Benchmarking: What Actually Builds Long-Term Firm Value
If you’ve worked inside an accounting firm long enough, you start to recognise the early warning signs that something isn’t quite right. It’s the partner meeting where everyone politely ignores the dip in realisation. The WIP report nobody really wants to talk about. Or the quiet dread of opening a job file you thought was on budget, only to discover it isn’t even close. These moments matter more than the glossy numbers we often reassure ourselves with. They’re the small indicators of value — or value erosion — long before it shows up in headline revenue.
Over the years, firms have asked us the same question in different ways: what really drives long-term firm value?
Most assume it’s revenue growth or headcount. But there’s more to it than that. The real driver is consistency — consistency in pricing, productivity, delegation, client retention, and partner contribution. How do we measure consistency – through regular benchmarking. Benchmarking for accounting practices is the clearest way to see whether that consistency genuinely exists, or whether it’s being held together with polite optimism.
Benchmarking: The Part Most Firms Underestimate
Benchmarking isn’t a competition and it’s not a performance review. If anything, it functions more like a reality check. It compares your data against firms that actually mirror your circumstances — same region, similar service mix, similar staffing structure. A Toowoomba firm battling talent drain to Brisbane shouldn’t be comparing itself to a Sydney CBD advisory practice, yet that’s exactly what happens when firms rely on generic charts or overseas “benchmarks”.
One Brisbane practice I recall had convinced itself it was doing well because the team felt “busy enough”. But once we plotted their realisation against revenue per FTE, the picture changed immediately: the firm was under-recovering in compliance by nearly 18%, and over-servicing their “favourite” clients without anyone noticing. Benchmarking didn’t give them new problems. It simply gave language to the problems they already suspected.
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Pricing: The First Place Value Leaks
Most write-offs and margin erosion don’t show up in dramatic moments. They build quietly, through habits that feel reasonable at the time and then go unchallenged for years. Pricing decisions are often made once and carried forward, even as workloads expand, expectations rise, and the work itself becomes more complex.
Legacy fees are common, particularly with long-term clients where relationships are strong and no one is eager to initiate an uncomfortable conversation. Partners assume their rates must still be broadly in line with the market because clients haven’t complained, even though the scope of work has shifted significantly.
Over time, this leads to under-recovery that becomes normalised. Write-offs are explained away as “just the nature of compliance work”, rather than recognised as a pricing issue that hasn’t been reviewed with any external context.
When firms benchmark pricing against genuinely comparable peers — similar size, similar service mix, similar location — the gap between perception and reality is often confronting. In many cases, the firm isn’t inefficient or poorly run; it has simply been charging fees that no longer reflect the true cost of the work being delivered.
One regional firm discovered it was still using the same BAS fee structure it had set in 2019. Nothing about the clients or the work was unusual, but pricing had not kept pace as the firm grew. Benchmarking forced an internal conversation the partners had been avoiding, and the adjustments that followed lifted profitability and firm value more than any technology investment they had made in years.
Pricing is rarely where firms expect value to be leaking, but it is very often where the erosion begins.
Productivity: Where Work Actually Moves
Productivity is one of the few areas where firm value can quietly rise or fall without anyone really noticing for months. It shows up in familiar ways: the overworked senior who redoes junior work because it feels quicker, the manager who spends most of the week stuck in review mode, or the partner who hasn’t done meaningful chargeable work in years but still appears constantly busy. These patterns rarely stand out when you’re inside them. They become part of how the firm operates.
Benchmarking is what makes them visible. When utilisation and realisation are compared against genuinely similar firms, bottlenecks that once felt normal become difficult to ignore. One Sydney firm discovered its intermediates were sitting at just 54% utilisation, not because of capability issues, but because partners were holding onto their favourite clients’ work. There was nothing malicious about it — just long-standing habits. Once that behaviour shifted, the firm’s capacity improved almost immediately.
Want to know more? Book a 15-minute call with Michelle Knights and discover how she can help your practice.
Valuation: The Part Buyers Never Overlook
When a firm enters a sale conversation — and we expect to see far more of these in 2026 — buyers look past headline revenue. They dig into the health of the numbers: realisation, margin trends, client tenure, average fee movements, revenue per FTE, advisory capacity, and the firm’s ability to operate without a single partner holding everything together.
Benchmarking becomes proof.
Proof the firm knows its numbers.
Proof the performance is stable.
Proof the future isn’t propped up by one heroic individual.
Firms with benchmarked data behind them tend to command higher multiples because there’s less guesswork for the buyer. They’re not buying “potential”. They’re buying evidence.
Where Benchmarking Goes Wrong
1. Doing benchmarking once and declaring victory. Markets shift, staff move on, and client expectations change. A single check-in won’t protect a firm for long.
2. Using overseas or generic benchmarks. Australian firms operate under very different conditions to US or UK practices, yet those comparisons are still relied on far too often.
3. Treating benchmarking as a judgement. It’s not about being the best firm in the room — it’s about being clear-eyed about how yours actually operates.
4. Not digging into why a number looks the way it does. Low utilisation isn’t always a performance issue. Sometimes it’s delegation. Sometimes it’s workflow.
5. Using internal reports without external context. Assessing performance without comparison is like trying to judge your fitness by looking in the mirror instead of stepping on a scale.
Benchmarking and Technology: Helpful, But Not Magic
Cloud adoption, automation, workflow tools — all incredibly useful, but they work best when the firm actually measures the before and after. Two firms can use the same tech stack and get completely different outcomes based on their structure, discipline, and review habits.
Benchmarking shines a light on:
where the technology is genuinely helping
where the staff are bypassing it
where inefficiencies still hide in plain sight
One firm thought Xero Practice Manager had improved their workflow; the benchmarking data told a different story. Jobs were still stacking up at the review stage — the bottleneck wasn’t the software, it was the habits.
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What Firms Usually Realise Too Late
If there’s one thing I’ve learned after decades of advising firms, it’s that most people already know where the problems are. They just haven’t had the data, the comparison, or the push to address them.
Benchmarking gives owners that push.
It replaces vague discomfort with clarity.
And clarity builds value — year after year — far more reliably than any new trend, tool, or shortcut.
Frequently Asked Questions
Usually pricing. Firms are often 10–20% behind where they should be, especially long-term clients who haven’t had a fee review since COVID.
It tells you whether your staffing feels stretched or actually is stretched. Many firms discover the real bottleneck is partner-level review, not headcount.
Absolutely. Buyers trust numbers they can compare. Benchmarking gives your firm a track record instead of one good year.
Buyers increasingly look for evidence that a firm understands and manages its numbers. Benchmarking provides proof around pricing discipline, capacity, sustainability, and whether the business can operate without reliance on one or two individuals.
Most often, it highlights issues firms have felt for some time but haven’t been able to quantify — pricing that hasn’t kept pace with workload, productivity bottlenecks in review stages, or partners holding onto work that should be delegated.
Yes — especially because regional firms have pressures metro firms don’t face. Toowoomba competes with Brisbane for staff. Ballarat competes with Melbourne. Wagga has its own market rhythm. Benchmarking lets you see how firms in your situation perform. Benchmarking works best when firms are compared against others with similar size, service mix, and operating conditions, particularly within the Australian market.
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