As a CPA you are in charge of a small tax advisory firm providing services to individual taxpayers, a substantial group of whom is high-wealth. Your firm is experiencing new pressures from the changing marketplace. New, non-CPA market competitors and competition from do-it-yourself tax-preparation software packages have had a negative effect on your bottom line. Because of these pressures, you are looking at ways to reduce costs. To expand your business and continue successfully you must consider employing non-CPAs.
Explain economic issues that bring concern to pricing your services and products. What ethical challenges will you face in hiring non-CPAs? What standards apply?
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Economic issues in pricing services and products
Pricing is a critical aspect of marketing and pricing strategies must be devised to represent the value of product/service to customers, the perceptions of customers, and a relative position against other options available in the market. In the event of shrinking line, a company might be tempted to try a variety of pricing strategies to increase market share and profits. Every business has ups and downs and when business is in a good phase, it needs to develop business-developing strategies that succeed when times are tough. In the situation where the firm is having risk of losing customers to other competitors and do-it-yourself tax preparation software packages, there is an instant fix to lower prices of services and products to lure more customers. However, it is not necessary to reduce prices, especially when the product and service portfolio has a range of fees. There are implications on reducing the price as if customers sense that the firm is cutting price because it is losing customers, they will take advantage and force the prices even lower.
The competitors can takes undue advantage of their offerings in the market to lure greater price for products and services from customers. Given the quantum of information that customer is exposed ...
This solution discusses economic issues that bring concern to pricing services and products as a CPA, as well as ethical challenges a CPA would face in hiring non-CPAs.