Accountants and Bookkeepers are always asking me:
“What should I be charging as an hourly rate for bookkeeping?”
I get asked this particularly from bookkeepers who are starting their business journey.
So I decided to find out, definitively what the profession is charging.
I recently created the world’s largest ever study, with 2683 participants, into what people are charging for their bookkeeping services.
980 Qualified and 416 Unqualified Accountants, 468 Certified Bookkeepers and 591 Non-Credentialed Bookkeepers all took part, as well as 208 ‘others’ such as Enrolled Agents. Mainly accountants and bookkeepers.
One of the questions I asked in the survey was:
“If you price based on an hourly rate, what is that hourly rate?”
This graph shows the findings…
Let me just explain how we achieved these numbers.
What we did was we organised all of the 2683 participants responses in ascending order. From that we excluded the top and bottom 3% to allow for anomalies and outliers.
Then with the data left, we located the lowest price, and the highest price. We also found the median, which is the number exactly in the middle of the data - which we used as the average. We also found the numbers at both 25% and 75%. This gives us a good idea of the spread of the data.
People who took part in the study were from all over the world, so we converted all the local currencies into US dollars as well.
What you can now see in the graph is that at the bottom end, some accounting professionals are charging a mere $19 an hour for bookkeeping services. That’s an incredibly low rate! It’s far too cheap.
At the 25% level, it was $31 an hour. This means that 25% of the people surveyed charge $31 or less an hour for bookkeeping services which is still far too low.
The most interesting number is the average. When we surveyed 2683 accounting professionals around the world what they priced for bookkeeping services, the average answer was $40.
At 75% people were charging $60. So, 25% of people surveyed charge between $40 and $60.
At the top end, the highest pricers were charging up to $125.
There are several things we can take from this. The first thing that strikes me is the huge range of prices from $19 to $125. This shows us very clearly that there is no such thing as a market price when it comes to bookkeeping.
People often think there should be, but if that were the case, we would see much more similar rates - there would not be such a big range between the prices.
The prices are all over the place, there is no consistency. This is most likely because people have absolutely no idea how to price bookkeeping. The process is seemingly completely random because there is no market price to go on.
We should not be setting our prices based on what the firm down the road does, because they won’t have any idea about how to price either.
It makes sense that there is no market price, because bookkeeping is not a commodity, it’s a service.
Each price is individual based on the specific service offered.
What we can see from this data, and this analysis, is that some firms have come up with a way of charging much higher prices, not just by 5 or 10%, but by over 557%! From $19 to $125.
However, even though these people have found a way to charge really high hourly rates, there are more effective ways of pricing than time-based billing.
I went on to look at pricing methods in the study. I asked people whether they used hourly rates, fixed fees, menu pricing or some form of value pricing system to come up with their prices.
What we found was, although hourly rates is still the most commonly used pricing method, it typically generates a lower price than those using the other methods. It’s not a great way of pricing.
If you would like to learn more and see the exact prices people are charging for very specific bookkeeping scenarios and client profiles, you can download a free, country specific, 36 page sample here. Or you can buy a copy of the full report here.
If you want to know more about value pricing and how to make the move away from hourly rates, I run a free online live training session every month where you can ask me questions and learn pricing strategies and techniques to improve your profits. Click here to register and I will send you an invitation to the next session.
And if you are interested in joining a community of like-minded accounting professionals learning to price more confidently and effectively, you can join my Facebook Support Group here.
Wishing you every success on your pricing journey.
Chartered Accountant, Public Speaker and author of Amazon No.1 Best Seller, “Effective Pricing for Accountants”
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