I have spent the day looking at websites and looking at what I will be offering as a bookkeeper. From what I have read and also from attending several seminars recently, Monthly Packages seem to be the way forward. So I have done £65, £85 and £110 p/m or different levels. Does this seem the correct rates?
I have also read through the (many) pricing chats on the forums and there is a very mixed opinion, but the forum is suggesting largely to price per hour. I dont supply payroll, and for specific jobs I have priced them as a standalone service.
At the risk of repeating previous comments, are packages the way to go as a newbie, and adjust accordingly price structures as my business grows? I have listed my packages as from to allow a slight change if the client has a larger business.
Also, I will largely be using QuickBooks, which the client can also work on himself. If they do the invoicing and some of the purchase side, how do I account for that in my pricing? This is where it becomes difficult for fixed menu pricing doesnt it?
Depends what sort of market you're aiming at but I would be very wary of "package pricing" as all businesses will be different. It's going to be tricky at first for you to do this but I have a "price per hour" then estimate how long I expect the job to take. I will then quote a fixed price which is for 6 months, after which I will review and then renegotiate with the client if I need to increase it. If I've overpriced (never managed that yet lol) then I will simply inform the client of the new price.
At the beginning I'd be inclined to charge by the hour until you get a feel as to how long a job is going to take, but would be interested in other peoples opinions.
-- Edited by Leger on Sunday 23rd of October 2016 08:12:26 PM
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
That's an interesting thought - 6 month trial based on an estimated time and then go into a 12 month contract at the correct price. That could work very well. I have already bought myself an 'appointment' desk diary which I intend to use as my timesheet so I can see how long I am spending on each job. This would then enable me to go back to client with actual hours and justify the rate.
Great stuff!! Cant wait to get started!! More clients please lol!!!
How do you go about getting the information to know you will not be underselling yourself at these rates?
How do you allow for their business expansion?
How do you justify (to your client) doing 6 months at a fixed rate, then increasing it, especially if they haven't changed the way they do business with you?
Be careful with the 'actual hours' that you don't build in what effectively amounts to your learning on the job.
Not sure what you mean by adjust your pricing structure as your business grows.
__________________
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
How do you justify (to your client) doing 6 months at a fixed rate, then increasing it, especially if they haven't changed the way they do business with you?
That was my suggestion Joanne, but I tell them that I will fix the price for 6 months, then review based on the volume of work. Would you see a problem with this approach?
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi John
Yes, I knew you made that suggestion but wanted to open it up for discussion for Caroline's benefit. We all know who is suggesting the fixed prices and I'm not saying they are wrong in some cases, but what I'm not sure of is how much information has been given to aid someone, especially a newbie, in scoping out what is and more importantly not included in that fixed price.
A lot of the fixed price sole trader models are much easier to price up as some of them have very easy requirements for bookkeeping and have very low levels of items to be processed, but from what I can gather Caroline is not doing sole trader accounts and tax returns.
You are way more experienced in pricing up, knowing what is involved potentially, than Caroline but by your own admittance get it wrong sometimes still, so Caroline is potentially more likely to. Then as I say, underselling herself.
Plus my question was in part about how you, well an inexperienced Caroline, brings up the issue of price hikes and more importantly justify them, what specifically do you/ will she measure and use as that reason for the hike. Time in itself doesn't cut it surely, as some clients may just think you are slowing down the processing deliberately to push the price up. Which goes back to my initial question of what is it the is being offered for the initial monthly fees?
__________________
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
We all know who is suggesting the fixed prices and I'm not saying they are wrong in some cases,
Lol.
Just packing up for the day and that brought a giggle. Thanks Joanne.
Caroline.
I'm interested to know as well what they get for each of your time based bandings? Don't forget a pricing model for annual clients to pay monthly throughout the year. I've got a few on that and it helps them with their cashflow and me to know that I've already been paid for the work.
One warning on moving clients from hourly to fixed fee. They'll try and load more work onto you or be less helpful figuring that they are paying a set fee so (a) get the most for your money and (b) why waste their own time making your life easier if you will do it all for no extra money.
Also, remember that when you are checking your clients paperwork prior to accepting them or even quoting for the work ensure that you check what the amount that they were paying to their last financial professional. If your figures are to much higher than that (or even just higher as many clients seem to change in an attempt to reduce their fee's) you probably won't win the work.
Shaun.
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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 John Yes, I knew you made that suggestion but wanted to open it up for discussion for Caroline's benefit. We all know who is suggesting the fixed prices and I'm not saying they are wrong in some cases, but what I'm not sure of is how much information has been given to aid someone, especially a newbie, in scoping out what is and more importantly not included in that fixed price.
A lot of the fixed price sole trader models are much easier to price up as some of them have very easy requirements for bookkeeping and have very low levels of items to be processed, but from what I can gather Caroline is not doing sole trader accounts and tax returns.
You are way more experienced in pricing up, knowing what is involved potentially, than Caroline but by your own admittance get it wrong sometimes still, so Caroline is potentially more likely to. Then as I say, underselling herself.
I've only been seriously out twice, one I probably mentioned a while back, and it equated to £5 an hour (ouch) It was a good learning curve though. The other was not taking into account that I would have to do the bookkeeping from scratch when they presented me with a written "ledger". I let that one go because I had already accepted the work.
What do you do, charge by the hour, fixed fees or both? Personally I prefer fixed fee, but accept your comments.
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Gosh!!! Thanks guys! Been 'at my day job' so can't join in till I get home!!
I have read through your comments several times and think the best way forward for me is to not publish any prices or plans, but have an idea of what they could be. The basic plan was sales & purchase ledger and gen exps posting; the next level was bank rec, monthly accts and liaison with accountant; top level included cash flow and budgeting. I propose a free consultation and then I can ascertain how much time it will take. Sorting this out is harder than doing exams!!!
Do your bills vary each month then if you are charging by the hour? And would you discuss what your charge will be each month before hand or just invoice them at the end of the month? And what sort of rate? i have been advised £20-£25 ph. Which did make me wonder with my pricing plans.....
If this is getting too much for an open forum, I would appreciate any confidential advice on info@meadowofficeservices.co.uk
As I am pushing my self out there, about to make the final jump into full time bookkeeping I need to make sure I have got this right!!
I've only been seriously out twice, one I probably mentioned a while back, and it equated to £5 an hour (ouch) It was a good learning curve though. The other was not taking into account that I would have to do the bookkeeping from scratch when they presented me with a written "ledger". I let that one go because I had already accepted the work.
What do you do, charge by the hour, fixed fees or both? Personally I prefer fixed fee, but accept your comments.
I use a mixtur of several pricing models, often depends on the nature of the business with the initial offering based a hell of lot as to what they have revealed (especially from the sometimes innocuously sounding tell me about your business!), or importantly what i think they have not revealed. If I use hourly, I also have a range of hourly rates and will use them as I see fit, eg go in with my bottom end rate for businesses in their early days/not making much money, although the pay back from them is after x months its auto increased, or I get a piece of the profit pie when that kicks in.
I think Ive mentioned before about the one Im so glad I didnt agree to their suggestion of a fixed fee. They had used a bookkeeper previously and knew how long it had taken her to do the work, but there was some giveaway in their answers and I knew something was a bit awry from my questioning. From their 6 hours a week, I will pay you this (I went in a lot higher than they had been paying anyway) this one rapidly turned into a monster. They opened two new companies, tripled their workload on the original one, never mind the two new ones, passed over more and more of one of the Directors work pile, started using invoice discounting, passed over credit control, wanted management accounts which the Accountants had been doing. There was a massive change in their industry as it became regulated, so had to deal with all of that, even dealing with bonds, insurance and HR stuff when they took on a huge team of staff they hadnt had before and I was involved in all sorts - it ended up me working a 40 hour week and taking on the role of FD (but on a self employed basis). So glad I didnt negotiate a fixed fee for that one.
Yes - I know before anyone jumps on this -if I had been on a fixed fee, I wouldve built in triggers to prevent such a thing happening without a fee increase, but what Im trying to get across is that they are times when they dont tell you their plans, even with the strongest light being shone in their eyes as you say 'we ave vays of making you talk'
I just urge caution for new entrants because in the nicest way - you dont know what you dont know.
-- Edited by Cheshire on Tuesday 25th of October 2016 08:17:08 AM
__________________
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
Gosh!!! Thanks guys! Been 'at my day job' so can't join in till I get home!!
I have read through your comments several times and think the best way forward for me is to not publish any prices or plans, but have an idea of what they could be. As John said - have an idea of what your base hourly rate is that makes up such fees. I have a 'I wouldnt get out of bed for that fee and it aint low!' The basic plan was sales & purchase ledger and gen exps posting; the next level was bank rec, this concerns me a little, as my experience is that if people ask for their bookkeeping to be done, then the Bank rec is included under the heading 'bookkeeping'. In fact I also view - prepayments, accruals, everything you would do up to TB is done, with the liaison with the Accountant as part of the process for completion of the year end accounts, plus adjustments when the information is returned. Or this that just my thinking? Certainly my experience with all clients Ive come across so far! monthly accts and liaison with accountant; top level included cash flow and budgeting. management accounts are not always a given, but some kind of reporting is required by the majority of my clients, but I am dealing with limiteds rather than sole traders who mostly just want their tax returns doing and dont often even want accounts, although my view is they should have them for completeness (besides they usually want some at some point!). Cash flow and budgeting is a different kettle of fish! I propose a free consultation and then I can ascertain how much time it will take (please see my comment to John. If you feel comfortable with being able to get the required info and document it sufficiently then great Sorting this out is harder than doing exams!!! you will often hear me say 'the real learning starts now!'
Do your bills vary each month then if you are charging by the hour? And would you discuss what your charge will be each month before hand or just invoice them at the end of the month? And what sort of rate? i have been advised £20-£25 ph. Which did make me wonder with my pricing plans.....
If this is getting too much for an open forum, I would appreciate any confidential advice on info@meadowofficeservices.co.uk
As I am pushing my self out there, about to make the final jump into full time bookkeeping I need to make sure I have got this right!!
Thanks again for your help
-- Edited by Cheshire on Monday 24th of October 2016 08:04:53 PM
__________________
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
Thanks Joanne. I did wonder about the bank rec etc being the normal b/k role but was trying to get clients onto the middle tier so it was then an enticement!! Your help is great and I am still getting my head round it all. I had thought about the fact the work could increase, but in my niaivity thought i would just have to tell the client it would cost more. probably wont be that easy!
Does anyone use cloud pricing - the software? I did see a demo at the ICB conference and thought it looked good, but not sure if I would use it or not....but then there is a basic one for £9 p/m which may help once I am out there practising?
Ok Caroline, think of it this way. You do a bank rec to ensure that everything that you have tally's. If you tell the client it will cost more they will say well don't bother with it as it doesn't bring me any benefit (clients largely regard us as helping them to meet their statutory obligations so more as a necessary overhead than a benefit to their business... Which is seriously annoying as I know that some of mine wouldn't even still be in business now if they didn't have me behind them!).
You are far better ensuring that things like reconciliantions are emphasised as part of your quality service but don't give the client any incling that such may be optional for them.
As a bookkeeper you are responsible for everything up to trial balance. There is a debate as to where bookkeeping stops and accountancy begins but thats for another thread. What I am trying to say here is that absolutely everything. Accruals, prepayments, fixed asset register, reconcilliations, etc. are all pre trial balance and as such are all part of the role that you should be performing for clients.
When I saw your bandings I naturally assumed that such was based upon size of client and/or the number and complexity of transactions rather than the options being various cut down versions of the basic service.
I'm reminded of once buying a battery from a garage. It was a sealed unit. all components of it were necessary for it to work as a battery. The garage charged on their bill seperately for the battery and the battery acid (remember that this is a sealed unit). I paid their bill but never used their services again.
Bookkeeping is the same. You are expected to give a full service. I know that you will encounter websites out there where people break down their services a differnet rates but ask yourself (a) how many clients have they attracted that way? (b) how many have they managed to keep.
Stick with a basic full bookkeeping service with just elements such as Payroll, Auto Enrolement, credit control, management reporting and CIS being add ons to your service. Don't try to compartmentalise the basic bookkeeping service as you will end up shooting yourself in the foot.
kindest regards,
Shaun.
__________________
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.
Does anyone use cloud pricing - the software? I did see a demo at the ICB conference and thought it looked good, but not sure if I would use it or not....but then there is a basic one for £9 p/m which may help once I am out there practising?
Sound advice there from Joanne and Shaun.
With regards to cloud software, I don't use it at the moment, but from next year will probably be adding it to my portfolio. I won't use it for the bookkeeping I do, unless they themselves want to use the cloud, but with the change going on in the industry, it's going to be useful to at least provide the service. However, if it's you doing the bookkeeping, then I would be very loathe to load the client with an extra £10-£20 a month unless they specifically request it.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi John
The cloud struff Caroline refers to is pricing is software which supposedly helps bookkeepers/Accountants price things to gain more fees. Im not going to add a link to their product, sure you can all look it up easily enough. I had a quick look, bit gimmicky, none of it is rockets science especially if you have worked in a sales environment before. You can pay the value pricing of between £9pm, £29 or £39pm (Plus VAT) to use the bit of software. Might be useful to some - who knows. Might be useful if they allowed you to use a demo or a days free trail.
On the cloud bookkeeping software Ive notice the two biggest rivals have implemented price hikes in the last few months so the annual fee for cloudy stuff could buy you a perpetual licence that will last 3, 4, 5 or more years!!!!
That said - I do use some, only because a customer wanted me to and they had it already, but I hate the damned thing with a passion as you guys know!
__________________
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
I've seen that software - or more precisely, a Youtube video trying to extol its virtues. As you say, Joanne, I too thought it was a bit gimmicky - and I didn't quite 'get' why it had cloud in its name. I assumed it was a (highly configurable) app, so would have a one-off purchase price.
Now that you've mentioned the prices, though, I've realised what a plonker I was for thinking like that. Silly me - of course it's cloud based; how else do you get people to pay, and pay again, and again, and again, and again...
Personally, as a general rule (there is one exception) I don't use 'package' or 'value' pricing - I charge by the hour. I've had (and still have in some cases) enough, um, "challenging" clients over the years that I'm inclined to steer well clear of it. (The one exception gets a significant amount of time each week, and the fixed price they pay works out at about two thirds my normal hourly rate; I could therefore earn a lot more if I didn't do that, or I could earn the same for less work - but the directors are friends, and I enjoy working for them. (Not least because they are on the ball, and tend to do things right - the exact opposite of the "challenging" ones.
If I *wanted* to price that way, I don't think it would be too difficult to knock together some PHP to add pages to my website - making it accessible from whatever device I have with me. However, I think I'd be more likely to make it customer facing (if I actually advertised my services on my website!), and make it an 'estimate my monthly fee' type form.
i,e. the potential customer could fill in various key bits of info (approximate monthly number of sales invoices, number of purchase invoices, etc), what sort of reports they want, whether the software is dictated by them (and if so, what software) or I can use my preference, and so on - the underlying code can then estimate the amount of time using metrics I've defined, and present them with an estimated typical monthly fee.
However, I don't advertise, so it's just hypothetical.
Caroline: I'm sure this has been said in other posts (I've only just read this thread, fairly quickly) but if not...
You need to consider how much you need to earn each month, and the hours you expect to do. That must always be your starting point - especially if you're new to the business. Consider next the volume of work you might end up doing for your clients and how long it's likely to take. If your package prices are too low compared with the amount of work, you'll find yourself between a rock and a hard place.
The prices you mention at the start, for example, would be nowhere near enough to charge any of my clients. In one case (the one exception I mentioned above), I'd be earning next to nothing on your most expensive package. Remember, businesses come in many different sizes!
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
Ah Joanne, I see. Yes, I found the software Caroline mentioned. I'd have to see it in practice, but it could be a useful aid
Hi Vince
i,e. the potential customer could fill in various key bits of info (approximate monthly number of sales invoices, number of purchase invoices, etc), what sort of reports they want, whether the software is dictated by them (and if so, what software) or I can use my preference, and so on - the underlying code can then estimate the amount of time using metrics I've defined, and present them with an estimated typical monthly fee.
I saw that on a site once, and thought it a good idea.
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I wouldn't do fixed price when you are starting as you don't have the experience needed to judge how long it will take.
I still charge an hourly rate, part of this is because I go into premises to work so they know how long I am spending there. If you do go down the fixed rate make sure it'g high enough, do NOT under sell yourself, remember bookkeeping is just not any old admin job, which is what some clients think it is. We are trained people who do a good job and are worth our money. We are there to add value to our client, make yourself part of their business!
If you price it too cheap you will be running round like a headless chicken as you will end up doing loads of hours for little money, also they will pass your details on to another potential client who will also expect 'cheap' rates. So my advice is to price hourly to start with ( a good rate), and then see how long it takes you and maybe put on a fixed rates later.
As you progress you business and hopefully end up with loads of clients, you will be able to filter out the crap ones and gradually get rid of them, then you will be hopefully left with good quality clients. This is what I do once a year, normally about Feb time. So far for Feb next year I haven't got anyone to get rid off as they are all really good, but it has taken a long time to get to this stage.
HTH
-- Edited by Amanda on Wednesday 26th of October 2016 10:48:03 AM
One of the problems I have is knowing what to charge by the hour! The general consensus says I should do that but I don't know how much. ICB recommend £20 - £25 per hour, probably depending on the size of the business. Does that sound about right?
I also intend to work from home as much as possible which gives me another issue as they cant see what I am doing! But I imagine if I meet up with them and discuss their requirements I can estimate how long it will take.
I really do appreciate all the help you guys are giving me!!!
There is no correct rate, so nobody here can realistically say yay or nay to any given amount - there are a number of factors that contribute to what is the correct rate for you.
From a client's point of view, key things (about you) that will affect what they are willing to pay include your qualifications and experience - but if you specialise in a particular type of client/field of business, that could provide leverage to charge a higher rate.
Their own size in theory can affect what they are willing to pay, but I find that in general a very small client that only needs a small amount of work can accept the normal hourly rate because it's only a small number of hours, so the fee is correspondingly small.
Another thing that can have a bearing is location, and the cost of living in that location. From your point of view, this contributes to what you *need* to earn. From a client's point of view it can affect what they expect to pay. And related to that there may be a typical 'going rate' for the area.
Start with that last point; think about what you need to earn each week or month, and divide that by the number of hours you expect to work. The result is the minimum you need to charge per hour - from there you need to decide whether you can justify a higher rate, and therefore build in a comfort level. That also then allows you to charge a lower rate to some clients, perhaps, or an initially discounted rate to all new clients for three months, or whatever.
Say, for example, you know you are going to work 40 hours per week, and need to earn £400 - that's an hourly rate of £10. If you can therefore justify £20, that means you only *need* to work 20 hours, and anything above that is a bonus, and you could be doing thirty hours for some clients at £20, and six hours on really small, low turnover clients for, say, £12 - and have a nice POETS day every Friday.
__________________
Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
Entirely up to everyone how they price. Some people fix price, some people charge per hour, some people value price.
Whereas 20 years ago everyone charged per hour more and more people are doing fixed price or value pricing.
We have always done fixed pricing but when started out was a fixed price for a package of services. We now use a couple of pieces of software that we can sit with a prospective and put in additional stuff that they want or take out stuff they dont want to get to a price they are comfortable with.
As an example was out seeing someone today who pays their current accountant a couple of thousand a year. They are however looking for added value services which we can do but the existing accountant doesnt really do (they really just do the year end accounts, the tax return and meet once a year to go over the accounts).
We ended up selling them service to convert from SAGE to Xero and using receipt bank with a days training on Xero and Receipt Bank. They went for our top conversion package that works out at £159 + VAT per month for 12 months. Does include us paying for Xero for 6 months, plus 6 months email and telephone support plus a few other add ons but not a bad to get best part of £2k to convert them.
For the year end accounts etc they have initially went for our basic package that works out at £280 + VAT a month. But they are really keen on the business growth and development work that we do and expect they will move to our top package after everything is set up and running like clockwork on Xero. That package is £850 + VAT per month.
They see the value in what we can do with them at that service. They get a lot for that service and a monthly input from us but far better from our viewpoint getting one client paying £10k a year than 20 clients paying £500 a year.
