If you’re using a fixed fee structure, explain what this entails. Be upfront about what’s included in your services and what would incur additional charges. This step is crucial because it sets realistic expectations and helps prospective clients understand the scope of your services. You’re offering peace of mind and confidence in their financial status, and it’s this value that you put a price tag on. The one big trick with fixed pricing and value pricing for a bookkeeping service is really all about defining your service offering in advance. You should not present a price without an adequate definition of the work that you’ll be providing per month.
Step 2: Create 3-tiered pricing options
And in turn, these certifications can increase your expertise (and your pricing). Once you put together a good system, including a pricing list and some standard bundles, this is a great way to bill for your services. These are written by experts in value pricing, and can help you it all out. For example, calling the tax office to negotiate lower penalties on tax arrears may only take 15 minutes of your time, but could save your client thousands of dollars. You can discuss your prices in advance based on the work you’ve been asked to do. Or, you can determine your prices after the work is done.
Best Practices
Followed by Tax Returns (33.3%), Accounting (11.5%), Advisory (5.7%) and Consulting (3.8%). Certain industries have specific bookkeeping requirements. For example, what are accrued expenses a manufacturing company might need inventory management, while a retail business might require point-of-sale integration. Effective client communication is an art that’s mastered over time.
They might be sole proprietors or small businesses that require a professional to handle bank reconciliation, categorize transactions, and prepare financial statements. He and the team are all about automating many of those administrative processes surrounding pricing, proposals, engagement letters and payments. Professional proposals also help to keep your accounts receivable to a minimum by stating when accounts receivable are due. Essentially, whether in bookkeeping pricing, tax services pricing, or any other service, you need to know in advance exactly how you will deliver the work. If you aren’t in a position to define your scope clearly, then you likely don’t understand the situation well enough to be able to price it.
It incentivizes efficiency and you get paid before doing the work. As a result, you’re no longer chasing money.” says Loren. However, don’t compete solely on pricing as it’s a race to the bottom, where everyone sacrifices profit margins. Instead, focus on differentiating your services and highlighting the unique value you bring to the table.
Why is Pricing Accounting Services Difficult?
- With tech taking up so much airspace in modern accounting, those who are fluent users are quickly outpacing those who aren’t.
- As a bookkeeper, you can and should leverage your experience to increase your profit.
- When setting your bookkeeping services prices, consider creating different tiers for the size of the client.
- If you can do the job more efficiently or insightfully, you’re likely adding more value for your client than your hourly wage goal.
- A full charge bookkeeper has a larger responsibility and full oversight over a company’s finances.
A higher plan may include several hours of monthly phone support, account payable collections, and coordination with a tax preparer at year-end. It’s easy to implement and understand the hourly rate strategy. You simply track the time spent on each client’s tasks and multiply it by your hourly rate to determine the final fee. This simplicity makes it a good option for new bookkeepers or those with clients whose bookkeeping needs fluctuate month-to-month. In addition to basic bookkeeping, they might require additional services like payroll processing, sales tax returns, and accounts payable and receivable management. Remember, whether you choose traditional or value-based pricing, the goal is always to provide top-notch services that your clients appreciate.
Your Experience and Expertise
While this isn’t a new concept, the term value pricing has been more popular lately with bookkeeping and accounting professionals. Another extra task that I do for this client is to write checks for this preschool, so I am a signer on the bank account. It’s unusual for the bookkeeper to be able to write and sign checks, but because it is such a small business, we have our duties divided a little bit differently than it may normally look. Ian discussers the phases of transitioning to value pricing (setup, implementation, and execution) and walks you through the process in ten proven steps. There is a fine line between overcharging and undercharging, but the sweet spot does exist and you’ll know when you find it, because your clients will be happy, and so will you.
It’s important to consider market rates when pricing your bookkeeping services. If you live in an area with many bookkeepers, you may need to charge a lower price to compete. When determining how to price bookkeeping services, there are several key factors to consider. These factors not only impact the time and effort required to deliver the service, but they also influence the perceived value of the service in the eyes of your clients. Remember, every client, regardless of size, is looking for a trusted financial advisor. As their bookkeeper, you’re not just offering them a service, you’re offering them peace of mind, and that’s a value they’re more than willing to pay for.
Using this information, you want to guess at the highest price you think they’re willing to pay for each service level. For this step, you just need to list out the services, support, and technology for each tier, like the example below. For instance, Client A, who hates bookkeeping, will pay more than Client B, who doesn’t mind it.