MINIMUM MAXIMUM CHARGE PER HOUR? - The Book-keepers Forum (UK)

dga · Member

MINIMUM MAXIMUM CHARGE PER HOUR?

Shamus · Forum Moderator & Expert

Whatever the customer is willing to pay!

Some people work for less than the minimum wage as often the time taken is more than the rate quoted in order to win the work.

Some bookkeepers can make £25+ per hour although I would say that such is definitely the exception rather than the rule.

It's really one of those questions like "How long is a piece of string".

I think that a good rule would be to take whatever a training provider says that you will make as a minimum as a bookkeeper in your first year and divide it by your shoes size!

That gives you a start point and anything better than that is a bonus.

Year two try for 10% better than year one and so on until you've got a decent business.

gbm · Guru

Agree with Shaun, extremely difficult to say.

Are you paying or charging?

dga · Member

Hi Nick!

It about charging per hour, for a bookkeeping service from a bookkeeper.

Regards!

DGA

ADAS · Guru

As Nick and Shaun have posted it's a tough call.

For example you probably need to take into account the following.

What type of work are you doing?

What is your experience?

Where are you based?

What's the competition charging in the area?

Also threads similar to this crop up reasonably often and I don't recall too many people quoting their charge out rates. I've seen some web-site quoting fees but cant thing of any off hand.

Edit: The more I think about it, the more I think the first part of Shaun's answer is probably the best you can get.

-- Edited by ADAS on Saturday 4th of June 2011 11:15:13 PM

Peasie · Expert

These websites you see quoting their rates...it's always -
From £xx.99 per month
I wonder how many people are actually charged the minimum amount or how many extras are added on because they were not included in the £xx.pp per month.

lizbolney · Member

As a qualified bookkeeper, don't undervalue your skills. Some bookkeepers charge £10 per hour, which undervalues our trade. Maybe the person is not confident in their own ability?

I have recently won a new customer, even though my rate was the highest he had found. I was confident in my own ability, and was able to convince my customer of that ability, and demonstrate my knowledge and skills. He wanted someone he could trust, and after our initial meeting, he felt I was that person.

If you want an administrator, pay for an administrator. If you want a bookkeeper, pay for the skills and knowledge of a qualified bookkeeper.

gbm · Guru

The difficulty is the perception that 'anyone can do bookkeeping'. This devalues it a bit, so you have to be able to sell the advantages that you bring and the value you add.

ADAS · Guru

lizbolney wrote:

If you want an administrator, pay for an administrator. If you want a bookkeeper, pay for the skills and knowledge of a qualified bookkeeper.

Spot on Liz..

I've no wish to offend anyone, but there's so much more to bookkeeping than raising sales invoices, posting purchases and chasing debts.

As Nick posted above, you need to make sure your customer understands all the other more complex aspects of bookkeeping and the skills you have gained.

-- Edited by ADAS on Sunday 5th of June 2011 01:47:33 PM

Shamus · Forum Moderator & Expert

How many times have we come accross situations where clients go initially based on price and then when things go wrong it costs twice as much for them to pay someone qualified and / or experienced to sort out the mess making paying for the expertise the cheaper option.

The problem is that fee's are not neccessarily an indication of quality as some inexperienced bookkeepers also aim their fee's at the higher end of the market so such cannot neccessarily be used as a yardstick as a measure to the service that will be receieved.

There is also of course the issue that there are some very good people out there who don't have all of the qualifications that they might but underatand the subject matter and also some bookkeepers who have passed all of the exams because they are good at exams and not neccessarily applying that knowledge to real life situations.

An additional arguement of course is supply and demand in that rates will be lower in high unemplyment areas because (1) more people train to bookkeepers (2) there are generally less businesses for the bookkeepers to service.

Where bookkeepers are competing against unemployed accountants for work the only weapon available is price and in such situations £10 per hour might be considered a quite reasonable rate.

I mean would you rather be doing nothing with a £20 price sticker on you or have £10 per hour coming in? I think that most people would go for the latter option if it meant that they would be working all of the time so in a year bring in more than the person charging twice the rate.

Personally I've taken work at £10.50 per hour and £45 per hour. It really depends on what you can charge in the circumstances which as always are a combination of knowledge & experience vs the market forces of supply and demand.

kind regards,

Shaun.

semsley · Guru

It's always a question of what you are prepared to accept and what the customer is prepared or able to pay, I've ranged from £12.50 to £50 per hour. The former for small company with low margins the latter for training for government projects. It's not just your qualifications and experience but also what the job entails and as Shaun says how long is a piece of string!!!

gillyfleur · Senior Member

Surely one of the big problems we face is that we're not valued as professionals ? Clients will happily pay a solicitor £150/£200 per hour - well, moan a bit but still pay the bill, and yet we want £20 an hour and they gripe and go elsewhere where they pay £10 an hour - and then come back to us to sort out the mess that the puchase ledger clerk who thought that made her a bookkeeper has caused

Even at £20/£25 an hour, working for yourself, it's hard to make a decent living by the time you've paid your software licence fees, office rent, telephone, mobile, etc etc etc. You also have to factor in the downtime of networking, admin, non chargeable time. I had a huge row with a client over fees once and I actually sat him down and did the sums and showed him how much I was earning - and then showed him his p&l with his large profit - and the instances of where I'd actually saved him money. He signed a standing order mandate there and then and we've never argued over money since !!

Sorry, rant over - but one of my bug bears is how little we are valued in the general market place (rather than our own clients who do value us as individuals) - and some Accountants are the worst proponents of this because they are protecting their own little empire

The ICB won't accept an advert on their website for a bookkeeper unless you are prepared to pay £15 or more per hour - and this is how they are trying to help drive up our hourly rate - but it doesn't help when you have recruitment consultants trying to recruit a qualified bookkeeper for a role - and want to pay £8.50 per hour !! scandalous. As professionals we need to stand together to make bookkeeping a far better respected industry and make our qualifications work for us on the fee front.

Ok maybe my rant wasn't quite over !!

Wine required now !!

ADAS · Guru

Hi

My biggest bugbear is software companies churning out "bookkeepers" who've passed a course in using a particular piece of software. I don't think this does the profession any great favours.

Ray2000 · Veteran Member

I think we all would agree with gillyfleur. I was really shocked at the low rates the highly experienced and professionally trained people on this forum were charging for providing accountancy services - as low as £8 , £9 per hour. Here is why - 30 chargable hours each week at £9 ph for 46 weeks per year is £12,420. Take off expenses, licences etc and you are working for next to nothing.

I can understand that some people are not in it primarily for the money, and I respect that, but the vast majority are.

I understand completely why bookkeepers charging these low rates have decided to compete on price alone. On the face of it that might seem like a sensible strategy but even if you sell your 'inventory' of 30 hours at £9 each its still not worth it.

What do others think?

gillyfleur · Senior Member

Completely agree !! also makes me cross that they encourage people to think they know what they're doing !

ADAS · Guru

Ray2000 wrote:
___________________________________________________________
I understand completely why bookkeepers charging these low rates have decided to compete on price alone.
What do others think?

It's a weak business model imho. If you've won the client based purely on price then you're exposed to losing them simply by being undercut.

It's an easy trap to fall into, especially when you first set up in business, which is only natural as you want to build a portfolio of clients as quickly as possible. I think it takes a while to have the confidence to turn clients away because they're not willing to pay a reasonable rate.

-- Edited by ADAS on Friday 15th of July 2011 10:50:58 PM

Shamus · Forum Moderator & Expert

It's a good point Tony but at times, espechially when there is a lot of local competition the real choice is either to be paid at a charge rate of £10 or not paid at charge rate of £20.

One can ask whatever price they like but the closer a bookkeepers rates are to an accountants then the more likely that clients will simply go to the accountant.

People have to accept that clients come to bookkeepers based on price compared to using an accountant. So, it is to be expected that bookkeepers will compete against each other on price.

I take accountant level fee's as being £35+ so would expect a bookkeepers fee's to be considerably below that.

Also remember that a lot of bookkeepers get work from accountants who will be expecting to make a profit on their fee's.

Personally I think that any more than £20 an hour and one is pushing it. You will win work but I'm sure that the gaps between jobs will mean someone charging a lower rate will end up with a higher annual return for their business.

Where things get a little clouded with rates is where bookkeepers venture into accountants territory but that's a whole different conversation about clients not being able to tell the difference between a bookkeeper and and accountant. Then you get into the qualified vs unqualified debate which we did recently on the site but I cannot remember the thread at the moment.

Ray2000 · Veteran Member

Some interesting points.

But put it this way, there is a risk that we are actually promoting an unsustainable business model, and if you cant build a profitable bookkeeping practice then why bother? (OK, there are reasons, but lets not complicate things)

Also, will a qualified accountant always be a better bookkeeper? I guess that someone who is doing bookkeeping day in day out will be just as competent (if not better) than an accountant who does bookkeeping less frequently (and of course, the accountant will often give the work to the accounts clerk in their practice, or subcontract it out, anyway).

Shaun - £35 is a good rate for a qualified accountant, are you quoting rates for simple bookkeeping?

ADAS · Guru

Shamus wrote:

People have to accept that clients come to bookkeepers based on price compared to using an accountant. So, it is to be expected that bookkeepers will compete against each other on price.

Not always you know Shaun, I recently took on a new client and my quote per hour was 50% higher than the cheapest. The reason I "won" was because the client had "no doubt" I could sort their problems out.

Sure price will always be a consideration but you can be too cheap and end up a busy fool. Obviously it's one's own call what they find acceptable.

Can I ask you a question Shaun - in another thread you posted your charge out rate. So would you rather work flat out at £10 an hour or work less at £20 per hour but spend the rest of time trying to find more clients closer to your target rate?

In no way is the above paragraph a criticism bud, I may be wrong but I think I know the answer

Another big factor is people's domestic circumstances. As a single parent with two teenage sons, I'd have to do an awful lot of hours at a £10 to make it work for me. If it came down to competing with someone else, say, it was the households secondary income - I couldn't compete just on price.

Ultimately, you're not just selling a bookkeeping service, you're selling yourself and your abilities and experience. The individual behind the business is the USP.

I try to make clients aware that not all bookkeepers are created equal.

Imho....

-- Edited by ADAS on Saturday 16th of July 2011 11:59:15 AM

Shamus · Forum Moderator & Expert

Hi Ray,

not suggesting that an accountant is always better but if one is paying the same money for a qualified accountant as they pay for a qualified bookkeeper then I feel that most people would quite sensibly opt for the accountant.

The work that a bookkeeper does can often be taken on by accountancy practices who will have staff trained in bookkeeping.

People keep talking about business models but I think that many bookkeepers are just trying to scrape a living rather than build a business in the sense of an actual practice.

A business model to me involves dedicated premises, permanent staff and long term planning. Not merely taking on all of the work oneself.

£35 is a rate often used by smaller accountancy practices however, how close that is to the hours charged I don't know as I'm sure that often jobs that take no more than a couple of hours may be charged at a full day so £35 per hour can turn into £140 per hour and the person doing the work is unlikely to be the accountant whose time would be better employed concentrating on winning new business and smoosing existing clients.

Bookkeepers play an important role and are very often very highly skilled and deserve better pay than clients often seem willing to pay. At times our work can cross over into accountants territory. But a bookkeeper should not aspire to be paid the same as a qualified accountant unless they are willing to put themselves through the level of training that accountants have to go through.

Shamus · Forum Moderator & Expert

Hi Nick,

charge out rates are a funny old thing.

As I've posted elsewhere (although I can't remember in which post) I've taken seriously low rates to pick up new skills and experience close to home where the rates have been kept low by high levels of unemployment combined with lots of bookkeepers. Luckily the low local rates have been compensated by income from other area's of my business.

The market has changed somewhat since I accepted £10 per hour and my minimum for bookkeeping related work is now £20 per hour (VAT inclusive) and £35 for most other work (VAT exclusive). The further afield the work the higher the rates I charge. Although like yourself, I'm a single parent with sole custody which severly limits access to the more lucrative positons available in London and Edinburgh if they expect me to work on site during the week.

Don't know about yourself but I always thought as the children were growing that things would get easier in relation to childcare as they got older but it's completely the other way around. My family is too far dispersed to be able to use them for childcare and childminders don't want to know once children are past around seven years old. (My youngest is now almost 13).

P.S. edited to remove conversation related to my hourly rates in my non bookkeeping related work as it's never good form to talk about money regardless of the context.

In the other thread we are talking about the rate accepted was to illustrate the variance in rates from area to area.

This thread however is about generalisations rather than case specifics.

-- Edited by Shamus on Sunday 17th of July 2011 11:17:31 AM

gillyfleur · Senior Member

Qualified Accountants doing bookkeeping ? most have never actually really been taught how to do double entry bookkeeping on a practical level - enough to pass their exams and that's it. They're taught to interpret on a far higher level than maybe a bookkeeper can. How many times have you passed a set of accounts to an accountant to finalise and when you get the final journals back they're wrong ?? it's happened to me 3 times in the last year - all different firms. No doubt it's the junior member of staff who has done the accounts prep but that's not the point really

I guess I get caught in the middle because I've been doing "accounts" for 30 years - both in practice in the early years - shoeboxes and carrier bags a speciality ! and on a practical level as a"financial controller" doing management accounts for a business in commerce in later years. I did my AAT back in the day when it was the Institute of Accounts Staff (IAS) and I'm ICB qualified more recently. I feel I therefore warrant a higher charge out rate because I can do some of an accountants role - but I'm not interested in taking Limited Company accounts to the end stage

It's convincing prospective new clients that they're going to get a better job done - and hopefully some saving on their year end accountants fees - although the reality of that is that often they don't despite the accountant getting a far better set of accounts than they normally get

Shamus · Forum Moderator & Expert

gillyfleur wrote:
Qualified Accountants doing bookkeeping ? most have never actually really been taught how to do double entry bookkeeping on a practical level - enough to pass their exams and that's it.

I think that there are some sweeping generalisations in there which you back up with experience but we're from the same neck of the woods Gill so the accountants that you're talking about may be some that I know and I can assure you that the local accountants that I know have no problems with double entry bookkeeping.

There are good and bad accountants the same as there are good and bad bookkeepers. Because someone is an accountant in a chartered practice does not mean that every accountant in that practice is chartered. Are you sure of the qualifications of the accountants that you are talking about?

I actually disagree with your post only to the extent really that you state "Most". If you had said some then I would have bowed to your greater experience and not have bothered replying to this one.

Sometimes I feel caught between a rock and a hard place as I defend accountants to bookkeepers and offline often find myself defending bookkeepers to accountants.

At some stage someone is actually going to cotton onto the fact that we're all actually on the same team and we need to start looking out for each other whatever our qualification or supervisory body.

Right, got to go but should be back in about an hour or so.

kind regards,

Shaun.

KHagland · Veteran Member

Hello everyone,

I have just searched for posts regarding bookeeping fees and found this old discussion which is very much how I feel right now.

I have just been in discussion with a tax accountant as they were looking for a bookkeeper to outsource work to. The budget they quoted was £6-£10 per hour. He is in the same area as me (Hertforshire), but I don't understand how he can expect to get a qualified and capable bookkeeper for this rate per hour?

I replied to his enquiry stating that I couldn't work for this amount (£6.08 being the minimum wage!) and my minimum hourly rate was £15 due to my training and business overheads.

I understand that he has a budget but I would have thought that as an accountant he would understand that you get the quality of service that you pay for. I have numerous other clients who have no problem paying £15 per hour. I makes me so angry that he can charge for his expertise at a much higher rate than a bookkeeper but he is undervaluing someone in the same field of work.

Has anyone every worked as a bookkeeper for less than £10 per hour? Especially in Hertfordshire where a lot of my competition and clients come from London?

Rant over, thanks for reading!

Kelly

kjmcculloch83 · Expert

Kelly,

I recently had a new local bookkeeper discuss outsourcing with me. She has just started in business and at the point we were having these discussions she had not registered for MLR. Admittedly she does have a fair bit of experience employed in the field but her outsource rate was £25 per hour. There is no way I would outsource work at this rate.

Prices depend very much on who you're dealing with. If you are going direct to businesses you can afford to get away with charging a decent rate. But if you approach other bookkeepers and accountants I think you need to be willing to lower your aim slightly to account for the fact that you will have a supply of work that essentially costs the bookkeeper or accountant to acquire.

Having said that, the best deals are the ones where everyone feels they have gained something. If someone thinks they've been done over the relationship isn't going to last.

Shamus · Forum Moderator & Expert

Hi Kelly,

just grabbed myself a coffee and read through the above thread and it seems to be one of those where a few posts have been deleted (not by me) as there are a couple of times where I reply to posts and it's not apparent what I'm actually replying to. However, overall I think that the integrity of the thread remains intact. Good find there, I had forgotten this one.

The discussion here is quite different to the other current thread where low permanent fee's are being debated and I fall on the defending the fee's side of the fence.

Here, despite £10 (or less) per hour occassionally being acceptable in order to pick up a skill or experience in an industry sector that one does not already have as a loss leader (#1) overall rates such as this show little respect for the skill level required from members of the profession.

You will also get scenarios where accountants try to get you to go down the fixed fee / daily rate route. I know that this works for Kris but I tend to stay well clear of the practice except for the consultancy side of my work.

Recently I took a call where a practiice was looking for my firm to take on servicing one of their clients. The offer was £220 per month. Fair enough thinks I for a day to a day and a halfs work per month (equating to somewhere in the region of £15 to £29 per hour depending on the hours needed in a given month) so I looked a little closer at the requirements which turned out to be an expectation of at least a day per week with uncapped hours and the expectation that if the work wasn't completed on one day you would also be there the next (as though your business only existed to be there to service theirs!) so I would have actually been lucky to come away with minimum wage level of return and I also needed to factor travel into that.

I don't know how much the client was paying the accountancy practice but I could certainly see why they wanted nothing to do with the day to day servicing of this business but wanted to retain the actual accounts and tax work.

The issue that this raises of course is that in this instance the accountants sought to offload work to bookkeepers that they knew that they could not make a profit on but seemed to assume that a bookkeeping practice would see the £220 per month and grab at it without any consideration for the opportunity cost of acceptance (#2).

I am sure that they will get their bookkeeper for the money offered but I doubt if it will be the sort of bookkeeper needed for the role which will simply perpetuate the feeling amongst some accountants that bookkeepers are a lesser species akin basically to data entry staff (which of course we are not).

Hope you have a good day,

Talk soon,

Shaun.

(#1) a day a week for three months on a low rate is to my mind acceptable for picking up new skills. For example, using new software such as SAP or getting a supervisory body experience requirement signed off.

(#2) For people new to the business reading this, opportunity cost is the amount forgone from other opportunities by accepting a given alternative. For example, if I accepted £220 for four days work. (£55 per day) and my normal rate is £20 per hour the opportunity foregone is £105 ((20*8)-55). Accepting the £55 closes one off to accepting higher return for the same time. However it could of course also mean that one makes nothing instead of £55. Swings and roundabouts.