Value pricing for accountancy services

Value pricing sets the fee by what the work is worth to the client rather than by the hours it takes, and tiered packages are the usual way practices apply it to recurring work: a small number of defined bundles at set monthly prices. The ICAEW Code of Ethics allows it, provided the basis is explained in writing, the client can get a breakdown on request, and the fee does not become contingent on an outcome in a way that threatens objectivity.

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What does value pricing actually mean?

An ICAEW Insights viewpoint by Della Hudson defines value pricing as fees based not on cost but on the value the firm can provide to the client. It describes it as well suited to advisory work, while observing that few clients see much value in compliance work beyond being kept legal. That distinction shapes how most practices use it: advisory projects priced on the value of the result, and compliance work sold in packages whose price reflects the bundle and the client’s needs rather than a timesheet.

This page deals with how those models are built. The comparison between fixed fees and hourly billing for compliance work, and the risks of each, is on fixed fees vs hourly rates.

Is value pricing allowed under the professional rules?

Yes. Paragraph 330.4 A1 of the ICAEW Code of Ethics, which applies from 1 July 2026, says fee levels are a commercial matter and lists factors that may determine them, including the risk and responsibility of the work and the priority and importance of the work to the client. ICAEW’s guidance on determining the basis of charging fees says the list is not a narrow checklist, and that priority and importance to the client could cover the value of the work to the client and its outcome, urgency, and fees charged or quoted by others. It adds that a member does not have to justify a fee on the grounds that it is mechanically derived from the listed items.

The same rules that apply to any fee still apply. R330.4 and R330.5 require the basis of fees to be explained at the earliest opportunity and confirmed in writing, normally in the engagement letter. R330.4B.1 requires a breakdown if the client asks, with enough detail to understand how the fee was calculated. A value priced fee therefore needs a basis that can be explained: what is included, what the client receives, and why the price is what it is.

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Where does value pricing become a contingent fee?

When the amount depends on the outcome. ICAEW’s fees guidance treats a fee that depends on some aspect of the outcome, rather than the listed factors, as an indicator that the fee related threat may be significant. Contingent fees are prohibited for assurance engagements and in many circumstances for non assurance services to assurance clients. Elsewhere they may be acceptable if the threat to objectivity can be safeguarded. A fixed price for a tax planning review is value pricing; a fee equal to a percentage of the tax saved is a contingent fee and needs the analysis on the contingent fees page.

How are tiered packages built?

A sponsored article published on ICAEW’s practice resources site, written by Sage, suggests breaking services into identifiable components, giving examples for Making Tax Digital for Income Tax such as setup and training, quarterly updates, data processing, bank reconciliation, bookkeeping, tax return preparation and ongoing tax planning. It suggests pricing data processing by bands of transaction numbers and bank reconciliation by number of accounts and frequency.

A practical way to turn components into tiers:

List the components the firm actually delivers and what each needs from the client.
Set the drivers that change the work: transactions a month, bank accounts, employees on payroll, VAT scheme, number of income sources.
Group into three or four tiers, each a coherent offer for a type of client, not a menu of everything.
Write the scope for each tier: inputs the client provides, outputs the firm delivers, response times, meetings included.
Price out of scope work in advance, so extra requests have a known cost.
Check each tier against cost. The value is the ceiling, but the floor is still what it costs to do the work properly.

That last point is an ethics point as well as a commercial one. Paragraph 330.3 A2 of the Code says a fee so low that the work cannot be performed to technical and professional standards creates a self interest threat to professional competence and due care.

What does a tiered offer look like?

Illustration only. A firm serving sole traders under Making Tax Digital for Income Tax sets three monthly packages.

Tier	Included	Typical client	Monthly fee
Essentials	Software setup, firm reviews and submits quarterly updates from the client’s own records, year end return	Keeps tidy records, one income source	£60
Standard	As Essentials plus monthly bookkeeping up to 100 transactions and bank reconciliation	Busy trader without time for bookkeeping	£110
Plus	As Standard plus quarterly review call, tax estimate after each update, planning before year end	Growing business, possibly heading for incorporation	£180

The engagement letter states the transaction band, the price for each further band, and the hourly rate for anything outside all tiers. The client chooses; the firm does not negotiate the tier price, only which tier fits.

Does monthly billing raise consumer credit issues?

It can, where the client is a consumer and the firm lets them pay for work already done in instalments. ICAEW’s guide to credit related regulated activity says instalment arrangements entered into on or after 18 March 2015 are exempt where there are 12 payments or fewer in a 12 month period with no interest or charges other than default charges, and recommends recording the arrangement in writing, for example in the engagement letter. More than 12 instalments, or charging interest, brings the arrangement within regulation. The guide also notes that a client paying monthly in advance of being invoiced is not receiving credit at all. The exemption is in article 60F of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.

The fee information helpsheet adds a separate warning: monthly direct debits can lead clients to assume the payments cover everything the firm does. Each package should say what the monthly fee covers and what it does not.

How should prices be introduced and kept current?

The ICAEW Insights viewpoint suggests starting with new clients, then moving existing clients to the correct fee, either at once or over two years, communicated as a standard price change rather than a negotiation. It recommends an annual price increase clause in the engagement letter, applied every year, and checking that clients are on the services they need, including spotting anyone paying for something they no longer use. The Sage article gives a timing illustration: a one off £600 fee converted into £50 a month.

Where a fee goes above a figure the client was given, R330.4B.2 of the Code requires the firm to explain the reason and how the excess was calculated, so tier moves should be agreed before the higher fee is charged.

What goes wrong with value pricing?

Packages with no transaction limits, which turn into unlimited bookkeeping for a fixed price.
Prices set by what competitors charge without checking the firm’s own cost to deliver.
No way to explain the fee when a client asks for a breakdown.
Outcome based fees introduced without the contingent fee safeguards.
Instalment terms for consumers that run beyond 12 payments in 12 months.
Tiers that are never reviewed as clients grow.

Package scope and fee terms belong in the engagement letter, and the onboarding sequence in which they are agreed is set out in a client onboarding process for accountants. For the obligations clients take on under the new regime, see Making Tax Digital for Income Tax.

Solar Protect runs fee protection schemes for accountancy and bookkeeping practices. See how our accountant schemes work or read fee protection schemes for accountants.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.