers show they're already priced correctly. The letter goes out with a reason behind every figure.

Firm B's approach

Firm B applies a standard increase across the board. Same percentage, most clients. It's simpler. It's straightforward to explain. Both firms send their letters in the same week. Both firms see revenue increase by a similar amount.

A year later

A year later, the outcomes look very different. Firm A's margin has genuinely improved. The clients who were quietly under-recovering now come closer to reflecting the real cost of serving them. The clients who were already fairly priced stayed where they were — no unnecessary friction, no pushback on an increase that wasn't needed.

Firm B's margin has barely moved. The flat increase lifted every client by the same amount — including the ones whose fees hadn't come close to covering the actual effort for years, and including those who were already fairly priced. The underpriced clients are still underpriced. Just by a slightly smaller gap than before.

Same revenue increase. Very different effect on profitability.

Why the difference isn't how much they charge

The difference isn't that Firm A charges more. Some of their clients pay less than they would have under a flat increase. The difference is that Firm A's fees are grounded in what the work actually costs to deliver. Firm B's are grounded in last year's fee.

A flat percentage increase feels like pricing discipline — a clear, consistent rule applied fairly to everyone. It often isn't. It's just carrying an old assumption forward, unchanged, one more year, regardless of whether that assumption was ever right to begin with.

Why this pattern repeats every renewal cycle

The reason flat increases persist isn't that firm owners don't know better. It's that reviewing each client's actual effort against their fee takes real visibility — the kind that doesn't exist by default. A flat percentage is what's left when that visibility isn't there. It's not laziness; it's the only tool available without the underlying data.

The question worth sitting with

Before this year's price increase goes out: is your next fee based on what the work will actually take, or on last year's fee, plus a percentage?