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Once I’ve spent some time in their books, I usually like to transition to the next method. Occasionally, there’s a problem where I need to dig to find the solution, or my client has a special request I need to take care of, and in those cases, it will take me the full five hours. I like to calculate my rate based on my max time, but then I’m rewarded if I work quickly and efficiently. To illustrate what a small client looks like, I’ll be using a preschool I do bookkeeping for that generates about $150k in revenue a year. This preschool employs six teachers and hosts about 100 students.
Factors to Consider When Setting Prices
For as long as many can remember, accountant fees have always been based on the billable hour as a pricing strategy. To illustrate what a large client looks like, I’ll be using a physical therapist office I do bookkeeping for that generates about $1.2 million in revenue a year. This office employs 10 speech pathologists and general staff and circulates child clients who come in for their services. Even though I’m giving you the hours it takes me with each of these clients, I don’t necessarily keep track of them.
- Then you also need to quantify the volume included within the services.
- However, if the company instead chose to focus on cost, it might end up selling its products at a lower price point to save money.
- Along with considering the above factors when setting your pricing for bookkeeping services, you’ll also want to set up a pricing structure that works for you and your firm.
- Tech makes once time-consuming work quick, and in many cases, effortless.
Hourly Versus Project-Based Pricing
A strong alternative to hourly billing is fixed-rate (or flat-fee). It means you set a fee for each service you offer and provide clients with a ‘menu’ of sorts, with corresponding prices. To decide which type of pricing is best for you, consider your experience level, the type of work you’ll be doing, and the needs of your clients. Once you’ve considered all of these factors, you should what is days payable outstanding have a good idea of how to price your bookkeeping services.
Remember, the perfect pricing model is unique to your firm. Track your results, refine your approach, and find the sweet spot that maximizes your profitability while attracting the ideal clients for your business. Once you know this, you can modify your service packages to address their specific needs and challenges.
Guide to Pricing Accounting Services (Fixed & Value Pricing)
For example, in Massachusetts, in-house bookkeepers earn 20% more than the national average, whereas in Kentucky, they earn 22% less than the national average. If you think they’re too high for you to set reasonable rates, consider lowering them. A major and effective way to do that is to move to a remote or hybrid work set-up. So to bill correctly, it’s important to identify what you’re charging for, the way you charge, and what adjustments you can make to improve your bottom line. You’ll be able to address any questions or concerns the potential client may have in real-time.
Fixed costs
To make things more complicated, a freelancer, small business, bookkeeping firm, or an accounting firm will offer different average rates for bookkeeping services. Like so many aspects of accounting, bookkeeping involves a lot of repetition. Since you often do the same work for multiple clients, there’s no reason to start from scratch each time you calculate your pricing. This article will look at the factors that should go into your pricing, how to market your services, and mistakes to avoid when calculating your prices. A specialist will always command higher rates than a generalist. That’s because clients often seek out bookkeepers who possess a deeper understanding of the financial nuances specific to their industry.