Today's accounting firms increasingly rely on digital tools, software and automation to provide efficient and accurate services. The costs associated with staying technologically competitive have surged. The COVID-19 pandemic further accelerated the need for digital solutions as remote work and virtual client interactions became the norm.
To meet these challenges, many accounting firms are revisiting the concept of charging a "technology fee" to offset their technology-related expenses.
A brief history of technology fees
The idea of a technology fee in accounting firms is not new. In the 1990s and early 2000s, many firms introduced technology fees to cover the costs associated with adopting and maintaining modern technology infrastructure. These fees were typically added to client invoices and ranged from $50 to $200, depending on the specific services provided.
However, many firms abandoned this practice somewhere along the way, possibly due to client pushback or a belief that technology had become so ingrained in the industry that it no longer warranted a separate fee.
Now, the landscape has shifted again, and technology remains a fundamental and ever-evolving aspect of accounting practice.
The post-pandemic technology landscape
The pandemic forced accounting firms to embrace technology like never before. Remote work arrangements, virtual meetings and digital workflows became essential to maintaining business continuity. Firms invested heavily in video conferencing tools, upgraded home office equipment, implemented digital workflows, and leveraged automation and outsourcing solutions to adapt to the new normal. These investments were necessary not only to serve clients effectively but also to remain competitive in the industry.
Some firms are now reintroducing technology fees—or at least considering the process. On one hand, it’s understandable. The expenses associated with technology adoption, maintenance and upgrades are significant. Charging a technology fee allows firms to recover these costs without compromising profitability. However, there are several drawbacks.
Antiquated image. Tacking on a technology fee makes accounting firms appear antiquated and resistant to change. It sends a message that they are not fully committed to modernizing their practices.
Client experience. Clients today expect a seamless digital experience. Technology fees may alienate clients and cause dissatisfaction, potentially leading them to work with firms that don’t charge a fee (or build it into their fee structure so it’s invisible to clients).
Technology is a cost of doing business. Modern accounting firms can’t function without technology. Charging an extra fee for its use seems counterintuitive when it is a fundamental part of the profession.
Encouraging paper-based processes. Do you really want to give clients the option to forgo digital processes to avoid a technology fee?
Embracing a client-centric approach
Rather than imposing technology fees, accounting firms should consider adopting a more client-centric approach that aligns with modern business practices.
Transparent, value-based pricing. Establish transparent pricing structures that include technology costs as part of the service. Clients should be able to see the value they receive without add-on fees. If your fees aren’t enough to cover the technology investment, reexamine your fee structure and raise rates.
Incentivize technology adoption. Encourage clients to embrace digital solutions by highlighting the benefits of accuracy, efficiency and security. Offer training and support for those who may be less tech-savvy. Rather than charge a technology fee, consider charging additional fees for paper returns and other deliverables.
Efficiency over fees. Instead of adding fees, focus on streamlining internal processes to reduce costs. Efficiency gains can be passed on to clients without additional charges.
Client education. Educate clients about the advantages of digital processes, emphasizing the time and cost savings associated with modern methods.
Charging a technology fee sends the wrong message about a firm's commitment to being future-ready. Technology is both necessary and an expectation in your firm, so you should prioritize the client experience and encourage end-to-end digital processes. Doing so can better position your firm as forward-thinking and future-ready in the ever-evolving business landscape.
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Amanda Wilkie, Consultant at Boomer Consulting, Inc., has a computer science background, but she’s not your average geek. With two decades of technology experience, Amanda has spent 13 years driving change and process improvement through innovative technology solutions working across firms of varying sizes in the public accounting profession. She has held strategic leadership positions in firms ranging from Top 50 to Top 10 including her most recent role as CIO of a Top 30 firm. Amanda is a recognized expert in the profession who regularly speaks and writes on blockchain and cryptocurrency and their impact on the profession.