H&R Block aims to take the ‘pain point’ out of tax-prep pricing | Cons…

KANSAS CITY, Mo. –– H&R Block — facing potential pressure from the new tax law— is changing how it will charge customers and claims that it has also lowered those prices.

The Kansas City-based tax preparation firm said it will post prices just inside its doors during the upcoming tax season. Customers will be able to calculate how much they’ll pay for tax work before the work begins.

Usually, consumers who seek tax help find out the cost when their returns are ready to file.

“Pricing is so important because we know it’s been the consumer’s biggest pain point,” H&R Block CEO Jeff Jones said. “The mystery — I don’t know what I’m paying until after it’s done.”

Jones, the former president of Uber, said the changes have been in the works for two years, including efforts predating his arrival last year at H&R Block.

Both actions — posted prices and lower prices — break dramatically from H&R Block’s and the industry’s long-established practices.

“The approach to pricing in the business really wasn’t a consumer-friendly approach, and our prices over time had gotten too high,” Jones said. “We had taken price increases too many years in a row.”

For example, H&R Block’s tax office customers paid an average of 2 percent more to have their 2017 taxes done than in the year before. The company also has turned to add-on products — such as its Peace of Mind service plan, Refund Advance and Tax Identity Shield— for additional revenue.

Jones revealed the company’s new pricing strategies to H&R Block franchise operators Monday during their annual pre-tax season convention in Nashville, Tenn. He said franchisees are allowed to set their own prices.

Lowering prices is one tactic Jones has embraced to deal with the declining number of filers coming to H&R Block offices in recent years. The tax law threatens to accelerate the decline.

Congress increased the standard deduction for 2018 tax returns. It means many filers who previously itemized their deductions to get the lowest tax bill can do so by claiming a standard deduction. Federal tax returns also are simpler this year.

Both changes mean filers may be less likely to seek help.

Analyst Mark Palmer told clients of BTIG Research in June that the higher standard deduction could cut into Block’s tax office client total by 2 percent, 5 percent or 10 percent depending on how “severe” the impact becomes.

Jones argued, however, that a higher-than-average share of Block’s customers already claim a standard deduction. He said the change won’t be dramatic this tax season for Block.

Jones has acknowledged that price cuts likely will mean lower revenue this year but expects growth to prevail in the long run.


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