Nathan Eads, a partner at Lally Group in Michigan, started his firm’s pricing change with the bill. His firm added up what each client paid in a year, divided it by twelve, and sent that number every month. That first step toward a different CPA pricing model grew into the way the firm works today: new clients get three options, all of them subscriptions, and even audits are on subscription plans.
I talked with Nathan for Common Grounds about how Lally got there. He has been a partner for 20 years. Owners ask what is the best pricing model, and Nathan did not name one model that wins for every firm. This post covers how Lally moved off hourly billing, how it handled clients and its own team, and where Nathan suggests starting. It reflects one firm’s experience. Which pricing model fits your firm is your call as the owner.
How does a firm start moving off hourly billing?
Lally’s first step was small. Looking at a full year, the firm would “add it up, divide it by twelve and give it to the client.” The goal, in Nathan’s words, was to “at least go to some type of consistent billing so the client always knows what the dollar amount is.” The billing also goes out “a lot quicker” now.
Nathan said he was nervous at first. Lally began with a couple of clients who would likely appreciate knowing what each invoice would be, then told other clients what it was seeing in the industry and with current clients. That was before COVID, and the firm has leaned into it since.
What does subscription pricing look like at Lally Group?
A new client who fills out the form on the website and goes through Lally’s process gets three options, and all three are subscriptions. Existing clients take more communication. Near the end of the year, Lally tells them the current year’s bill will go out in February or March, and that next year’s invoices start in January, so there can be a lag or a double-up. Some clients don’t mind. For others, Lally prices over the transition into the next year.
Why talk about value before price?
When a client comes to Lally from another CPA, Nathan starts with their experience: how pricing worked for them, and what made them look for a new firm. He wants those concerns on the table before pricing comes up. Nathan put it this way: “the product isn’t the financial statement, it’s the tax return. It’s the interaction, the communication, the guidance.”
By the time Lally explains how it bills, the value has been communicated and the services are lined up. Most of the time, he said, subscription pricing isn’t really even a topic by then. His order avoids what could be called The Price-First Pitch: explaining how you bill before the client has seen the value.
When should you roll out subscription plans?
For many longtime clients at first, Lally started plans in May or June, right after tax season. Take May 2027 as an example. The plan would cover the rest of 2027 and all of 2028, which means two year-ends, two 1040s, several quarters, and maybe two compilations. Wrapped into an 18-month plan, the price is locked for that stretch, and Lally shows the following year’s price going down. If the work turns out to be larger than expected, Nathan said, that gives the firm “a lot of leeway” when the client moves back to a 12-month plan.
The second failure mode is The Renewal Jump. Once a client has seen a price, a big change the following year is a hard conversation. Nathan used 40 percent as his example, which is why Lally puts real effort into the first price. Most of its business clients also choose some type of quarterly interaction, even if they don’t get a quarterly statement, so by renewal the firm already knows how the relationship is going.
What if the pushback comes from your own team?
I asked Nathan about resistance, since he had mentioned in our prep call that it came more from inside the firm than from clients. Years ago, he said, the worries were how clients would perceive it, what would happen to realization numbers, and what if the firm priced a plan wrong. He pointed out that hourly billing carries the same worries: “if you’re kinda honest with yourself, you kinda know the threshold of what you’re gonna bill.” What cleared the hurdles was repetition, then data showing the pricing had worked out.
Lally still tracks time. Nathan uses it to compare how long a service takes with how long the firm expected, and to see whether its services line up with market value. He doesn’t lean on it much to measure staff efficiency.
I also asked whether Lally lost clients over the change. Nathan doesn’t think so and doesn’t recall specific losses. He said the firm spent a lot of time early on explaining the process and the value, and that a large client renewed a couple of weeks before we recorded. That client’s reaction: “my word, there’s like two pages of stuff that you do.” He added that any client who did move on after a price change may have been pulling more time from the staff than the value they were receiving.
How can you test subscription pricing this week?
Nathan’s suggestion for a firm that wants to try it is to start with clients you have known a long time.
- Pick a couple of clients you have known for a long time.
- Take one to lunch, with no connection to the work you usually do together.
- Say you are thinking about moving to this type of model, that you have looked at what it would mean for them, and ask what comes to mind.
They are entrepreneurs, Nathan said, so they will put that hat on and talk it through. Often, after a couple of those conversations, a client says to set them up on the same plan. From there you can shape a couple of plans around what those clients told you and roll them out for momentum.
I closed the conversation by asking what Nathan believes now that he didn’t before. After 20 years as a partner, he said, accounting and tax are about 25 percent of his time, technology another 25 to 30 percent, and the rest is “psychology internally and externally.”
Lally’s CPA pricing model grew from one small step, a consistent monthly invoice. Yours can too. Pick two clients. Book the lunch. Ask what comes to mind.
About the guest
Nathan Eads is a partner and independent shareholder at Lally Group, an independent full-service accounting firm in Michigan. He has been a partner for 20 years.
