How much should a self-employed bookkeeper earn? - The Book-keepers Forum (UK)

BobHarper · Guru

How much should a self-employed bookkeeper earn?

kjmcculloch · Guru

Hi Bob,

I don't really understand where you're going with this thread. Unless of course it's another barefaced self promotion thread that is.

I've actually had a look through all of your posts, and I can find only two that are not just promoting Crunchers.

I don't know if you've noticed, but we're all bookkeepers, either starting out or established. We're all taking different routes, and have different needs, issues and aspirations. But the one thing we all appear to have in common is that we're here to help each other out (and ask for help too). All of us that is, except you it would appear.

I can find one single post where you go out of your way to help or offer advice without you seeing a potential sale in it.

There was one thread where you were offering £15 per hour to take up the slack in bookkeeping, but it later transpired that you appeared to be using us for market research for your new lifestyle franchise. Another way to sell us something.

If any of us wanted to buy into crunchers we probably would have by now. I just wonder if others feel the same. And of course you're views on my observations would be welcomed.

Cheers

Kris

-- Edited by kjmcculloch on Friday 25th of September 2009 07:56:42 PM

BobHarper · Guru

Kris - the direction I am going with this thread is to try and understand the self worth and motivation of members of the forum. Reading through the posts, it seems to me that many bookkeepers under value themselves by charging a ridiculously low hourly rate. However, Ill focus on useful hints and tips like you do.

kjmcculloch · Guru

Bob,

While I understand your frustration at this, if people want to live on the equivalent of about £2-4 per hour, let them. We all know that you've seen the light and are extremely successful, however from your latest opportunity on offer I think you've also now realised that some folks don't want all the fame and glory, they want to be bookkeepers. They want to be technicians running a business. While you might disagree that it is possible there are more than a few lifestyle businesses around, turning over a small profit, allowing the owner to live a reasonable lifestyle.

I just feel that you've been a member here since 4th May. In that time, and 32 posts you've asked for advice once. You've offered help once. And the rest has been trying to sell your franchise.

I'm on this forum to get help where I need it, and to offer it when I can. I think that most others are the same.

I sense from your posts and threads you start you've got another reason to be here, am I right?

Kris

-- Edited by kjmcculloch on Saturday 26th of September 2009 07:58:46 AM

stephen72 · Senior Member

Hi,
I would disagree with Bob in that i don't think that bookkeepers are under valuing themselves on purpose in my opinion it is the local market that are dictating the prices that we can realistically charge as in my area all of the people i have spoken to are not looking to pay large sums of money to have the accounts done and if i were to start asking for a higher rate then i know i would not get any clients.
I think i would rather continue with the thought of offering a good service at a reasonable price and have a chance of getting clients as opposed to charging a higher price and having none.As Kris rightly points out for most people it is not about the money perhaps as i gain more clients thriugh the years i would be able to increase my prices slightly i still do not think i would be able to charge a great deal more in my area.

stephen

Terri · Senior Member

I completely agree with Stephen. I have been doing some local research into other bookkeepers in my local area, and there are a lot so competition is great. The bookkeeper nearest to me charges £7 and hour, the others that I've been able to get prices for between £7 and £12 an hour, if I overpriced myself, I would never get any work. I charge £8 an hour and am struggling to win clients. I have one client and got him back in April. Times are tough, like Stephen said, I would rather work for £8 an hour than not work at all.

Terri

orange · Member

Bob may be looking to sell his franchise but if you take the time to understand where he is coming from then you'll learn a valuable business lesson. The problem here is that most people on this site aren't business people, read the threads and topics and you soon realise that it's the blind leading the blind. Sorry but its true.

On this point of how much a bookkeeper can earn really has nothing to do with you're charge out rate, it's your recovery rate. When Bob says you can earn £50 per hour, he doesn't mean charging a client £50 per hour!!! He means working smarter - using his software for example.. Once you understand this you'll be able to earn more. You can do this on your own or by buying into a system like crunchers.

Everyone on here is here to sell something, your bookkeeping business for example. If there's no-one to sell to on this site then why have your web address at the bottom of every post. To create as many web "spiders" of course, to help promote/sell your service on search engines. So it's a bit rich knocking someone for trying to promote their business!!!

brog13 · Veteran Member

'Blind leading the blind'!! Oh contraire Orange! I so disagree.

This site is extremely useful for both novices and the more experienced. And unlike several other sites for other topics - it tries to be friendly as well.

Many times I have picked up hints and knowledge from here - or learned where to go for more information. And a couple of times, hopefully, I have helped others.

And to add my two pennorth - I agree with Kris - I stopped reading the 'Crunchers' entry after a while, deciding that it only seemed to be a very cheap advertising ploy. No offence, Bob, and hopefully you will continue to be very successful.

Babs

BobHarper · Guru

Orange - I am in love with you!

Kris - your links need different anchor text to be most effective - I hope that helps.

The new Crunchers package (and promotional offer) is to effectively eliminate franchise fees from the decision on joining Crunchers. I want to switch the focus on the investment needed to build a business as well as other things like personality and I agree you should stay on your own.

Stephen & Teri - it will help if you stop quoting an hourly rate and focus externally. You can not win the hourly rate game. so change it. Do a search on YouTube for a £5,000 car cleaning service and think about what you can do.

Brog 13 - no offence taken as I do use a mix of low cost and expensive marketing tactics. Keep an eye out for the postcards and an ear out for the telemarketing as well.

-- Edited by BobHarper on Saturday 26th of September 2009 11:21:28 AM

stephen72 · Senior Member

Bob,
not sure what you mean about thinking externally . as for the hourly rate i have found that most people will not pay any more than £10 per hour in my area so it would be hard to try to get more money out of them.

BobHarper · Guru

Stephen - hourly rates are internal and all about your effort. Who cares if you charge £10 an hour - what matters is how long you take and what the outcome is.

External is about the market and recognising that you shouldn't be targeting "most" people. Even if you won all the work from most of the people you wouldn't be able to cope.

Did you find the £5,000 car clean?

Julie · Senior Member

I have read with interest the posts over the last few months regarding Bob Harper and `Crunchers` - My conclusion is if people want to spend gods knows what on a franchise in the hope that it will be a quick get rich scheme, then a fool and his money will soon be parted.

I would say the vast majority of people on this forum are like me, running a bookkeeping business, trying to make a decent living out of providing a professional service for their clients. We post our queries and concerns about problems we come up against in the hope that others may have gone through the same thing and advise accordingly. It most certainly is not the `blind leading the blind` as Orange has implied.

I think what Orange fails to realise is that for most of us running a bookkeeping business is often a business run in isolation, the vast majority of us work alone and so forums like this are a godsend.

Julie

BobHarper · Guru

Julie just to be clear, Crunchers is not a get quick rich scheme and the fees are a small fraction of the benefit. Keep in mind a Crunchers can quickly cover the fee by renting software to people who want to do their own bookkeeping and interestingly one of the benefits is not being isolated.

orange · Member

I apologise for the blind leading the blind comment. And I agree with the final comment by Julie re the usefulness of the forum given this is a business where people normally work on their own.

I don't think anyone buying a franchise should be regarded as a fool easily parted with their money! I think you'll find the success rate of buying into a franchise is much better than starting on your own. I believe overall 95% of franchisees report that they are making a profit, whereas the majority of businesses started fail within the first year. If you are interested in a franchise then you should look at a number of them, and if you are serious then the owners of the franchise will allow you to contact and meet current franchise holders and see for yourself how it works in practise.

Back to the original post and the first reply that changed the course of this thread, Bob is trying to help us by pointing out some obvious ways the majority of bookkeepers are going wrong (yes, and promoting his franchise). He's gave more advice than he's been given credit for and I don't agree to the way he was "attacked" in the first reply by Kris.

lor · Guru

Julie wrote:

I think what Orange fails to realise is that for most of us running a bookkeeping business is often a business run in isolation, the vast majority of us work alone and so forums like this are a godsend.

Julie

I agree that this forum is vital to myself and others as a way of helping with our bookkeeping businesses as with out it I think I would be stuck.

Terri · Senior Member

Stephen & Terri - it will help if you stop quoting an hourly rate and focus externally. You can not win the hourly rate game. so change it. Do a search on YouTube for a £5,000 car cleaning service and think about what you can do.

I haven't been advertising my hourly rate for a couple of months now, I am advertising in shop windows, on Ebay and on free advertising websites, plus a couple of weeks ago I sent out 200 flyers to new start up businesses in the area. I haven't received an enquiry since April/May time. I am doing all that I can but when times are hard for businesses, they will do whatever they can to save money, if they are struggling to keep their heads afloat then I really can't see them paying me something that they can do for free. If they don't have the money to spare to pay a bookkeeper, then no amount of calls or sales techniques are going to make a difference in my opinion.

kjmcculloch · Guru

Hi Orange firstly, welcome to the forum.

Secondly perhaps if you took the time to read my previous posts you'll find that I actually do agree with bob regarding fixed rates. I also understand fully that to earn £50 per hour you don't need to charge a client £50 per hour.

The point I was making was that we all now know bob runs a bookkeeping franchise, he need not remind us every five minutes with loaded questions and sales pitches.

Of course we are all here to sell, and of course we all have links to help with google rankings (but also to help each other). What we are not doing is selling (or trying to sell) constantly to each other.

I don't doubt at all that franchises have a place, nor do I doubt the success of some franchises, neither do I doubt the success of some timeshare companies, but oh how we cringe when timeshare is mentioned. You see the two are pretty similar. They can both be very successful but a few bad apples have spoiled the concept to the point that people back away from it.

Having said this, I also appreciate the contributions that independent businesses make too. And know that there's a place for lifestyle businesses, like bookkeepers charging £12 per hour.

I wish to dispute that I attacked Bob, I did not. I simply outlined the point of the forum, and suggested that perhaps people don't want to be bombarded with sales pitches. This view seems to have been confirmed by others. I have read every single post bob has made, and I can assure you I don't underestimate any advise he may have given, my point is that all the advice he gives is a double edged sword, it's a hook with which to try to sell his franchise.

And finally, Bob, thanks for pointing out my websites failings.

Oh and Terri, try not to get too down, things will improve soon, I'm sure.

Kris

-- Edited by kjmcculloch on Saturday 26th of September 2009 04:24:12 PM

Terri · Senior Member

Thanks Kris, I hope so

Terri

stephen72 · Senior Member

Hi,
I would agree with Terri if i can't get people to pay to have the accounts done then i have no chance of selling them software etc

BobHarper · Guru

Kris the issue is not you agreeing with me about using fixed pricing or you trying to dispute attacking me but accusing me of being deceitful.

Anyway, your analogy between a franchise and a timeshare is interesting as my father has just returned form his in Madeira. I was sceptical when he bought his first week, then his second but when I saw it myself I realised it was great value. It has three bedrooms, three bathrooms, air-conditioning with marble flooring and he could not afford to buy this without collaborating with a few other people.

Collaboration is what we do as a society and it is what Crunchers is about but I understand some people don want to be part of a team.

BobHarper · Guru

Terri I am not sure your targeting is right and if your market is doing their own books you need to be able to offer them software, not just a service.

I also do not think 200 leaflets is enough but recommend you check out Permission Based Marketing from Seth Godin before doing any more.

Stop quoting time and you will start to differentiate yourself.

kjmcculloch · Guru

Bob, my reply was actually to orange and that was indeed the issues they raised.

I have not accused you of deceit, only of constantly trying to sell your franchise in every post. I merely suggested that perhaps you'd like to enter into the spirit of this forum, this community instead of constantly trying to hook us with your product. Perhaps you could try your collaboration here, because right now it feels like you don't want to be part of this team.

Your reply about permission based marketing is fantastic, it's about delivering the right message to the people who want to hear it, and that to treat people with respect is the best way to get their attention. I don't think that's really what you've been doing on this forum.

Kris

kjmcculloch · Guru

However, to go back to your original post, I would suggest in the region of £25 per hour is acceptable.

For that rate I can cover my initial investment in my skills training, including time in one year's worth of work, being 1200 hours of billed work. This may take longer than one year, but is the equivalent of one years worth of work.

It takes account of my time and my overheads, it takes into account that I will not bill 35 hours of work per week. It also takes into account a substantial return on my initial investment, far more than if I stuck my cash in an ISA.

With regards to risk, I fail to see the relevance as being self employed carries less risk as I spread my workload over many clients, so if I loose a few I can still operate. This is unlike employment were it can all be pulled away in a heartbeat. I think you'll agree that it's a long time since someone entered a job at 16 and left at 65.

In terms of employment rights, I need only to cover my sick time, all other rights are irrelevant to me in terms of being self employed.

Regards

Kris

BobHarper · Guru

Kris - a couple of risks I have in mind include claims by clients, potential fines for ML, paying someone to do the work for you if you are sick or potentially loosing your income if you are unable to work for a few months.

However, if we ignore that, you can consider the profit your business is aiming at by deducting what would a full-time bookkeeper earn from your desired recovery rate multiplied by the number of chargeable hours.

I am not 100% sure what a good bookkeeper would earn where you are. I had a look on a job site and saw £20k so in your case your business the maximum profit you could make is £10k.

But, when look at it from another angle of employing someone to do the bookkeeping work for you, then you would need to pay £20k salary plus Employers NI, cover for sick-pay, there would costs and you would need to allow for training and management.

If we estimate £2k for NI, £2,000 for sick and recruitment and £2k for management that leaves £4k profit on an employee. But, there are additional risks if you employ someone so perhaps £25 an hour is break-even?

kjmcculloch · Guru

Bob,

Claims by clients are the reason I pay insurance. In terms of fines for ML, thats all about knowing your rights and responsibilities under the current legislation. Sick or unable to work, I covered.

Employing someone is interesting because the thread title, which you entered, is How much should a self-employed bookkeeper earn?, it says nothing about employment. However, I believe with oncosts, to employ a full time bookkeeper 35 hrs per week would be in the region of £18-£20k. Even if they only billed 25 hrs of a 35 hour week, they would still make me a net profit.

Kris

Alison · Senior Member

I would say I would have to disagree with the £35 an hour, even the £25 an hour unless you live in London where this might be suitable.

When I first did my research the hourly rate seemed to be between £7 and £12 for the area I am in, I started at £12 an hour when I first started in August 2006, in April 2008 I increased my hourly rate to £12.50, was going to increase again in April 2009 just by 50p an hour but held off because of the recession.

Would say you have to be realistic as a bookkeeper, if you go to the higher rates of £35 an hour and even if you are a qualified bookkeeper there are qualified accountants whose hourly rate is not much more then that and there could be many clients who prefer to pay accountant for everything even the bookkeeping rather then have a seperate bookkeeper.

Alison

BobHarper · Guru

Alison - just to be clear, I'm not talking about charging £35 an hour but earning an effective rate of £35 an hour. The question is really asking what bookkeepers should be aiming for starting from the base of the National Minimum Wage. I feel most bookkeepers under value themselves.

Your point about clients preferring an accountant to do the bookkeeping - do you see competition from accountants for bookkeeping?

Flex Accounting Services · Senior Member

This is my personal opinion - I wish people would stop trying to 'sell' or 'promote' their business on this forum. This forum is here to help and bring together us bookkeepers that are all in a similar situation. It annoys me when I see posts like this one because all it does is wind us bookkeepers up. To all other like minded bookkeepers - do you all feel the same as I do?

Terri · Senior Member

Beverley

I totally agree with you, I joined here for support and to "meet" other bookkeepers and lately there has been a lot of negativity. I didn't come on here to be sold a franchise or to be told that experienced bookkeepers are getting annoyed at newbies (like me) being self employed without three years working experience. I don't come on here like I used to because of it but I hope that it can get back to how it was as I have made a couple of friends on here and used to find it a very positive and welcoming place.

Terri

kjmcculloch · Guru

Beverly,

This is exactly the point I've been making all through this thread.

Kris

Denise · Senior Member

Hear, hear, Beverley

(I was trying to keep out of this thread lol)

brog13 · Veteran Member

Hi Beverley, Terri, Kris and Denise.

Totally agree. Perhaps the answer is that we let this thread now die, so we can get back to the 'real' Bookkeepers Forum!

Keep smiling
Babs

Flex Accounting Services · Senior Member

Babs we had let it go, that's why no one had commented for a few days!

gerry · Senior Member

I would like to add that, as a new bookeeper, this forum has given me wonderful advice during my start up and plenty of support through my self confidence issues. This is what I like and admire about the forum. For those of you that are there for others, please continue as your help and support has been invaluable.

Gerry