Before You Raise Prices, Check Your Software Subscription Margins

EOFY is when many accounting and bookkeeping firms start reviewing pricing. 

Rising wages, software costs, compliance complexity, and operational overheads all put pressure on profitability. That naturally leads firms to ask an important question: 

Do we need to increase our fees? 

But before firms increase prices across the board, there is another question worth asking first: 

Are we already recovering the software subscription costs we should be recovering? 

Because in many firms, the issue is not always that prices are too low. 

Sometimes the issue is that software subscription margins have quietly eroded over time. 

The hidden impact of subscription costs 

Software subscriptions have become deeply embedded in modern accounting firms. 

QuickBooks. Xero. Payroll platforms. Reporting tools. Workflow systems. Practice management software. Client add-ons. Industry-specific apps. 

Many firms manage these subscriptions on behalf of clients, either by reselling the software directly or bundling the cost into fixed monthly fees. 

At first, the pricing may make perfect sense. 

But over time, things change. 

Vendor prices increase. Discounts expire. Clients move plans. Payroll employee counts grow. Additional features get activated. Fixed-fee arrangements stay static while underlying software costs continue to rise. 

And because the changes are gradual, they are easy to miss. 

Margin leakage often happens silently 

Most firms would quickly notice if a large invoice was never sent. 

But subscription margin leakage usually happens in much smaller amounts. 

A $5 increase that was never passed on. 

A discount that ended six months ago. 

A premium subscription added to a fixed-fee client. 

A payroll platform charging more because the client’s employee count grew. 

One client absorbing slightly more cost rarely feels urgent. 

But across dozens or hundreds of subscriptions, those small gaps can become meaningful. 

That is why subscription billing deserves more attention during EOFY pricing reviews. 

Fixed-fee pricing can hide the issue 

Fixed-fee arrangements are one of the biggest areas where software subscription margins become unclear. 

Fixed fees can work extremely well for firms and clients. They create predictability, simplify billing, and strengthen client relationships. 

But they can also make software costs harder to see. 

A fixed monthly fee that was profitable two years ago may look very different today if software costs have steadily increased underneath it. 

That does not mean firms should automatically pass every software increase directly to clients. 

But firms should understand: 

• What software costs sit inside each fixed fee 

• Which subscriptions have increased in cost 

• Which vendor discounts have ended 

• Which clients have changed plans or usage 

• Whether the current pricing still makes commercial sense 

Without that visibility, firms can slowly absorb more and more cost without realising it. 

Pricing reviews should include subscription reviews 

Many firms review WIP, recovery, write-offs, and staff utilisation at EOFY. 

Subscription billing should be part of the same process. 

A good EOFY review should help the firm answer questions like: 

• What are we paying for each client subscription? 

• What are we charging the client? 

• Which subscriptions have changed over the past 12 months? 

• Where have vendor prices increased? 

• Are there subscriptions we are paying for but not billing? 

• Which fixed-fee clients should be reviewed? 

• Are our margins intentional, or accidental? 

These are not just operational questions. 

They are profitability questions. 

Why spreadsheets make this harder 

Many firms still manage subscription billing through spreadsheets and manual checks. 

That works reasonably well at smaller scale. 

But as subscription volumes, pricing models, and client exceptions increase, the process becomes harder to trust. 

Teams spend EOFY trying to compare vendor billing files against spreadsheets, fixed-fee agreements, and client invoices to understand what changed. 

The review becomes reactive instead of controlled. 

And when visibility is poor, pricing decisions are often delayed because no one feels fully confident in the numbers. 

Better visibility leads to better pricing decisions 

The goal is not simply to raise client fees. 

The goal is to make informed decisions. 

Some software cost increases may need to be passed on. Some may be absorbed intentionally because of the client relationship. Some clients may need package restructuring. Some subscriptions may simply need better tracking. 

But those decisions should be deliberate. 

Not accidental. 

The firms with the strongest pricing confidence are usually the firms with the clearest visibility over their costs, margins, and billing processes. 

The bottom line 

Before increasing prices at EOFY, take time to review your software subscription margins. 

Because the issue may not be that your fees are too low. 

The issue may be that subscription costs have gradually drifted away from the pricing model your firm originally intended. 

Small billing gaps are easy to overlook. 

But over time, they add up. 

Twine Biller is being built to help accounting and bookkeeping firms map wholesale billing to clients, review subscription margins, track pricing changes, and improve billing visibility. 

Before your next pricing review, make sure you understand what is happening inside your subscription billing process.