To charge higher fees and do more complex work, you need to understand the importance of a niche. Focus your education on that one niche you really know. Michelle Weinstein’s guest today is Thomas Gorczynski, EA, USTCP, a nationally recognized educator in the federal income tax field. Tom explains that your niche should be where most of your clients operate and where you can show planning and value. In Tom’s case, he works with business and rental owners because they have ongoing tax business and financial needs. If you want more tips on finding your niche, you need to listen to this episode. Tune in!
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The Importance Of A Niche: How To Charge Higher Fees With Thomas Gorczynski
I am so happy to be here with you again. We have a very special guest. You probably even know our guest. I want to know for those of you that been waiting around for that right time where fears have been holding you back to create the firm and life of your dreams, so you never have to dread another tax season. What would you do if you finally felt in control of who you work with and never gave away any free advice ever again? Imagine if you had the confidence to ask for those higher fees and had a strategy to raise your rates to existing clients without them even batting an eye and got paid your worth. You had a simple step-by-step process to easily enroll your clients and optimize what’s possible for you and them.
If you’ve tried other things in the past, you’ve tried other programs, you’ve read every book and it hasn’t worked, then I invite you to book a call with me and my team. If you tried waiting it out and you still aren’t getting those right clients to pay you what you’re worth, I would love to explore what you’ve tried, what hasn’t worked, and what’s possible for you and your firm and we can go into depth on that. You can book a call over at TheAbundantCall.com and we’ll dig deep and see where your accounting firm is at right now and where you want it to go.
Don’t take my word for it. You can hear Ross. We had a case study interview with him. He tripled his rates and increased his recurring revenue by $8,000 per month from where he was when we first chatted. Marianne and Jody did an extra $100,000 in revenue in their business in just an eight-week period. They did $25,000 in December 2020, which before they did $0. If you would like to explore what’s possible for you, head on over to TheAbundantCall.com.
We have our special guest, Tom Gorczynski. He is an EA, a USTCP. He is a nationally known speaker and educator on federal tax law matters. He’s the Editor-in-Chief of the EA Journal and Co-author at PassKey Learning Systems EA Review Series. He is the Co-owner of Compass Tax Educators. He’s done a lot. He’s got a Master’s of Science in Taxation. He’s the Certified Tax Planner. He speaks all over the country and he also has a very private inner circle now.
He’ll be sharing that with us. A lot of you I’ve talked to, what is the outlook of accounting firms in a world of AI in the near future? Why is having that niche client profile for your accounting firm imperative as we move forward and navigate the changes with all these tax laws so you don’t lose 400 to 500 clients in one night, but you get to choose to make those shifts? Let’s welcome Tom to the show.
Thank you, Michelle, for having me. How are you doing?The easiest thing to do to find your niche is to look at your current client base. Click To Tweet
I am fantastic and I know everyone reading is going to be so excited. Before we start, for those that don’t know you, can you please introduce yourself and share with them what it is that you do?
I’m an Enrolled Agent. I’m the Senior Tax Consultant of Gorczynski & Associates, a firm in Phoenix, Arizona. I’m also a Tax Educator and Writer. I have my newsletter, Tom Talks Taxes. I teach classes all around the country where I try and educate tax professionals, not only about technical tax law but to value the services they provide to their clients.
Don’t you have a special inner circle, too, that you just randomly started?
I do have a new program called The Inner Circle with Tom.
Can you share with readers what that’s about? There might be some that could be interested.
It’s where you get one-on-one mentorship with me on a weekly basis. We have weekly meetings where I answer all of your technical tax questions, practice management questions, show you how you can demonstrate your value to your clients in your work so that you can increase your fees.
If you want to learn more, go to Tom’s website, but that’s a perfect segue into what we’re talking about. We’re going to talk about the importance of before you can increase those fees, we have to have niche client profiles. If you’re an accountant or an accounting professional, that’s important. I hone in on that a lot here, Tom. It’s also going to segue into, and what I want to talk about, is the outlook for accounting firms in an AI world and what you see on the horizon and the importance of having that niche client profile in order to charge those higher fees and do some more of the complex work.
I see niche work in two areas. One, if you focus on a specialty set of clients, how you define that is up to you. It could be broad, rental owners. It could be narrow, those who own a specific franchise. They provide unique opportunities, not just for marketing, but also in that restricted client base that specialized knowledge creates scarcity, which also impacts your value. If you know an area of tax law because your clients mostly operate in it and that’s where you focus your education and show planning and value, you’re going to be able to increase your fees. It’ll also be easier to focus your tax education on the topics that particularly impact that niche.
Can you give us an example of a story that you did yourself where you went either narrow or broad and what that looked like, and then how you were able to be able to sell your value at a higher fee because you got your specialized knowledge and you created that form of scarcity? When someone hears scarcity, I’m sure you all are reading, “That’s not a good word, Michelle. That’s like the word sales, I hate sales.” Scarcity could also be a mindset, but it impacts the value and increases it. Can you share something personal that you had and that you experienced in your firm when you made these shifts?
Going forward, I’ve decided for the tax preparation I’m going to do and I don’t do a lot of tax preparation, but the ones I do are going to be high value and they are high value. I’m only going to focus on business and rental owners. For a few reasons, one, they have ongoing tax, business and financial needs for which I can charge a premium fee for those services. Two, that’s the area of the tax law, where I have a lot of familiarity, especially in the planning zone. I know I can help those clients, especially when compared to the entire universe of taxpayers.
When you narrow that down, where do you think your fees are going to go? You probably have already changed your fees and what you’re charging, but how much of an increase did you see when you focused just on businesses and rental owners on the compliance stuff?
That’s a narrow niche. You can specialize even further. You could do people in certain industries. You could focus on farmers, for example, on commercial rental properties, on franchises. There are so many different niches out there that one can focus on. It’s incredible. If you tie it to an interest that you have, then it combines both knowledge and passion into your work, which means you’ll be able to do both effectively.
Knowledge and passion are a great combo. When you made this decision, how do you see this and talking about just your vision of what you see happening in the industry with accounting firms and small firms, big firms that everything in the world of AI and what you see coming?
For many tax professionals, their bread-and-butter tax client is a straightforward tax return. What I mean by straightforward is, they may itemize deductions, they may have investments, but from a complexity standpoint, relatively basic. As the industry evolves, those individuals who have those types of returns are going to be able to get more automated processes to complete their returns. First, we already have commercially available software that can do a lot of those returns correctly.
We have AI. Who knows where that’s going to go in the industry? We have retail tax preparation stores where many of those returns can already be prepared on a walk-in basis for a fee in a very short amount of time. For the tax advisor who is looking to build a stable base of clients, I don’t see that market being the foundation of a stable base of clients because, for all of those reasons, a lot of them are going to self-select out of the tax preparation world. They’re going to go into self-preparation.
There’s also a push by some policymakers in Congress for the IRS to prepare tax returns for taxpayers, send them to the taxpayers, and have the taxpayers say, “This looks good,” and sign it. If something like that ever came to pass, all of those simple tax returns could easily go away from a practitioner’s client base. The future of accounting and the future of the tax industry is on clients with complex issues who need specialized advice, tax planning, financial planning, and those types of related services.
I had two calls in a week, Tom. The gentleman had 800 individual client returns and maybe only 100 of them, he was saying, could be these complex ones. He wants to also get rid of the clients that no longer serve him and all that. He’s going to lose 600 clients at the end of the day, and he’s worried about the robots or AI or anything like that taking away that business. If that’s the bread-and-butter, it’s time to make a change. That’s what it sounds like working on the complex issues, having specialized advice, which requires specialized knowledge in this specialized niche.
The time is now, Michelle. With all of the tax law changes that have happened and with all of the tax law changes to come over the next couple of years, if you think there’s been a lot of changes in the past few years, wait from now through 2025, we’re going to have a ton more. It is going to be so difficult to run a volume practice. If you are in a volume practice, let’s combine that whole idea of those simple returns are going to go away eventually with the niche idea to see what you can do right in the real world to make this happen.
First, identify the niche you want to go into. Keep the clients in that niche and offer them higher-end value services and increase those fees based on that. For your client base that doesn’t meet your needs anymore, sell them off. There are other tax firms who will gladly take those types of returns and you can at least make some cash on letting those clients leave your practice. Whoever is left, you can focus on them, showing them the value, adding services, bringing in new clients to your practice who want value-based high-end advisory services, and then you can build a new client base on that new model.Most tax professionals have hundreds of clients, which adds to the unpleasantness. Click To Tweet
It’s a transition. For a lot of people, it’s terrifying to say, “I’m going to sell this piece off for some cash. I’m so busy.” That’s what I hear a lot of times, “Michelle, I’m so busy. How do you want me to learn?” I’ve got a new name for it. It doesn’t have the word sales in it, by the way, Tom. It’s called the optimizing client system. How do you optimize the value for every client? Not even talk about getting new ones, just the ones you have that you like, but you’ve never gone deep with them.
You’ve never done some preventative-looking head stuff because you’re on a hamster wheel and you can’t get off of it. Let’s talk about your first step that you recommend, Tom, which is to identify the niche. How did you pick business owners and say, “That’s all I want to work with?” What process did you use? The simplest thing someone can do right now.
The easiest thing is to look at your current client base and see, are there any groups of clients you already have that you’re providing services to that could form a potential niche? I’m sure there’s going to be more than one. Is there any particular niche that either A) You have a great deal of knowledge in that you can leverage or B) Is there a niche you are passionate about? If you have both A and B, it’s a win-win situation. If you don’t have both, then you got to look to see, “Do I want to go with the niche I’m passionate about and make an intentional effort to gain the knowledge and experience I need to be able to sell high-value services or do I go with the one that I know a ton about and just simply find good clients that I can be passionate about?” I feel you do need both to have a boutique practice focused on a small number of niche clients.
Step number two, we’re going to keep the good ones that we like, and now we’re going to offer them higher-value services. We’re going to maybe increase the amount of work we’re doing for them. I’m sure a lot of you are probably doing a lot of work for free right now, like answering their emails and questions. That’s the terrifying thing for everyone reading like, “I can’t charge more and do more for my clients, Michelle, they’re going to leave me.” The third step is the clients that you don’t like, or don’t meet your needs anymore, sell them off for some cash.
That’s a short-term gain but also frees up a ton of time. Thinking about that step number two, for someone that was in your shoes, Tom, however many years ago, that is thinking, “I want to keep the good ones. I want to do more for them, but I’ve only been charging them $500 a year. They probably think I should do all these services for free and it’s ‘included,'” like you’re an all-inclusive resort or that you get the food, the booze, and everything.
It’s almost like a public library. You go in, your clients come in, they ask you questions, you respond to their emails, they leave, they check you out. They checked your knowledge and your inventory out for free, and then that’s it. It’s like you’re the public library. You got a bunch of books and they’re all $0. How did you make that shift? I think step number two is probably the most daunting and overwhelming and terrifying one because we think people are going to leave us.
There are a couple of strategies. One, if it’s simple return preparation that’s being done, that is compliance work. It is not advisory or planning. If you can approach the conversation by saying, “For a couple of years, we’ve been doing your tax returns, but there are some great advanced tax planning opportunities for you.” This is a different service than we’ve been providing in the past.
In the past, we’ve simply been taking your books, making sure they’re reconciled, putting that information on the return, doing some adjustments. What I’m talking about is a different service where we proactively work to lower your tax liabilities over the long term, and then try to show the value of that with some ideas that you have, but not necessarily telling them the ideas, but give them a hint as to the value and then compare your price to that value.
They’ll see, “Yes, this is a new service and it’s more than I’ve ever paid, but I see why I want to do it because the amount of value I’m receiving for these more advanced services outweighs the potential increased cost.” What if you are not ready to go that far with a client that you want to keep? All of the things that you’ve always done for free can be bundled into service packages and then you show the client all of the things that are now included at this increased price. You can show the client, “These are package offerings for mere tax return preparation. Here are the options if you want questions after the season. Do you want me to answer and IRS notices automatically?” The more add-on value-based services in each package, the higher price you can charge.
The key is the client sees everything that’s included with the enhanced price. Why? They can see the value of the services they’re receiving in exchange for the fee. Most people simply say, “X dollars for tax return. That’s it.” They don’t ever say what else is happening along with that. All those collateral things that are being done for free, by showing them to the client, demonstrating they’re there telling the client that they’re available, you automatically have increased the value in the eyes of the client. That means you can increase the fee you charge to that client. There’s a couple of ways you can approach it, depending on what direction you’re taking your business in.
Those are some great options to test out, but I pulled up the definition of value just so everyone can understand because sometimes we forget. The value is the monetary worth of something. It’s a fair return or equivalent in good services or money for something exchanged, relative worth, utility importance, a good value at the price, the value of a base ceiling in baseball. The biggest thing there is that it’s a monetary exchange. If we keep providing value for $0, then that’s not an exchange. That’s a one-way street.
I find most accountants have a lot of challenges quantifying and explaining their value. A lot of times, it’s simply, “Here’s the fee, here’s the return. Here’s the fee, here’s the service,” but the client doesn’t understand what they’re truly getting in return for that fee or return fee or service. In that case, it’s hard to increase your fees if they’re just simply seeing it as return preparation, which is something they don’t want to do anyway. Nobody loves having their taxes done. Maybe a few people do. I don’t know.
I don’t think so. I am your ideal client and it makes me go cringe. It makes me want to roll up in a ball and hide under my covers. It has me go bananas. It’s almost like if you plug me into the wall in an electric socket, my hair will stick up. That’s what doing taxes is for the regular person who’s not an accountant.
If you turn this unpleasant task into something where the client sees they’re getting financial value back from that task, your ability to increase your prices goes up.
How do we turn a horrific experience for most human beings on the planet? There might be 1% that enjoy doing it but filling out that stupid tax thing you think that you all need drives us nuts. We don’t like it. We think it’s dumb. All of those thoughts that you think about, “I’m just going to not raise my prices because I don’t want to lose a client.” We think about those things when we come to filling out these massive tax organizers. How you change that unpleasant tax into something that they financially have a gain or a win is genius, Tom. It is very unpleasant.
Part of the industry model right now is the fact that most tax professionals have hundreds of clients adds to the unpleasantness. They are simply one of the hundreds of people in a queue to the average tax pro. If you drop that model and go to a limited size practice, not only do you help eliminate the unpleasantness of just being one in a crowd, but that individualized attention alone is worth increased prices for many taxpayers.If you have no time to devote to managing, growing, or developing your business, you have a problem. Click To Tweet
That’s why I could go to a big gym. For all of you that follow me on social media, you all know. I like to work out. I don’t go to a big gym. That would be like a place with thousands of clients and it’s an unpleasant experience. I go to a boutique gym. It’s got four ladies in a group and we have one trainer. We are told what to do and it is a very pleasant experience. Think about anywhere you go or the services that you pay for, do you want pleasant or unpleasant? Notice the difference between the unpleasant experiences. Correlating it to something in your personal life will help you visually see this in a different light. Thank you, Tom, for sharing that.
If we just look at our own consumer preferences and then apply them to our client base, we’ll see that the traditional accounting model is never what we would want to be in the first place anyway, so why do we subject our clients to it?
It’s like, “How did we end up in this boat?” I’m sure a lot of you are thinking like, “How did this happen to me? I knew I didn’t want this when I started my firm. Why did I end up this way?” The beauty of it is that you have a choice. You can either continue doing what you’re doing now or take some of the ideas that we’ve talked about with Tom and make a shift because you have the power and you have the control and you get to create whatever firm you like.
With the AI features coming out in the world, the changes between now and 2025 on the tax law, the outlook for accounting firms is going to shift. The time is now. Thank you, Tom, so much for sharing. Is there anything else that you wanted to share with the readers that could support them in this area in making these shifts right now instead of waiting for the AI to show up and then they lose 400 to 500 clients?
If you’re saying to yourself, “I don’t have the time because I’m too busy,” realize that you have admitted to yourself that you have a problem. If in your business you have no time to devote to managing or growing or developing your business, full stop. You need an immediate in mindset and approach to your business.
Tom, thank you for being here. Tom is a resource. If you want to apply to be in his inner circle, feel free to go to his website. Where can they go again? What’s the website?
It’s at www.Gorczynski.tax.
The one for the Inner Circle to apply?
Head on over to InnerCircleWithTom.com. You can join. It’s a very small group of people, but this will help you get out of the mindset of what happens when the AI shows up. You won’t need to care about that. You will have your boutique firm and practice ready to go. Thanks, Tom, for being here with us on the show. It was an honor to have you in a great discussion. I love how we’re going to take all of these unpleasant experiences that people like me have to go through and change them into pleasant experiences that put more money in your pockets.
Thank you, Michelle. It was great being here and thank you for having me.
Thank you all so much for being here with Tom and me. There was so much goodness. I always love talking to Tom. This is something that you can implement right away. I wouldn’t wait. I always say we can prevent a lot of things from happening in our life. For example, I go to the gym a lot. I do that to prevent a lot of health problems that we might have. I truly believe in having a full tank. A full tank meaning we take care of ourselves. We have enough sleep every day and we can show up to be our best in our firm. It’s like we’re Olympian athletes to our clients and to our firm.
Anyone who’s in the Olympics is not burning the midnight oil or burning the candle at both ends, working 14, 18-hour days. They might train a lot, but they’re getting recovery, massage, or acupuncture. They’re taking care of their body and their machine and we need to, too. I’ve gone on a little rant. However, it’s so important because this is how you can make the shifts in having the specialized knowledge and having that stable base of clients who are paying you every single penny you’re worth.
No more being the public library. We don’t want people to just check out our knowledge and check out our inventory for free. That is the complimentary service provided by your counties. That is not us. We are a boutique practice in identifying your niche, keeping the good clients, and increasing the value you bring to them is what’s going to get you there.
That simple 1040 work, that is an unpleasant tax that us taxpayers have to do on the regular every single year. How can you increase your fees and the experience that people like me have to go through to not only help make something unpleasant be financially rewarding, possibly but make it so that we never have to dread doing our taxes? Whoever can figure that out is going to be a genius.
If you don’t have that confidence to ask for higher fees, or you wish you had a strategy to raise your rates for your existing clients, and you wished you had a step-by-step process to optimize your current client base and have a system and method for that, and also, exactly know who is willing to pay your fees and who isn’t using a proven system, then head on over to TheAbundantCall.com and you can book a call with me or one of my teammates so you can be like Ross, Marianne, or even Kate.
She worked with us and she did about $8,000 in revenue in just the first week together. I was so proud of her. I’d love to explore what that could look like for you, too, because sometimes it’s not your fault where you’re at and everything can change. The time is now. You can make the shift and you can take over the world and make yourself a boutique firm where you’re only working maybe 6 to 8 hours a day. No more 14-to-18-hour days. Once again, let’s explore what those possibilities look like.
We can discover that on a chat. You can book a one-hour call. It is complimentary. The only thing I ask is that you’ve been in business at least two years. You’ve had a bunch of clients not pay you enough and you want to increase your fees. You want to increase your revenue and you want to get rid of all those PITA clients. If that’s you, head on over to TheAbundantCall.com and I look forward to talking to a couple of you. Have a beautiful day and I’ll see you in the next episode.
- PassKey Learning Systems EA Review Series
- Compass Tax Educators
- Gorczynski & Associates
- Tom Talks Taxes
- The Inner Circle with Tom
About Thomas Gorczynski
Thomas A. Gorczynski, EA, USTCP is a nationally-known speaker and educator on federal tax law matters. He is editor-in-chief of EA Journal, co-author of the PassKey Learning Systems EA Review Series, and co-owner of Compass Tax Educators. He is an Enrolled Agent, a Certified Tax Planner, a National Tax Practice Institute Fellow, and admitted to the bar of the United States Tax Court as a non-attorney.
Tom earned a Master of Science in Taxation from Golden Gate University and a Certificate in Finance and Accounting from the Wharton School at the University of Pennsylvania. He received the 2019 Excellence in Education Award from the National Association of Enrolled Agents and the 2018 Member of the Year Award from the American Institute of Certified Tax Planners.