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....
I started my accounting firm way back in May 1996. I started from scratch and built up my business as a sole practitioner.
I made so many mistakes!
I often get asked advice from people who are starting up their businesses, so I thought I would share with you the first 3 things I would have done differently if I were to start it all again…
1 - Hire The Right People
I went from 0 clients to 200 in 3 years and had a team of 13 people. I was growing crazily fast.
But I wasn’t growing profitably.
One of the biggest mistakes I made was hiring the wrong people.
I didn’t have a huge amount of money, so I tried to cut every possible corner I could, hiring college students and school leavers, rather than qualified accountants, to avoid the fees of recruitment agencies.
The problem with employing people who aren’t the best is the work is not as good, and you have to micro-manage them. I spent so much of my time in my early years...
I’m sure this will have happened to you at some point: a client agrees to do something, give you information in a certain format by a certain time, and they just don’t deliver.
You then have to work longer and harder to fix the problem, so should you charge the client for it?
Here are 7 things you ought to consider before you do…
1 - How Clear Were You?
At the outset, how clear were you in your price agreement about the criteria the client had to meet? Is it crystal clear what the client has promised to do? Is it in writing?
If you weren’t clear enough, or you don’t have the conditions in writing, it becomes much more difficult to put the price up. You will get pushback, or you may even lose the client.
Make sure you are always very clear on what the client needs to do, the scope of the work and who is responsible - and get it in writing.
2 - Consequences
Were you also clear on what the consequences would be if the...
Before we can look at how to make the move to advisory, we need to first ask two other questions…
‘What is advisory service, and why do we need it?’
In our modern world, with the rise of cloud technology and artificial intelligence, we are seeing compliance work become more and more automated.
Compliance work can be done at the touch of a button, so we need to start changing our services away from simply adding up numbers and towards interpreting numbers. We need to move to advisory services.
However, everyone has different definitions of what advisory services include. For example, it could involve tax planning, technology and app advice, business advice, management reporting or consulting work.
In this blog, I’m going to refer to advisory as business advisory, meaning adding value through management reports and meeting periodically to give business advice.
I’ve come up with 7 steps that you will need to take to make the...
I want to share with you 7 practical tips for how you might price bookkeeping services…
If you prefer you can watch the video here.
Tip 1 - Don’t Move Straight to Value Pricing
This is a big mistake I see often.
If you try to move from hourly billing to value pricing in one quick jump you are going to fail without a doubt.
Value pricing is a difficult concept to grasp in the first place. Trying to apply it to a complex compliance service like bookkeeping is going to make it even harder.
The move to value pricing is going to be a journey, not a quick fix, so be patient.
Tip 2 - Remember It Is Valuable
You need to recognise that bookkeeping is valuable.
The perception is often that it is a low value service, it’s just data entry. But bookkeeping can be so much more complex than that.
I know that my bookkeeper is quite expensive, but I don’t mind paying that price because I know I am getting great service. It gives me peace of mind knowing that the...
Do you struggle with knowing how to price your bookkeeping services?
Do you hate having the pricing conversation with clients?
Do you feel you are working crazy long hours for too little reward?
Trust me, you are not alone.
I know far too many bookkeepers who are underselling themselves and not getting enough money for the work they do.
I’ve noticed that people in the accounting profession are not typically very good at communicating their value to clients.
The ultimate problem is when clients don’t see the value of the work you do, they don’t want to pay a premium price for your services.
That’s why bookkeepers price so low. But you are worth so much more.
I hate seeing bookkeepers being under appreciated for the work they do. I’ve been there myself.
That’s why I have created this new ebook ‘How To Price Bookkeeping’ with these 5 easy steps to getting better prices:
Step 1: Change the way you price - stop quoting hourly rates and move...
If you haven’t used Trello before, it’s an amazing piece of software. I use it daily to organise my business, plan big projects, delegate and manage my staff workflow and many other things.
I pay for the upgraded version because I love it so much, but you can get a really good version totally free.
The idea of Trello is to create boards. On these boards you can create different lists, and within each list you can create individual cards. Below is a picture to explain what I mean…
You can attach all sorts of useful information to each card including links, images, descriptions, checklists, labels, deadlines - there are tons of features. You can move these cards along your boards to help organise your workflows and processes.
I use a board as my Weekly Planner. On this board, the first column is a list called ‘Ideas’. If I ever think of a great idea, something I can do to improve my business, I...
As people move away from hourly billing and move towards value pricing, the first step in the process is being able to give a fixed price.
One of the problems with hourly billing is that the client doesn’t know the price until the work has been completed. If we can give them a fixed price they will feel more confident and more likely to buy.
You can watch the video here.
Just to be clear…
Fixed Pricing is not Value Pricing.
However, it is an important first step to have a system for coming up with a fixed price. Once you have this system in place, it is much easier to move through the steps towards value pricing.
So, how exactly do you come up with a price…
#1 - Work out the scope
For every service, there are primary scope factors.
These are factors that will determine how long the work will take. For example, the primary scope factor for payroll is likely to be the amount of employees. For bookkeeping, it may well be the number of transactions.
“I’m just starting an accounting / bookkeeping firm. How do I grow it? How do I win clients?”
People ask me this question a lot, so I decided to put my answer down here in this blog. I’m going to share 12 strategies that every accountant and bookkeeper should know to help build a bigger business…
You can watch the video here instead if you prefer.
1 - Referrals
This is nothing new. You should be actively seeking referrals. Make sure you have a process in place to systematically ask for referrals. If you don’t ask, you don’t get.
2 - Joint Ventures
Who else do you know that has a similar audience to you, but that you don’t compete with? It could be your local bank manager, or local financial advisor. Having their clients would be great. You can start a strategic marketing alliance - you can help them, and in return they send clients your way.
3 - Networking
You need to get out there and talk to people. There are some great networking...
Every client is different. They all want different things, they value different things, and they are willing to pay you different prices.
You need to make sure you always give your clients choices - customers love choices.
You can watch the video I did on this here.
I recently bought a new car...
...it’s a Jaguar XF. I find the whole car buying process fascinating. It’s a big, important purchase. When I went onto the website to do my research I notice they gave me lots of choices.
They had three different model of the Jaguar XF. There was the Prestige which is the cheapest option. Then the R-Sport was designed for people who were more interested in the sporty extras. And finally, the Portfolio was the luxury model, it was the premium version. This one was aimed at people who wanted the highest quality and luxury.
That’s the first choice they give you. The three packages. I call this Menu Pricing. Creating a bronze, silver and gold option.
They gave me so many...