Clean-up work is one of those services that can feel quite tricky to price.
When a client comes to you with their books and records in a complete mess and they ask you to fix them and give a price – the difficulty is the huge amount of uncertainty.
You have no idea how much work is going to be involved. You can try asking the client to get a better idea, but sometimes they aren’t any more clued up on their books!
You might ask when they last reconciled their bank account and they tell you it was a few weeks ago, but in reality it hasn’t been reconciled properly for 6 years.
The clients don’t know the answers and you won’t know the true scope of the work until you actually start.
It’s challenging – so how do you price that?
By the way, you can watch the video here if you prefer...
Option 1 – Charge an Hourly Rate
This is what most accountants and bookkeepers do, but it’s the worst possible way of pricing.
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. So let’s look at that. Also, later I’m going to share with you how you can get 30 days of free access to some of my best training.
Hourly Rates for Bookkeeping
I recently created the world’s largest ever study, with 2683 participants, into what people are charging for their bookkeeping services.
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…
As you can see, at the bottom end of the spectrum, there are accounting professionals charging as little as $19 an hour for their bookkeeping services. This is a ridiculously low price.
Bookkeeping is a highly valuable...
I got an email recently that completely blew my mind.
When I saw it, I couldn’t believe what Carla was telling me…
I was absolutely astounded by this result. Not only had Carla got an incredible 6-figure fee, but she had done it only one month after discovering value pricing, on her first attempting, in just 2 hours with the client!
I had to reach out to Carla to find out exactly how she achieved this amazing result. She agreed to an interview. It’s 29 minutes of pure gold! I suggest you watch it now.
Meet Carla Davidson
Carla started her bookkeeping practice small, by herself, from her house.
She struggled with the amount of work, and couldn’t make a decent profit because she was still using hourly billing.
She wanted to be able to help her smaller clients so started hiring people to help, but things didn’t improve right away.
Hourly Billing Became A Big Issue
Carla found that, because she was using hourly billing, all her clients were asking for a...
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...
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.
Is the bookkeeping profession is crisis?
There is such a huge amount of change going on in our profession right now.
We are seeing the rise and increase of Cloud accounting. We are seeing artificial intelligence, machine learning, automation like bank feeds, and not too long ago we also saw Intuit QuickBooks launching Bookkeeping Live - alive bookkeeper, at really low prices.
What we are going to see over the years to come is increasing downward pressure on prices for compliance work and particularly for bookkeeping.
If you are a bookkeeper, CPA, accountant, or do bookkeeping services, this blog is for you.
I’m going to share with you my thoughts on where the profession is going and how we can overcome that.
How do we rise to the challenge? How do we make sure that we can continue to build a very successful accounting practise? How do we beat technology, outsourcing, low cost competitors and now software companies that are getting in on the bookkeeping action.
Here are four...