Ok, since my other thread wasn't to be a general discussion of the pros and cons of each fixed fees and hourly rates I thought we could have one that is.
There are no other threads dedicated to this, just hijacks of other topics.
So, I'll kick off.
I started developing my business based on hourly rate, partly because I didn't think there was really an alternative. It was something I never really gave any thought.
When I realised I could offer a fixed rate, I was a bit unsure. So decided to offer both a fixed rate and hourly rate.
So when you meet a potential client what do they ask? We'll sooner or later they want to know how much it'll cost them. So you say £13 an hour. And whats the very next question? How many hours do you think it'll take?
So straight away new clients want to know what it'll cost, so I thought, why not give it to them straight?
Recently we've had a new kitchen installed and the house redecorated. I pushed both tradesmen for a fixed price. Theres just something in me that thought if I paid by the hour they were more likely to string it out.
I wonder if our new client think the same.
So I took the leap and no longer offer an hourly rate.
The views expressed in this post are my own personal (HRA protected) views, and are not representative of any organisation I have any involvement with.
It's always interesting, how people calculate charges.
Currently I base mine on a per document basis after consultation. By (gu)estimating how many document need to be processed and the state of system the client uses. If they are "Books in a bag" I base my charges on 25-30 entries an hour.
An entry every two minutes sounds like a lot but by the time you've sorted them and made the relevant entries time soon goes by. If the paper work is well maintained and basically just needs processing then I will increase the number. Once I have calculated what I want, I give the client a fixed price.
The draw back to this is that I have only just started out myself and so far my guestimations have been a bit off centre. It's surprising how many documents there are in an inch high pile!! Hoping that as I get more experienced the better I will be at judging.
However I have stuck to my quotes and swallowed the extra time, so I probably just about make minmum wage at the moment. I am treating it as a loss leader and a learning curve (education isn't cheap!). I have retained the clients and have been asked to quote on doing wages by one of them.
Great minds think alike! I had literally logged on to ask the same question.
I had just been looking at a website called Whizzbooks which prompted me to ask this. They quote on a transaction basis and claim to be cheaper than anyone else, plus they say they will beat any quote given. It seems fairer all round to quote per transaction as far as I see it because, like you, I like to know where I stand.
Will be interesting to hear what others think. Leigh
I always use the fixed fee method and has always worked for me, and the client knows where they stand. If the workload goes up then I put that price up. Then again it does depend on what service you are providing? General bookkeeping, then fair enough, you can guess the number of transactions and go from there.
But, what if you prepare their VAT returns? What if you complete their SA return? Payroll? All these need some kind of thought on top of the basics.
This is an interesting debate as I'm sure we all want to be paid the best price for our services.
I currently charge a mix of hourly and fixed rates.
For a set of accounts or sa return I charge a fixed rate but with an hourly rate involved to prepare the paperwork.
This is due to the fact that a lot of my work is end of year sa submission only and I find that some clients have really well kept records which means figures can be immediately transferred while others require a years worth of bookkeeping!
So far I have had no complaints with regards to this way of pricing
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Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
