At a glance
- Benchmarking compares your business performance against competitors to identify areas for improvement.
- Data can be biased towards large firms, geographically limited, and quickly become outdated.
- Focus on relevant metrics, track your own progress, and aim to beat the average.
Everyone likes to know how they measure up. That’s what a process called benchmarking aims to do. It lets you measure and improve your business’s performance against a competitor’s performance in the same market.
Benchmarking reports for accountants have become more widely available in recent years. From global surveys and national database comparisons to highly specialised sector analyses, this research is offering more detailed insights than ever before.
Their use makes some intuitive sense. We race other runners to help us run faster. We listen to others’ music to become better musicians. We watch other cooks to help us cook better. It seems logical that we can look at others’ businesses to improve our own – at least, so long as we can find the right information.
The benchmarking explosion
The search for benchmarks seems to have begun in earnest in the 1970s. By 1979 the US-based Xerox was tearing down its Japanese competitors’ copiers to calculate and then try to match those competitors manufacturing costs. In the years since, benchmarking has spread even into services businesses, where benchmarking has some additional difficulties.
Most benchmarking reports are based on larger firms, and the method’s biggest wins have come disproportionately from the manufacturing sector. Small practices and sole practitioners may legitimately wonder how much benchmarking might really apply to them.
But proponents say dismissing them for this reason would be a mistake. Used thoughtfully, they say, such reports can be a great way to spot trends, check your progress and set smart goals.
And there are ways in which small firms can make the most of benchmarking reports – so long as they watch out for the known pitfalls.
Benefits of benchmarking
Accountants often focus on client work and don’t spend enough time analysing their own business performance. Stacey Price, accountant and financial coach at Australia-based Health Business Finances, says benchmarking reports are a great way to start doing this.
“When someone else has collected up-to-date industry data, it saves you a lot of work,” Price explains. “Our industry changes all the time – how we bill, what we offer, legislation – so knowing what’s happening helps you adjust faster.”
Effective benchmarking reports let accountants compare fees, profitability and productivity with industry standards, so they can spot where they can improve. They can guide decisions on pricing, staffing, tech investment and services, and provide solid evidence when discussing fee increases or salary reviews.
Plus, they help with long-term planning by showing trends, and they can help firms establish realistic, data-backed goals.
Michelle Knights is principal of accountant advisory consultancy Rob Knights & Co. Her firm has been consistently publishing benchmarking reports in Australia for 50 years, and says they serve both large and small practices.
“Firms often won’t really have an appreciation of how they compare to their peers, and the profession more generally, until they start benchmarking,” she says.
“We’ve seen some firms charging fees up to 50 per cent lower than their competitors. Without knowing how you compare, it’s tough to identify strengths or opportunities.”
Canada-based Ryan Lazanis, CPA, accounting coach and founder of Future Firm, says benchmarking reports highlight weaknesses.
“If you see you’re pricing in the lower tier, benchmarking shows exactly where to improve,” he says.
Lazanis advises heads of small firms to focus on reports tailored to smaller practices. However, he adds that they can also learn from reports like Future Firm’s The Top 50 Modern Accounting Firms of 2025, which showcases inspiring firms of all sizes.
“These firms may be using tech in smart ways, offering subscriptions or packaged services, building visibility through creative marketing, or building teams focused on work-life balance. It’s not just about revenue and profit; it’s about creating a lifestyle that works.”
Limitations of benchmarking reports
For all their merits, benchmarking also has known problems. One well-documented issue is selection bias. A practice used by 50% of existing businesses might seem impressive; it would be less so if you found out it was also used by 100% of that field’s failed firms. But no-one gathers data from failed firms, because … well, they are by definition not around any more.
And that is only one way in which a benchmarking report can end up with a biased sample of businesses.
Benchmarking reports often focus on larger firms, making them less relevant for small practices or sole practitioners. They may limit their focus to specific regions, ignoring differences like rural versus suburban markets. Or they may fail to distinguish between advisory-focused and compliance-heavy firms.
At least one accounting leader – US-based Robert Kaplan, co-creator of the balanced scorecard method – has argued that services businesses should limit their benchmarking comparisons to “basic, commoditised services”.
Michelle Knights points out that gathering accurate data from across Australia is tough.
“Everyone wants the insights but isn’t always keen to share their data,” she says. “Rural areas in Western Australia or South Australia, and smaller states like Tasmania, the Australian Capital Territory, and the Northern Territory can be especially hard to benchmark.”
Many reports also lack detail on niche services. And they can quickly become outdated during economic or regulatory shifts.
On top of this, smaller firms may not have the resources to fully analyse or act on the data.
Stacey Price stresses it’s crucial to know where benchmarking data comes from – which size practices, locations, specialisations and the sample size – to ensure it’s relevant and comparable.
“Location shapes talent availability, salaries and client expectations,” she says. “An ‘average’ price for tax services is too vague. Is it basic returns, tax planning or capital gains? Precise data, like sole trader services for regional firms, is far more useful.”
She warns accountants not to compare themselves to mismatched data, which can fuel stress and feelings of inadequacy in an already-pressured industry.
“Understanding your data’s source is key to avoiding paranoia – and making confident, informed decisions.”
Ryan Lazanis warns the biggest pitfall is benchmarking against a low, “substandard” average, which can actually stifle innovation.
“Understanding your data’s source is key to avoiding paranoia – and making confident, informed decisions.”
Stacey Price
“Many firms struggle with overwork or low profits,” he says. “If half the firms charge under $500 a month, being in that group might seem OK, but it’s actually a red flag. You don’t want to be the average; you want to beat it.”
Making the most of benchmarking reports
Price advises accountants to home in on one key metric, whether it’s pricing, margins or salaries. She also recommends using benchmarking data that matches their firm’s size, services or region.
Most importantly, firms should track their own progress over time. This often tells a clearer story than broad national averages.
“Find benchmarking reports that reflect your own circumstance. But remember, the very best data comes from analysing your own business first.”
Knights says that benchmarking is a vital tool for staying ahead of industry trends.
“Benchmarking keeps firms proactive rather than reactive,” she explains.
“Most firms tend to only evaluate their performance when something goes wrong, but benchmarking helps you spot issues early and adapt before they become problems.”
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