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- Member PM.Dip
- Practice Licence
- 71 posts
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Hello everyone,
I am starting up my own bookkeeping service, and I am struggling with the pricing structure! My customers will be mainly sole traders/small businesses and I was thinking that they might prefer a set rate rather than an hourly rate. However I don’t know how long it takes to “do the books” every month and, to start with at least, I will be slower than an experienced bookkeeper!
I know it’s a very general question, but can anyone give me some idea as to how many hours I should base a set fee on?
Thanks
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- Fellow PM.Dip
- Practice Licence
- 258 posts
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Hi Clair,
Just need to ask this question, do you have a practice licence, PII Insurance etc.? You should not be working as self-employed without one. If you have applied for one and are just setting up then ignore my question.
It is very difficult to say unless you have seen the business' account, how many transactions are going through each month etc.
I would suggest that if you are going to set a fee, have a look at their bank statement first to get an idea of how many transactions are going through and base your fee on that, then advise the client that you will review this after 3 months and if you need and extra hour or so then you will raise the fee and vice versa.
Also, make sure you have an engagement letter that states what services you will be providing for the fee and that also states that any extra services will be charged at an hourly rate, just to cover yourself so the client doesn't start to "take liberties".
Hope that helps!
Edited at 10 Jun 2011 09:00 PM GMT
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- Fellow PM.Dip
- Practice Licence
- 17 posts
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Hi Clair
When starting work start by offering an hourly fee and then review after 3 to 6 months and then you have had enough to get an understganding what is actually happening in regards to the amount of transactions\time and then you can move to a fixed fee fromthen.
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Hi Clair
Agree with Gandalf - but then of course I would - I love Lord of the Rings 
That particular way of charging has worked for me and plus you may find that the work from these types of clients is only going to cover a few times a year so best to stick to hourly in that particular situation -you can fix it for the next year e.g. £14 per hour first year then next year £300 per year's accounts. (please note that figures are plucked out of the air!!)
I have a few clients on a monthly fixed fee / standing order as they need weekly/monthly work done but still keep a record of time taken as you dont want to do yourself out of money. They only became monthly once I had carried out work over six months but that was mainly because they were start-ups (so you never can tell) or a few years worth of accounts to do.
Good luck with starting up
Kind regards
Liz
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- Member PM.Dip
- Practice Licence
- 71 posts
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Thank you, that has helped! Good idea about looking at bank statements to get an idea of volume of work, even if charge an hourly rate. I haven't applied for my practice licence yet, I'm still working on the business side of it!
Going to look at the PI topic now!
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- Member PM.Dip
- Practice Licence
- 71 posts
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Third time lucky! Can't always get my posts submitted - something to do with Explorer 9 apparently.
Anyway - thank you for your help. I had thought that customers would want to know what the charge would be up front but it seems this is not the case. Good idea to look at bank statements to get an idea of volume of work.
I haven't applied for my practice licence yet, still working on the business side of it.
Going to read the PI thread now!
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- Member PM.Dip
- Practice Licence
- 481 posts
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Clair said:
Good idea to look at bank statements to get an idea of volume of work.
Unless they are a cash based business.
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Peasie> plenty of those up here, isn't there.
Love the attitude that most folks up here don't trust the banks and grudge the admin charge to the cc companies - not that it makes my life easy - exact opposite - and MLR to consider and all. But guess that's Scotland fir ye. 
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- Member PM.Dip
- Practice Licence
- 481 posts
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Hi Liz - I don't know whether so much it's a case of not trusting the banks, more a case of thinking "well, if the banks are going to charge me say 60p per £100 to pay cash into the bank I may as well use the cash to pay suppliers and wages instead".
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As my Rich Grandmother used to say - every penny counts
Pity the philosophy didnt feed down through the generations. My mother always says 'money burns a hole in our pocket' - lol
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- Member PM.Dip
- Practice Licence
- 39 posts
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Hi, I charge all my clients an hourly fee. Many of my clients are seasonal therefore the volume of work fluctuates throughout the year.
That is a great idea about the bank statement. I also note the point about cashbased businesses.
Please also be aware of the way in which you and your client work together and the type of business they have. I have a client that insists on holding onto invoices and only handing them over to me when they are paid. Unfortunately she is so disorganised not only does pay the invoice but she also pays the statement when it comes in at month end. She runs 3 bank accounts and then there is also the dreaded cash pot!!
Till receipts - some cash gets banked, some goes into a cashpot, card payments are automatically deposited into another bank account and I then have to split this then allocate the sales to the various income stream - i.e. food, bar, accommodation. This can be very time consuming. This client is high maintenance!
On the other hand, I have 2 other clients that work in a similar way but with a tighter grip on cash and only 1 bank account and life couldn't be simpler.
Angie
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No one can tell you what you should do with this one, there are so many slit views on it. Personally I charge fixed rates, and always have. I have come up with a fairly simple algorithm now and have manged to build a quote form for my site to give an instant quote.
I did get it wrong, once. But beleive me, when you do, you'll never get it wrong again. My clients also know that their rate is fixed for a minimum of 18 months unless their workload changes a lot.
My reason for offering fixed price is because when I hire someone I want to know the bottom line. If I asked for a fence to be built and the guy said £15 an hour, I'd be scratching my head. My next question would be how long will it take? Also, it really sticks in my throat to think I'm paying more because someone dithers. When you're paying by the hour it's not in their best interest to be very efficient, is it?
But this is a question everyone needs to answer for themselves.
Kris
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- Fellow PM.Dip
- Practice Licence
- 424 posts
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kjmcculloch said:
“No one can tell you what you should do with this one, there are so many slit views on it. Personally I charge fixed rates, and always have. I have come up with a fairly simple algorithm now and have manged to build a quote form for my site to give an instant quote.
I did get it wrong, once. But beleive me, when you do, you'll never get it wrong again. My clients also know that their rate is fixed for a minimum of 18 months unless their workload changes a lot.
My reason for offering fixed price is because when I hire someone I want to know the bottom line. If I asked for a fence to be built and the guy said £15 an hour, I'd be scratching my head. My next question would be how long will it take? Also, it really sticks in my throat to think I'm paying more because someone dithers. When you're paying by the hour it's not in their best interest to be very efficient, is it?
But this is a question everyone needs to answer for themselves.
Kris ”
I agree with the fixed rate charge. At least the client would know how much they're paying per month instead of waiting for an invoice from your.
Just out of curiosity, what is this 'fairly simple algorithm' you devised?
David
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It's based on the number of transactions, the business structure, whether they are VAT registered and if they need a self assessment.
So, I calculate the price for a self assessment / their period (12 for monthly, 52 for weekly etc)
I have a fee for a VAT return so I multiply that by 4 / their period
I have a set fee for each structure and work that out per period
Then I have broken down the transactions into groups and assigned a value to each.
I used to work it out on paper, but recently I decided to build an instant quote form for my website.
Kris
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