First Previous - Page 1 of 1 - Next Last

How much to charge?

  • 2 posts
  • # 77923

Hi Everyone,

I plan to start a new business soon and wondered if anyone had advice on what to charge - I don't have a clue; for example hourly rate or fixed rate? Thanks 

  • 1159 posts
  • # 77924

Hi Sam,

Your question is so open that you could drive a coach and horses through it.  I'll try to take it a bit at a time.  Have you got any feelings between fixed price or hourly?

There are pros and cons to each.  Are you willing to risk doing a variable amount of work each month for the same price?  What systems will you put in place to ensure that clients dont abuse you if you offer fixed price?  Fixed price is certainly the more difficult to manage of the two, but also can offer a better deal for all involved.

Hourly is easy to cost, but how difficult is it to get paid, invoicing and waiting?  With fixed price you can set up a standing order ensuring you can better manage your cashflow.

Regardless of which you choose to be able to work out your pricing you need to know your customer, who are you targeting?  What are they willing to pay?  What services will you offer?  Do you know what your competition are doing?

I know this probably isn't what you were expecting, but no one can say charge £20 an hour.

Kris 

  • 2 posts
  • # 77932

Hi Kim,

Thanks for your reply. I guess I just want some ideas really - I have no fixed opinions about this, except that, being new I think I would be slower and so I am attracted to a fixed fee. I guess I could always change it in the future.

Thanks for your thoughts - Sam 

  • 82 posts
  • # 77940

You said about trying a fixed fee first and then changing it, but have you thought about the other way around? For your first couple of clients charge an hourly fee until you get a firm idea about much work is involved and how long it takes you. You could then get a better idea of what your fixed fee should be, and maybe move the clients over to a fixed fee if they are happy to do so. Any new clients could then be on a fixed fee from the start if this way is preferable.


I am also about to start on my own and this is probably the way I am going to go.

  • 1159 posts
  • # 77941

Cherylsaid:

“You said about trying a fixed fee first and then changing it, but have you thought about the other way around? For your first couple of clients charge an hourly fee until you get a firm idea about much work is involved and how long it takes you. You could then get a better idea of what your fixed fee should be, and maybe move the clients over to a fixed fee if they are happy to do so. Any new clients could then be on a fixed fee from the start if this way is preferable.


I am also about to start on my own and this is probably the way I am going to go.”


To do this is to make the mistake of thinking that the difference between fixed fee and hourl is only how you charge.  I would suggest if you start down this path fixed fee will never work for you.

To be able to make your business work on fixed fee requires a whole new frame of mind, a new way of thinking about your business and your clients.  These two ways of working are very rarely interchangable.

Kris 

  • Member PM.Dip
  • 1 post
  • # 78622

Hi folks

A good topic and question I've pondered over, I haven't taken the brave step as yet to start out on my own but am planning for it in the near future. I made some calls to those who advertise to get a feel of hourly rates, there was a quite a variance and I was drawn to one who probed rather than simply answer £X per hour. I did a similar exercise on website's, what services are offered etc., whilst some made interesting reading, others made eye popping reading! One I came across actually advertised fixed rates for SA returns and specific business types. I tend to lean toward the thought of establishing from the client a brief on the work involved then adding disbursements, travel etc. From this an agreement and fixed fee could be applied with an over and above agreement on an hourly basis for the exeptional or unexpected occurances. Taking a client’s view, I'd want to know the charges I'm likely to face each month. I doubt there is any kind of exact formula to establish the "how much do I charge" question, and thinking ahead there are probably some I'll win and some I'll lose until such time as I have awareness of most pitfalls, however I'd appreciate all thoughts on the topic, especially pitfalls to look out for!

  • 1159 posts
  • # 78644

I'd say the biggest pitfalls are thinking that the client knows the services they need to design their own brief.  Most clients don't have a clue.  Just like if I wanted a wall built I wouldn;t know the ins and outs of what needs done along the way, I just know when the builder is finished I want a wall.

The second is to watch out for clients who agree a service then try to push the boundaries without paying extra, this is where a letter of engagement is invaluable.

Good luck

Kris 

  • 328 posts
  • # 78646

Hi Everyone;

I would like to add to what Chris has mentioned below about client pushing boundaries.

I have noticed that client tend to come up with their own estimate time the job would take.
This estimate what is it based on? Clients/potential clients do not always know the in and outs of our job therefore how accurate this estimate could possibly be!
To gain a valuable knowledge of how long  the job is going to take , it is vital to know the average transactions  to handle per hour per day as the client estimate will obviously be minimal.

Listing details of the assigment in the letter of engagement is also crucial.

Kind Regards and best of luck,

Nathaliexxx

  • Member PM.Dip
  • Practice Licence
  • 115 posts
  • # 78654

I would also be careful about using client on line software. 1 of my clients software is so slow during the day, on one occasion it took about 5 minutes for it to post a transaction. My client is aware of how slow it can be at times, found weekends and evenings its quicker but then I don't always want to work at those times!  

  • Fellow
  • Practice Licence
  • 116 posts
  • # 78726

I've come across a few people who think that as the information is already on Sage/other accounts package, then there is nothing else to do....

and also those who don't appreciate the skill and knowledge required, some people think they should be paying about the same as cleaners charge in my area!

 

  • Fellow
  • Practice Licence
  • 698 posts
  • # 78904

Hi Jude & Everyone

I think this is a tough question to answer as it is dependant on so many factors from location to experience and services offered.

I do think we as professional bookkeepers sohould be making a stand against some of the ridiculous rates that are being offered. You will tend to find most local professionals will know each other and they do not cut each others throats to win the work this is somthing that we do hear our members doing time and again.

the local regional meetings will help sort this part of the problem out and then it is a case of everyone for the ICB to us to educate the public as the value of a Certified bookkeeper or a non-qualified.

The shame here is the addage pay peanuts and get monkeys does not apply all too often business' are getting away with paying peanuts and getting qulaified professional people who are desperate for the work we need to change our tact and be more prepared to walk away unless the rate is right (I do not mean we should not negotiate and be flexable but there has to be boundaries). It would be interesting as to where people think those boundaries should be set.

I also know it is easy for people like me with established work to say walk away but unless we all take a stand together we will never resolve the undervalument issue.

Unfortunatley poeple tend to value things the more they pay for them.

Kind regards
Stuart

  • 328 posts
  • # 78908

Hi Everyone,

I, as a professional bookkeeper will no longer try out for any unrealistic rate for a qualified, experienced bookeeper/Accounting professional. I am not well established as yet like other fellow bookkeeper but will not operate on "desperation" basis as it is going to build up frustration undertaking jobs. I decided to change the approach of getting the price range right and stick to it. There is room for negotiation as long as it is in the range of rate I value what i deliver.

As to Educating people about our job, Thanks Stuart for mentioning this. This could be one of the topic we could perhaps discuss during regional meeting. Also without creating any lenghty debate.

 The institute has recommended an hourly base rate to  new practice holders. This in my opinion is no where near what practictioner who have been trading within three years trading period! There is quite a big Gap.
I understand that trainee and junior without experience will not get chance of gaining any work if they rank themself high but again there is quite a big gap!

In my opinion each individual has to honestly value  their rate based on knowledge, skills,qualifications and experienced. A basic homework need doing to value the quality of what can be produced, compare it to what is currently being charged in the area and come up with his own rate.Wink

Kind Regards,

Nathalie

Edited at 28 Jan 2012 03:53 PM GMT

Edited at 28 Jan 2012 03:56 PM GMT

  • 14 posts
  • # 78937

Hello everyone ,

Thank you for all your  posts they are so helpfull i am also starting my own practice  and  i was wondering exactly the same  questions how  much to charge per hour  the clients and because i haven't got a wide experiance i struggle to find out  but  i guess as  Nathalie saide  the ICB recommend on a hourly base rate how is can find what  the rate is do i give them a call or will it be writen on the practise documents when i receive them?


Thank you so much for your  help
Annie Kuncheva Smile

  • 328 posts
  • # 78946

Hi Annie G,


Here is the link about the recommended rate. It has actually been updated compared to last time i red it.
http://www.bookkeepers.org.uk/self_employed_members_area/how_much_to_charge


This should give you an idea as it is a range.
Good luck with the set up Wink  


Kind Regards,

Nathalie k        

  • 14 posts
  • # 78950

Nathalie Thank you so very much very kind of you Smile















Kind regards
Annie

  • Fellow
  • 199 posts
  • # 79112

I think it would be a nice idea to get some case studies together because this is a tricky, unanswerable question that everyone wants answered.

I was very interested to hear what Sharon Liddon said about how she structures charging and visiting clients when she was talking on the members' panel at the Bookkeepers Summit last November. 

Sharon is the new Regional Chair for Wales and I'll get in touch with her for some more information.  We'll see if we can distill the wisdom and advice of our experienced members to produce something to show the range of options available and what kind of 'probing' you need to do to or what information you need from a prospective client to determine your fee.

If anyone would like to ping me an email with their thoughts/experiences/methods, or if you have an issue with us reproducing any useful forum comments on this subject please get in touch ami@bookkeepers.org.uk

Otherwise this month's newsletter will have links to our new videos of two of the most propular presentations from the Bookkeepers Summit:

Mike Foster: How to market your practice
Stuart Morris: The professional bookkeeper

They are not yet available, but both presentations are 35 minutes long and should be really useful for any new practices, even if not related specifically to how to charge.

  • 33 posts
  • # 79188

Unfortunately, the link to the article about what to charge is in a Restricted Self Employed members area of the website - you can't view it if you are a student.

I don't see why a student who is planning to build their business should not be able to ask questions / discuss with those who are already in business.

To me there is an assumption that those who are students have nothing to contribute to the discussions of qualifieds. However, non-qualifieds can be in business for many years before seeking ICB accreditation or have had success in previous careers.

Edited at 02 Feb 2012 10:02 PM GMT

  • Fellow
  • Practice Licence
  • 1073 posts
  • # 79196

Hi Ray 

This is the reason for the Forum, so Students can interact with the members who are qualified or students.  

If there is anything you want to ask or suggest then  set up a post for a  discussion,  and members will help out and hopefully join in. 

We had a open discussion about this in the Scottish region and even mention figures.  I think you have access to that but I not sure on that one , other members outside the region posted on it.   ( Maybe AMi or James could answer that one . 

It is a personal view I believe there does have to areas for members only .  There is a huge difference in the membership fees. including the Practice fees we also pay on top  for our annual licence. 

If the ICB charge everyone  equally for the service then I have no problem with your idea , but as it stands at the moment there is a big difference in the fees. 


There is no discussion forum with this area though as any members who are willing to post , do so here. 

Hope this helps. 

Edited at 02 Feb 2012 11:42 PM GMT

  • Fellow
  • Practice Licence
  • 698 posts
  • # 79219

Hi All

Nathalie you make an excellent point re the issue of trainee and juniors not being able to charge the same rates as the more experienced members.

This is one areabodies like the AAT, ACCA, CIMA Score over the ICB in that their members are not granted practice licences until they have completed several years approved pratical experience this means their members when they begin practicing have moved on from the "junior" aspect and consider themselves fully experienced.

This is a difficult hurdle to overcome perhaps the mentoring scheme needs to be pushed harder in order to get over this although how it would work is a difficult one as who would pay the mentors for their services as this will be a big responsibility on their part but it would mean a less experienced but qualified member could carry out work getting the right rate for the job as they have a mentor to check over their work.

Perhaps an additonal fee could be levied on anyone who has held a practice licence less than say two years to pay for the scheme??

This is just an idea for debate my fellow bookkeepers all ideas are welcome.

Kind regards
Stuart

  • 153 posts
  • # 79263

I don't think it's just about checking the work, though, my experience of employing and subcontracting to qualified bookkeepers of varying experience levels is that speed of work is also a major factor and can vary massively, so it makes it very difficult to come up with an acceptable charge per hour.

I remember when I started with a new client this time last year, I quoted her £90 per quarter, which I based on 6 hours at £15 per hour. Her previous unqualified bookkeeper had been charging her only £10 per hour but took 10-12 hours to do the work (and not do it very well), therefore I was actually cheaper. 

The price I quote to customers varies on all sorts of factors - time I expect it to take me or whoever will be doing it, amount of skill required (so I generally charge VAT registered limited companies more per hour than non VAT registered sole traders), software and other resources required, any hassle factors (I have one client who smokes in the office and so I charge them extra as danger money!!) etc etc. I then come up with a fixed price so the client doesn't actally see this breakdown. 

  • 328 posts
  • # 79273

Hi Everyone,

Regardless of charging an hourly rate of a fixed fee, a calculation of a basic hourly rate need to be done.
I did mine based on a case study mentioned on the study corner of Members are from the main ICB site.
I agree with Ruth in the fact that various factors need to be taken into account while quoting a client.
I could not copy and paste the link as, once again, the site does not enable me to it cause i am using firefox mozilla!


To Stuart, with regard to the "Mentoring scheme", I do not know the in and out therefore can not comment on it. Perhaps you could start by defining what is a "practical experience" Also it would be, for the sake of having a clear and hopefullly a healthy debate/discussion to mention if past experience working in accounting department of large corporate organisation is considered as being valuable.

Hope this help,

Kind Regards,

Nathaliexxx

  • Fellow
  • Practice Licence
  • 698 posts
  • # 79281

Hi Nathalie

Having worked in both Industry and Commerce and in accounting practice in my opinion they are such different working enviroments that really unless you have worked in practice then you may not have the skills you will require to practice yourself.

However that said if previous roles were working for a company in a sole role capacity then you would have a much better idea and more rounded experience so the leap would not be that great.

having also work for large PLC's accounts departments in the past they compartmentailse to such a large degree that you would then only have a narrow band of experience rather than the fully rounded experience you really do need.

Kind regards
Stuart

  • Member PM.Dip
  • 37 posts
  • # 79765

Stuart Wildmansaid:

“Hi All

Nathalie you make an excellent point re the issue of trainee and juniors not being able to charge the same rates as the more experienced members.

This is one areabodies like the AAT, ACCA, CIMA Score over the ICB in that their members are not granted practice licences until they have completed several years approved pratical experience this means their members when they begin practicing have moved on from the "junior" aspect and consider themselves fully experienced.

This is a difficult hurdle to overcome perhaps the mentoring scheme needs to be pushed harder in order to get over this although how it would work is a difficult one as who would pay the mentors for their services as this will be a big responsibility on their part but it would mean a less experienced but qualified member could carry out work getting the right rate for the job as they have a mentor to check over their work.

Perhaps an additonal fee could be levied on anyone who has held a practice licence less than say two years to pay for the scheme??

This is just an idea for debate my fellow bookkeepers all ideas are welcome.

Kind regards
Stuart”


This is the exact problem I find. Only recently starting my practice I feel that I do know what I am doing in most situations. What I am always concerned about is coming across something I have not dealt with before. Although I usualy find the answer I am looking for I am always worried that I may done have "Done it correctly" I do find the fourum a very good place to share knowledge and advice on the correct way to deal with things.

As I become more confident I hope this feeling will reduce. At the moment I am trying to take on relitivly simple clients and build myself up that way and take on the harder task as I become more confident.

A mentoring scheme does sound like a good idea.  As always though there is the cost eliment. Many mabie put off by a much higher prectice fee so there maybie a way of basing the charge on earnings.

I think that the fact ICB allows members to prectice straight after an examination is good. Its what attracts may people to ICB. Its very hard out there to get employed jobs in anything finance/Accounts related So if people have got a way of earning money and building up a business slowly that must be good. 

  • 5 posts
  • # 80889

I think it can be depend on the work. If you have work which required lots of concentration and quality knowledge then the price of service may go to the higher.


-----------------------------------
mobile phone repeater


Edited at 15 Mar 2012 04:00 PM GMT

Edited at 15 Mar 2012 04:01 PM GMT

  • 5 posts
  • # 81600

REMOVED AS SPAM

Edited at 06 Apr 2012 09:53 AM GMT by James @ ICB (MODERATOR)

  • 2 posts
  • # 83496

Hi People,


Could you not do a variable Direct Debit type of arrangement like the Energy Companies employ. That way the client can budget into the future and you can increase or decrease depending o the work involved.

  • 1159 posts
  • # 83503

nckbookssaid:
“Hi Everyone,

Regardless of charging an hourly rate of a fixed fee, a calculation of a basic hourly rate need to be done.


I used to believe this too.  But in all honesty I don't think it does.  I've spent a long time thinking about it, and I've come to the conclusion that there is a difference between what bookkeepers think they are selling and clients think they are buying.

If bookkeepers base their fees on the time spent then they can only be selling the client one thing, time.  Clients are very rarely buying that.  In my opinion most clients are buying peace of mind and competence.  While I agree that time should still be recorded and analysed, I think this would be better used from a business management point of veiw and not for client billing. 

Hourly billing has many pros and cons, the traditional fixed price billing removes some of the cons, but not all.  I can understand why bookkeepers would be drawn to billing by time (I was when I started out), it's easy to calculate by using timesheets, it helps to ensure a relationship between price and cost.  Some think that hourly rates are easy to compare, but as has been said, the hourly rate is only part of the picture the other half is how long it takes.  This is the unknown figure.  The big plus from a bookkeepers point of view is that hourly rates transfer all the risk to the client, the bookkeeper will NEVER lose, but is that really fair?

There are a great many disadvantages too, most have been known for years.  It can result in a conflict of interest - the only way to earn more is to make the work last longer.  No upfront price is given - uncertainty to price is now extremely unusual in the commercial world.  Does not focus on the value - it focuses on the hours spent by the bookkeeper, not what the client gets out of it.  It actively discourages efficiency - by it's very nature introducing efficiency methods can only reduce what you earn.  Encourages over servicing - The only way you can earn more from a client is to take longer.  It discourages technological advances, much like efficiency the introduction of technology costs, but has no benefit if it takes less time to do the clients work.  No allowance for the customers capacity to pay is made meaning the smallest businesses pay the same as the largest.  It discourages communication because the client knows if they phone or email the clock starts ticking.  Billing focuses on the process, not the benefits for the client.  It reduces your quality of life - the only way you can earn more is to work longer.

I believe that value pricing is the way ahead for bookkeepers for a number of reasons.  It prices work by the value that the client gets from it.  

I'd be interested to hear if anyone has introduced value based pricing, and if ICB will add information on it to the pricing guidance.

Kris 

  • 4 posts
  • # 91790

I would also be cautious about using customer on the internet application. 1 of my customers application is so slowly during the day, on one event it took about 5 moments for it to publish a deal.

  • Member PM.Dip
  • Practice Licence
  • 481 posts
  • # 91796

marvek32said:

“I would also be cautious about using customer on the internet application. 1 of my customers application is so slowly during the day, on one event it took about 5 moments for it to publish a deal.”


Now I'm an extremely suspicious person. You've quoted almost word for word a post on this same thread from 17 months ago. On another thread you say you are studying Manual Level III yet your membership doesn't even say student. Being a suspicious type I suspect after a reasonable number of posts are built up then a signature will be added with a spam link.

Maybe I'm wrong and I apologise for any awkwardness this may cause. I've just seen it all too often on another forum. Reviving a year old thread is usually a dead giveaway.

  • 1159 posts
  • # 91797

Peasie, what a downright suspicious mind you have.....

 

  • Member PM.Dip
  • Practice Licence
  • 481 posts
  • # 91799

I feel a song coming on here - but whuch version should I go for, Elvis or the Fine Young Cannibals?

First Previous - Page 1 of 1 - Next Last
loading