Cost per Transaction - The Book-keepers Forum (UK)

allisont · Member

Cost per Transaction

luther parker · Veteran Member

Hi Alison,

I too work from home, and this client happens to have manual accounts, this also takes me about 3/4 hours, but I simply charge £15 per hour and £15 for collection, I find its easy this way rather than working out by how many transactions you have or you could work out a set fee, which again is what I charge one of my other clients.
I'm sure that if you just explain the work that you have to do and produce reports like a aged debtors/creditors,balance sheet or an income statement and reconcile your VAT and bank statements, then they should be happy.

Don't understate or overstate your fees alway's keep them neutral.

Hope this is ok!

Luther.

allisont · Member

Hi Luther

Thanks for the advice. Glad to hear you charge for travelling to collect the work as I too was thinking of doing that.

Regards

Allison

Jordan · Veteran Member

Hi Allison,

I prefer the fixed monthly fee option.
If they are to be regular client and you agree what services etc you will provide for a fixed fee per month, I find clients like the idea of knowing what they will pay.

The last discussion I had was with a sparky last week. I quoted for what he wanted, £65 per month, quite a straight forward account. He questioned about the price, typical !, but when I asked what his call-out was, it was on average £40 before the work was done ! So he was getting my services for one call-out charge ! A hair- dresser is one blow-dry or colouring job etc etc, the list goes on.

Good luck, don't sell yourself short.

allisont · Member

Hi Jordan

Thanks for the advice. There are so many add-ons to consider... software costs, money laundering subscription etc.

Regards

Allison

kjmcculloch · Guru

Hi Allison,

I agree with Jordan, fixed fee is the way ahead. With cost per transaction/hour you can spend so long working out your fees rather than billable work. I set fixed fees reviewed each year.

It also helps me to budget for the things you outline above and easily calculate a break even analysis.

Kris

luther parker · Veteran Member

Sometimes it is difficult to charge a set fee, as one month you might be working 4/5 hours then other times you might be doing 2 hours, then your client starts moaning because you charge them 60 quid a month for 2 hours.
I would charge hourly for a few months and see how work goes,if it seems to be the same amount of time then a set fee and (mention it to them) I would charge.
If its only a couple of hours per month, then hourly, otherwise you would charge say 30 quid for 2 hours then you end up doing 2 and a half hours, then 3 and so on. then your out of pocket.

Luther.

moxby · Veteran Member

We do it roughly on an hourly basis as sometimes you get a client just starting out - take up to an hour to do the transactions and then put together the management accounts and graphs (if needed) but each month or quarter this could grow.

If you get businesses that 'just tick along' then a flat rate to at least cover your time is easier on your brain and better for the client's budgeting process.

BudgetB · Guru

I charge by the hour, and can't even imagine how complicated it would be to work out cost per transaction! With enough years experience I can tell people roughly how long I think it's going to take each month, and I've had no clients with major issues with that so far.

With some clients whose bills do fluctuate from month to month I offer a sort of budget account, they pay a set amount each month (by standing order) and then I issue invoices based on the actual time spent and over time it evens itself out. I review the situation every 6 months to make sure they're not getting too far ahead or behind if their business has changed. This satisfies their need to budget their cashflow, whilst also not paying say £65 for something that only took 1.5 hours one month.

kjmcculloch · Guru

Luther,

I would suggest a fixed fee of £30 for something which takes on average 2 hours is far to low to begin with. Fixed fee you should be aiming to get about £25-£40 per hour.

Kris

luther parker · Veteran Member

Hi Kris,

'Yes you are right', and certainly if you have alot of experience with Book-keeping then you can charge £25 plus.
The problem I alway's believe, is not all Book-keepers can take on a vast amount of work, hense the help on this forum, so I say as a basic starter then £15 should be well sufficient which also helps new Book-keepers find work.

Luther.

kjmcculloch · Guru

Luthor,

The point I make on a regular basis is when you first mention to a new client 'My fees are £15 per hour', the very next question 90% of potential clients will ask is 'how many hours will it take?' people love to know what they are paying all in.

Personally I decided a long time ago to cut to the chase which allowed me with little experience to charge much more per hour than other local bookkeepers while still appearing competitive.

An equivalent hourly rate of £35 is normal for me, and I have been in bookkeeping for around 2 years.

Kris

luther parker · Veteran Member

Hi Kris,

I do totally agree with you, and certainly if in any doubt your experience is worth alot more than others. But then if you put this into an equation, A client has a choice paying £15 per hour for basic Book-keeping or £35 for complete accounts right upto the yearend,Payroll,stock adjustments, total knowledge and full reports ready for meetings, self audit,Depreciation and further adjustments, full knowledge of VAT and dealing with foreign accounts, journal entries and so on. if you could not produce this....'then what'!

Luther

kjmcculloch · Guru

No, I agree with you. I suppose the difference with my fixed fee is that none of my clients really know (or care for that matter) how long it takes me, so they don't really know the hourly equivalent rate for the work. There were times in the beginning where I undercharged, but I have more than made up for this.

I just genuinely believe that fixed fee is the way ahead.

Kris

luther parker · Veteran Member

...and that's true.'You seem like you have a good knowledge of Book-keeping' and if that's what client's see and trust you with, then you know you are one of those Book-keepers who shows that you are professional and reliable and not someone who's come up the Amazon on a banana boat!.

Luther.

Quentin Pain · Senior Member

lol Luther :) One thing I know for sure, most people undervalue what they do and it is almost always lack of confidence in their abilities. Trouble is, it takes experience and time to get over it.

ADAS · Guru

That's very very true Quentin.

I quoted for a new client recently and when I told her my payroll fee she said "Is that all" - talk about kicking yourself.

allisont · Member

Hi all.. thanks for the advice. Have decided I too should be pricing as a fixed monthly fee. Am considering offering £50 fixed fee for the first months bookkeeping for businesses with a turnover of up to £150K so that I can estimate how long it will take thereafter and then giving a monthly cost to be reviewed after 6 months. The £50 would be for processing on Sage 50 excluding PAYE. I would like to be earning £20 ph... (Essex) do you think I would be dropping a clanger by doing this.?? Thanks for any advice.
Allison

kjmcculloch · Guru

Hi Allison,

I use a combination of legal status, vat registration, turnover and number of transactions to arrive at a monthly fee. As I ave said, I aim to get around £35 per hour.

You will, as time passes, find more streamlined ways of doing things. This will decrease the time it takes you and so increases your monthly equivalent rate.

Kris