I'm not going down the whole how much should I charge route as I have been busy looking at memu pricing plans.
I am going to ask however, what's the best way to find out what others are charging in my area?
If I phone them up and tell them I'm a new bookkeeper they wouldn't tell me well I don't think they would, and if I make out I'm looking for a bookkeeper they will want further details and would only give me a price in person surely?
Also, are they getting clients at the prices that they are advertising!
Plus, are you comparing apples with aples when pricing against competition? For example, what services do you include compared to what they include? What experience or qualifications are you comparing against?
If you are having difficulty finding their prices then so will their potential clients so why make your pricing so transparent?
More important than your pricing, what is your burn rate?
What do you need to charge, rather than simply looking at what does your competition charges.
Benchmarking is a great tool but it has limitations. The largest of which is that the data that you gather is incomplete.
Benchmarking is often refered to as tomorrows solution to yesterdays problem.
A better solution is to calculate your burn rate to know your bottom out then find out from the clients books what they have paid previously for bookkeeping services (assuming that they have previously had a bookkeeper) and attempt to find a figure somewhere between the two (why do you think that accountants want to see the books and records before giving a quote!).
At this stage you also need to be thinking about how to do the job better and faster than the predecessor which will average up your hourly (hourly rates are just used as an indicator. The important factors are over take and how long did the job take.
If you're set rate is (say) £20 per hour but you do five hours work in one hour then your real rate was £100 for that hours work.That of course is an occassional perk and not something that can be achieved every hour. Also, you may find that you do one hour working and then the next four doing nothing so swings and roundabouts.
That will of course mean estimating the time that a job will take and that in itself can be problematic.
If you do not feel that you can do the job for the same money as previously done then don't attempt to. Quote what you feel is a fair price for the work.
As a ballpark figure you will generally find bookkeepers charge between £6 and £25 per hour. Higher than that and you risk an accountant taking all of the work off you as you are starting to hit their fee territory.
The more that you quote the better ay estimating that you will get. Never quote until you have seen the books and records as clients always underplay the work involved.
If you make a mistake (unless such is caused by the client hiding something that makes the job bigger) do not try to renegotiate in the first year as it looks unprofessional and is likely to mean that you will not have the cliet the following period.
As an aside, how did things go with the accoutant Eilef? Did you get any work from them in the end?
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Shaun
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.
Hi Eilef
Whilst it is great to look at menu pricing and there is an awful lot of debate around how to price jobs, I would like to make a suggestion with regards to initial pricing. Perhaps go with a rate per hour to start with, until you can start to gauge what it is you need to be asking clients for to be able to undertake their jobs properly/your involvement in producing whatever it is they require as an end result etc. To get to this per hour rate, there are quite a lot of variables which in include the local market rate as just one small part and if you are providing any add on value by provision of other services alongside the traditional bookkeeping (eg producing a businessplan that will actually help the business gain banking finance etc). Start point - have a look around at local adverts - you will be surprised at how many bookkeepers do put their pricing out there. I dont tend to as the focus can be too much on price rather than what they get for it, but obviously others have different views on here. (BTW - I would suggest you dont, until you know your market better).
Funny that Shaun - I was just wondering how Eilef was doing from his lovely breakfast networking meeting.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Love the pricing debate in its many forms on this forum.
All I can add to Shaun and Joanne`s comments are ...... what do you feel your time is worth ?
I can only comment on my own first initial putting my toes in the water of bookkeeping experience. I checked out the local job market for bookkeepers / accounts personnel and looked at what hourly rates were on offer. This gave me a base to which I then added such things as my self employed expenses ie; national insurance / MLR fees / PL insurance etc., Casting my mind back many, many years, I probably added an additional £5 to the average going rate of an employed accounts clerk.
Only after I acquired a few customers did I then start to adjust my rate as by then, I had some knowledge of just how complex some customers requirements could be in terms of having to chase them for paperwork, additional work being asked to do etc.,.
Again, ask yourself what do you think your time is worth, what are you comfortable at going in at ? remember you can always adjust your rate as time goes on, there will be some jobs you acquire that are an absolute dream to carry out, but then others which will have you pulling your hair out !!!
Glad you're looking seriously at menu pricing. If you watched my webinar on it, you'll know that I genuinely believe it's the way forward. I get that you want to know what others are charging, it's only natural, but try not to. You want to set yourself apart from others, not allow yourself to be compared like a commodity. Try to ignore what everyone else is doing, and beat your own path.
I did and thats the way im looking at going as it makes sense not to limit your income.
I only want to know to see if im anywhere near the mark thats all. If im charging £35 an hour and the others are all between £6 and £20 then im well over priced no matter how you look at it. But then i know i could charge £19 an hour instead as i like the power of 9.
It's just a ball park figure im after if i was looking for bookkeeping services i wouldnt go for £6 an hour as it seems cheap and i would expect a cheap service, but if the others were all aroun the £20 mark and one at £35 then i would be looking at the £20 ones.
The other thing is if i set my menu pricing too high again nobody will even consider it. Price comparison is a good thing, as different areas will have different prices for services.
The accountant who was interested in giving me some work hasn't been in touch after i told him it would cost him £19 an hour for my work.
If he is that desperate to get the work done he will call me and pay it if not then he will struggle on.
-- Edited by Eilef on Wednesday 14th of October 2015 12:30:26 PM
Talking of pricing - getting very annoyed with those who expect to get our advice for free, or who are constantly moaning about paying their bills despite the often fabulous job bookkeepers do to keep their books and affairs correctly. Maybe I should ask the window cleaner to do my windows for free, or British Gas to supply some free gas or solicitor for a freebie contract.
Never mind that we have taken exams and/or spent hours learning all about bookkeeping/accountancy, VAT, other taxes, law, how to navigate a way round software etc etc etc and that we are trying to make a living JUST LIKE THEY ARE!!!!!!!!!!!!!!!!!!!!!!!!
do you remember that some time ago now we had someone on here who worked as a cleaner and had also trained as a bookkeeper.
Eventually she dropped bookkeeping all together as she found that clients were more willing to pay, and happier to pay higher rates, for someone to clean the office than they were to pay someone to do their books.
I think that was an extreme example but it is also reflective of some clients attitude of us being an overhead rather than a real benefit to their business.
Why do they see us as an overhead? Because everything is running smoothly and they get to sleep at nights. But, they seem incapable of putting two and two together that things are running smoothly because of us. And they would not be sleeping so soundly if we didn't make everything run so smoothly for them.
I think that clients like the one that you sound as though you are having problems with are somewhat worse for the likes of ourselves who are used to dealing with businesses as lot further up the food chain who don't have an issue with paying professionals to keep them on the right side of the law.
If a client is giving you grief over getting payment think seriously about whether you need them in your stable... I know that you are professional and do not like to let down any business, but, if they are using up time that could be more profitably spent with another client who actually pays you without having to dangle them by the ankles from an upstairs window, then drop them faster than hot coals.
On the bright side apparently there's this accountant in Kiddeminster thats on the lookout!!! (Sorry Eilef, just joking. You're safe as you're way outside Joannes catchment area).
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Shaun
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.
And to the problem payers we can add those who don't (or won't) seem to understand that doing this job requires input from them: If we ask for paperwork it's because we need that paperwork, or if we ask a question it's because we need that information.
I have a couple of clients who are terrible for paperwork and dealing with questions - although one of them makes the other look wonderful by comparison.
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
Talking of pricing - getting very annoyed with those who expect to get our advice for free, or who are constantly moaning about paying their bills despite the often fabulous job bookkeepers do to keep their books and affairs correctly. Maybe I should ask the window cleaner to do my windows for free, or British Gas to supply some free gas or solicitor for a freebie contract.
Never mind that we have taken exams and/or spent hours learning all about bookkeeping/accountancy, VAT, other taxes, law, how to navigate a way round software etc etc etc and that we are trying to make a living JUST LIKE THEY ARE!!!!!!!!!!!!!!!!!!!!!!!!
I think you should call other bookkeepers. I did that and had a lovely chat with a local bookkeeper when I first started out. We both knew a few people in common. She had plenty of work so wasn't worried about me taking any of her business. We still keep in touch now and occasionally recommend each other for various reasons. I started out charging the same as her. After a while I increased my fees by £5 an hour and as my clients were happy they didn't leave. I have recently starting taking people on at £5 higher than that (I haven't increased the existing clients, just charging new ones more). I am quite full so don't need too many more clients so if they want me they have to pay more. Isn't it the same as any business, supply and demand? There seems to be enough work where I live and I have built up a good reputation. There are a few local accountants that recommend me and given that my fees are only about a quarter of the accountant's hourly rate their clients think I'm cheap!
It's certainly worth a try. I worked with a bookkeeper years ago, a fabulous German lady, who had a small network of bookkeeper pals. I don't think they passed work amongst each other, but if she ever got stuck with something she rang the other bookkeeper for advice how to do something, and vice versa. Their own helpline. I might try to give her a call, she would be brilliant at helping on here and it would be great for a catch up! Anyway, what I was going to ask Princess, is where you are based, our of interest?
Also, to back Michelle's campaign....can you add your name to your emails sign off section, or at least to your profile page?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
