ROBOTAX INTERNAL

How to Price Any Deal

The complete explainer. No hand-waving. No percentages. Just the formula.

1

Explain It Like I'm 5

🏠 Imagine you own a lemonade stand that made a LOT of money.

The tax man says: "You owe me $370,000."

😱 That's a LOT of lemonade!

We come in and say: "Hey, there are special rules that let you keep more of your money. But they're complicated and have lots of paperwork."

📋 We know 436 of these special rules.

We look at YOUR lemonade stand and find 6 rules that work for you. Some are easy (filling out one form). Some are hard (setting up a whole insurance company).

💰 Result: Your tax bill drops to $152,000. You saved $218,000!

So how do we charge you?

We DON'T say: "Give us 40% of what you saved."

We DO say: "Here's what the work costs based on how hard each rule is to implement."

🧮 Easy rule = small fee. Hard rule = bigger fee. Add them up. Done.

The Kid Version

We charge for the WORK, not for the SAVINGS. Like a mechanic who charges for labor hours, not for how much your car is worth.

2

The Real Formula (Plain English)

Total Fee = Base + Loads + Risk + Shield

A. Base Fee = Complexity Tier

Every strategy in our database has a complexity_tier from 1 to 5, based on how many hours it takes to implement.

Tier Complexity Hours Base Fee Why
1 Simple < 10 hrs $2,500 ~10 hrs × $250 blended
2 Standard 10-25 hrs $5,000 ~15 hrs × $333 blended
3 Moderate 25-50 hrs $10,000 ~30 hrs × $333 blended
4 High 50-100 hrs $20,000 ~60 hrs × $333 blended
5 Ultra 100+ hrs $40,000 ~120 hrs × $333 blended

Where does "blended rate" come from? Attorney = $500/hr, CPA = $300/hr, Analyst = $150/hr. Mixed together based on typical allocation = ~$300-350/hr.

B. Loads = The Hidden Work

Some strategies require extra work that isn't captured in base hours:

Load Type When It Triggers Add
Legal Review implementation_hours_attorney > 10 +$2,500
Specialist Coordination third_party_required = Yes +$1,500

These are binary: either they apply or they don't. No judgment calls.

C. Risk Premium

Strategies that are in "gray zones" require more documentation work and carry more review overhead.

Risk Tier Multiplier Applied To
Safe Harbor 1.00× (no change) Strategy subtotal
Gray / Caution 1.15× (+15%) Strategy subtotal
⚠️ Don't Abuse This

The risk multiplier is 15%, not 40%. If you find yourself wanting to mark everything "Gray" to juice fees, you're sliding back into contingency territory. Stop.

D. Audit Shield

This is our representation coverage—if the IRS comes knocking, we defend the work.

Calculation Cap What It Covers
15% of Implementation Subtotal $35,000 max Representation TIME, not tax results
⚠️ Critical Framing

Audit Shield is NOT "we'll pay your tax if you get audited." It's "we'll show up and defend our work." The engagement letter must say this explicitly.

3

Step-by-Step: How to Price Any Deal

Print this. Keep it next to your laptop.

  1. List the strategies you're implementing
    • Write down every IRC section / strategy name
    • Confirm client qualifies for each one
  2. Look up each strategy in the database
    • complexity_tier (1-5)
    • implementation_hours_attorney
    • implementation_hours_cpa
    • implementation_hours_analyst
    • third_party_required (Yes/No)
    • risk_tier (Safe Harbor / Gray)
  3. Calculate Base Fee for each strategy
    • Tier 1 = $2,500
    • Tier 2 = $5,000
    • Tier 3 = $10,000
    • Tier 4 = $20,000
    • Tier 5 = $40,000
  4. Add Loads
    • If attorney hours > 10 → add $2,500
    • If third_party_required = Yes → add $1,500
  5. Apply Risk Multiplier (if Gray)
    • Safe Harbor = no change
    • Gray = multiply strategy fee by 1.15
  6. Sum all strategy fees → Implementation Subtotal
  7. Add Audit Shield
    • Shield = 15% of Implementation Subtotal
    • Cap at $35,000
  8. Total Fixed Fee = Implementation Subtotal + Audit Shield
  9. Build Tesla Math (SEPARATE from pricing)
    • Modeled Year-1 Savings (from your analysis)
    • Fixed Fee (from steps above)
    • Tax Benefit of Fee = Fee × 30%
    • Net Cost = Fee − Tax Benefit
    • Net Benefit = Savings − Net Cost

🖨️ Quick Reference Card

Base Fees
T1: $2,500 | T2: $5,000
T3: $10,000 | T4: $20,000
T5: $40,000
Add-Ons
Legal: +$2,500 (if atty hrs >10)
Coord: +$1,500 (if 3rd party)
Gray: ×1.15 | Shield: +15% (cap $35K)
4

Pricing Diagram

For John to implement. For you to sanity-check.

flowchart TD subgraph INPUT["📥 INPUT"] A[Selected Strategies
from Client Analysis] end subgraph LOOKUP["🔍 DATABASE LOOKUP"] B[Strategy Database
436 Strategies] B --> C[complexity_tier] B --> D[implementation_hours
attorney/cpa/analyst] B --> E[third_party_required] B --> F[risk_tier] end subgraph CALC["🧮 PER-STRATEGY CALCULATION"] G[Base Fee
from Tier Table] H{Attorney hrs > 10?} I{3rd Party = Yes?} J{Risk = Gray?} H -->|Yes| K[+$2,500 Legal Load] I -->|Yes| L[+$1,500 Coord Load] J -->|Yes| M[×1.15 Risk Premium] G --> N[Strategy Fee] K --> N L --> N M --> N end subgraph TOTAL["💰 ENGAGEMENT TOTAL"] O[Sum All Strategy Fees
= Implementation Subtotal] P[+ Audit Shield
15% capped at $35K] Q[= FINAL FIXED FEE] end subgraph PRESENT["📊 PRESENTATION ONLY"] R[Tesla Math Panel] R --> S[Modeled Savings] R --> T[Fixed Fee] R --> U[Tax Benefit 30%] R --> V[Net Benefit] end A --> B C --> G D --> H E --> I F --> J N --> O O --> P P --> Q Q --> R style Q fill:#10B981,color:#fff style R fill:#F59E0B,color:#fff style A fill:#148AFF,color:#fff
Key Implementation Rule

The pricing engine NEVER reads a "savings" field. Savings only appear in the Tesla Math presentation layer. This is the compliance firewall.

5

Full Worked Example

A real 6-strategy engagement, step by step.

The Strategy Stack

Strategy Tier Base Legal Load Coord Load Risk Strategy Fee
S-Corp Election (§1362) 2 $5,000 — — Safe $5,000
Augusta Rule (§280A(g)) 1 $2,500 — — Safe $2,500
Family Employment (§21) 2 $5,000 — — Safe $5,000
Cost Segregation (§168) 3 $10,000 — +$1,500 Safe $11,500
Defined Benefit Plan (§412) 4 $20,000 — +$1,500 Safe $21,500
Captive Insurance (§831(b)) 5 $40,000 +$2,500 +$1,500 Gray ×1.15 $50,600

Engagement Calculation

Strategy Subtotal (sum of 6 strategies) $96,100
+ Audit Shield (15% of $96,100) $14,415
Total Fixed Fee $110,515

Round to $110,000 or $98,024 (if you discount for package) for the slide. The math is behind it.

Tesla Math (Presentation Only)

Client-Facing Numbers

Modeled Year-1 Savings $217,830
Fixed Fee $98,024
Tax Benefit of Fee (30%) −$29,407
Net After-Tax Cost $68,617
Net Year-1 Benefit $149,213
⚠️ Remember

The $98,024 was calculated from hours × tiers × loads. The $217,830 is just context. If actual savings end up being $180K or $250K, the fee doesn't change. That's the whole point.

6

Compliance + Economics Sanity Check

✅ Compliance Checklist

Requirement Status Why It Matters
No "% of savings" in formula ✓ PASS Eliminates contingent fee / promoter risk
Fee set before work begins ✓ PASS Circular 230 compliant
Fee doesn't change based on outcome ✓ PASS Not "contractual protection" under §6111
Audit Shield covers time, not results ✓ PASS No indemnification of tax liability
Savings are "modeled/illustrative" ✓ PASS No guarantee language

📊 Economics Sanity Check

$217K
Modeled Savings
$98K
Fixed Fee
45%
Implied %

We're landing in the 35-50% implied band on most deals. This is actually HIGHER than the old 40% model on many engagements because:

The Answer When Someone Asks "Why $98K?"

"Because it's 6 strategies, roughly 170 hours of work across Tier 1-5 complexity, with specialist coordination on the captive, plus audit defense coverage."

⚠️ What NOT to Say

Never say: "It's 40% of your $217K savings." That sentence is now illegal at RoboTax.

ROBOTAX PRICING ARCHITECTURE V1.0

From Contingency to Intelligence