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Managing Software Subscription Costs: Insights from Experienced Accountants

In a recent webinar, three experienced accountants shared their insights on managing the increasing cost of software subscriptions in accounting firms.

The discussion covered various aspects of handling price increases, including the impact on client relationships, the importance of communication, and strategies for managing costs.

You can watch the full recording here.

Understanding Price Increases

Price increases are a natural part of business, and accounting firms should expect them. Costs for software, wages, and utilities are all rising, and firms need to adapt to these changes.

Will Farnell, one of the panelists, emphasized the importance of revisiting client fees regularly to ensure they align with the firm's costs. He also highlighted the need to understand the challenges imposed by vendor actions and the increasing relevance of technology in the accounting industry.

"Price increases are a fact of life," Farnell said. "We need to be proactive in managing these costs and communicating with our clients. It's essential to revisit client fees regularly and ensure they reflect the current market conditions."

Managing Software Costs

Alex Falcon Huerta discussed the challenges of managing software costs, especially when vendors increase prices inconsistently throughout the year. This can make it difficult for firms to stay competitive and manage fee increases effectively.

Ryan Pearcy mentioned that his firm uses a hybrid model for software subscriptions, securing discounts for clients and charging an admin fee to absorb some price increases. This approach allows the firm to manage costs more effectively.

"We've found that a hybrid model works best for us," Pearcy said. "By securing discounts for our clients and charging an admin fee, we can absorb some of the price increases and maintain a competitive edge."

Communication and Engagement

Carl Reader emphasized the importance of communication when managing price increases. Firms should consider amending their engagement letters or terms and conditions to reflect potential changes in software recharges. The panelists agreed that engagement letters should be updated to address software costs and the potential for price increases. This helps set clear expectations with clients and ensures transparency.

"Communication is key," Reader said. "By updating our engagement letters to address software costs and potential price increases, we can set clear expectations with our clients and maintain transparency in our billing practices."

Ownership of Billing Relationships

Will Farnell discussed the importance of owning the billing relationship with clients. He argued that firms should hold software subscriptions and billing relationships to maintain control over client interactions and mitigate risks associated with vendor actions.

"Owning the billing relationship is crucial," Farnell said. "By holding software subscriptions and billing relationships, we can maintain control over client interactions and mitigate risks associated with vendor actions."

Conclusion

Managing software subscription costs in accounting firms requires a proactive approach, clear communication, and regular assessment of client fees. By understanding the challenges of price increases, adapting engagement letters, and maintaining control over billing relationships, firms can navigate the complexities of software costs more effectively.

"Managing software costs is an ongoing process," Huerta said. "By staying proactive, communicating with our clients, and regularly assessing our fees, we can navigate the challenges of price increases and maintain a competitive edge."

Further Reading: For more information on how Ignition can help firms manage software cost increases, check out this blog post.