So, you finally started your bookkeeping firm, and everything seems in order. You have a great team and a vision of your business’ goals. All that’s left to do is put a price tag on your bookkeeping services, and then you realise it’s not as simple as it seems.
The right bookkeeping pricing strategy is crucial for sustainability while staying competitive. Knowing that, we created this guide to provide insights, techniques, and some of the best practices you can implement to help you determine and optimise your bookkeeping pricing structure.
Table of Contents
Factors That Affect Bookkeeping Rates
Creating a bookkeeping services price list is a nuanced task that requires careful consideration of multiple moving targets. Understanding these factors will help you set fair, competitive, and profitable prices. Here are some of the factors that influence bookkeeping pricing.
Service Types
The types of services you offer directly influence how bookkeeping is priced. Understanding what you offer and how those services align with client needs helps determine a fair and strategic pricing model.
Recording Financial Transactions
+ Bookkeepers are expected to accurately record transactions, such as sales, expenses, and payments.
Reconciling Bank Statements
+ Bookkeepers also compare internal financial records with bank statements to catch errors, discrepancies, or missing transactions.
Managing Accounts Payable and Receivable
+ Bookkeepers track money owed by customers (AR) and money owed to suppliers (AP) and ensure timely invoicing and payments.
Maintaining the General Ledger
+ Bookkeepers organise financial data into the correct ledger accounts to keep the books balanced and up to date.
Processing Payroll
+ Bookkeepers can also calculate wages, deduct taxes, and ensure employees are paid accurately and on time.
Creating Financial Reports
+ Bookkeepers can generate monthly, quarterly, or annual reports (like income statements and balance sheets) to inform business decisions and sometimes, take charge of tax preparation as well.
Other Possible Tasks Involved in Bookkeeping
+ Filing and organising financial documents
+ Budget tracking and variance monitoring
+ Managing expense reports and reimbursements
+ Assisting with software setup and integration
Service Complexity
The complexity of the bookkeeping services you provide is a significant determinant of pricing. The more advanced the services you provide, the higher the price you can set. Bookkeeping services vary from basic to advanced, each demanding distinct expertise levels and time commitment.
Services such as basic bookkeeping tasks will be priced lower, while tasks such as monthly reconciliation, financial reports, budgeting, and financial analysis can command premium prices.
Business Size
The size of your client’s business can also significantly impact how much you can charge for your bookkeeping services.
- Small Businesses – Typically, small businesses such as local retail stores and cafés have fewer transactions and simpler financial structures, resulting in lower bookkeeping service costs.
- Medium-Sized Businesses – Mid-sized businesses such as medium-scale manufacturers, law firms, and growing restaurants with several chains have noticeably increased transaction volumes and have more complex financial activities. These businesses require more time and expertise, leading to higher prices.
- Large Enterprises – Large enterprises such as multinational companies often have numerous transactions and multiple accounts, requiring in-depth financial management. This justifies premium prices.
Geographic Location
Despite the mass transition to home-based and remote services during the pandemic, the location of your bookkeeping business and the clients you serve still play a crucial role in determining your pricing. In high-cost areas like Sydney and Melbourne, you can often command higher rates to cover increased operational expenses.
For remote services, on the other hand, location has less impact on pricing. Offering services remotely allows bookkeepers to tap into broader markets, potentially offering competitive pricing due to the lower overhead costs.
Expertise and Credentials
A bookkeeper’s experience, expertise, and credentials matter a lot in pricing. Although being a CPA (Certified Practising Accountant) is not required to be a bookkeeper the following certifications can help you charge higher rates:
- Gaining a Certified Bookkeeper status from the Institute of Certified Bookkeepers (ICB)
- A nationally recognised certification qualification such as Certificate IV in Accounting and Bookkeeping
- Registering as a BAS Agent
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Source: PracticeWeb
Bookkeeping Fee Structures
After you consider all the elements that affect your bookkeeping rates, it’s time to determine which bookkeeping fee structures to use. Here’s a detailed look at the most common pricing models.
Hourly Billing
Hourly billing is one of the most common bookkeeping pricing structures. It’s straightforward and flexible, ideal for those handling varied tasks. It ensures clients are billed for the exact time spent on their accounts.
However, it can lead to inconsistent income and may make clients hesitant due to the unpredictability of the costs. In addition, the advent of accounting technology, whose sole purpose is to expedite tasks, has made hourly billing inefficient.
Fixed Fees
Fixed fees involve monthly or annual charging of a predetermined amount for specific bookkeeping services. With this model, the cost of bookkeeping services becomes predictable for clients, encouraging long-term partnerships, and enhancing client retention.
On the downside, there’s the risk of underpricing if the scope of the work increases unexpectedly, so a thorough understanding of the time and resources required is essential. To avoid this problem, you must clearly define the scope of services included in your fixed fee; moreover, regularly review and adjust the bookkeeping services price list to reflect the changes in costs and market conditions.
Value Based Pricing
Value based pricing sets prices based on the perceived value of the service to the client rather than the time spent or specific tasks performed. This model leads to higher profitability and aligns your interests with your clients.
However, implementing and justifying value-based pricing may prove challenging because it demands a deep understanding of the client’s business and industry. When using this pricing structure, clearly communicate your services’ tangible benefits and outcomes, and customise your value proposition for different client segments and industries.
Hybrid Models
There’s always the option of implementing multiple bookkeeping pricing structures. Combining the strategies above can be effective when you want to charge a fixed fee for routine bookkeeping tasks, but want an hourly rate for more complex, ad-hoc projects, etc. This flexibility can appeal to clients while ensuring fair compensation for your time and expertise.
Best Practices for Optimising Pricing Structures
After you determine the right bookkeeping services pricing model for you, here’s what you can do to ensure profitability while remaining competitive.
- Regularly Review and Adjust Prices – Ensure you reassess your pricing structure at least once a year to remain competitive and profitable. Adjust prices in response to inflation, changes in demand, or shifts in the economic landscape.
- Be Transparent – Provide detailed proposals outlining the services included and the associated costs. Avoid hidden fees and ensure clients are aware of any additional charges. Being transparent builds trust and avoids disputes.
- Offer Flexible Pricing Options – Offer tiered or hybrid service packages to cater to different client needs and budgets. In addition, incentivise long-term clients with discounts to encourage loyalty.
- Take Advantage of Technology – Utilise accounting and bookkeeping software and automation tools to reduce mundane manual labor and improve efficiency, allowing for competitive pricing.
FAQs
Still unsure about setting the right rates? These FAQs can help you price with confidence.
What is a Fair Price for Bookkeeping Services?
A fair price for bookkeeping services ranges from $300 to $2,500 per month. For hourly rates, expect to pay around $40 to $100.
These price ranges are designed for small businesses. As your business grows and your needs increase, so will the cost of bookkeeping services.
What is the Going Rate for a Full Charge Bookkeeper?
A full charge bookkeeper can expect to earn around $57,000 to $80,000 per year on average, which translates to roughly $30 per hour, as per Glassdoor.
How to Set Prices for Bookkeeping Services?
Setting prices for bookkeeping services depends on several factors, including business size, service complexity, and the expertise/credentials of the service provider. Some businesses charge hourly, monthly, or flat fees for specific tasks.
To ensure fairness, it’s best to establish a bookkeeping contract agreement that considers all possible factors when making adjustments to bookkeeping pricing.
Why Is It Important to Get Your Bookkeeping Pricing Right?
Getting your bookkeeping pricing right is crucial for the long-term sustainability and profitability of your business. If you charge too little, you risk burnout and undervaluing your expertise. If you charge too much without clear justification, you may lose potential clients.
The right pricing reflects the value you provide, supports your growth goals, and builds client trust. Ultimately, smart pricing isn’t just about numbers but about positioning your firm for success!
Improve Your Firm's Profitability with TOA Global's Outsourced Bookkeeping Services
Locking in on smart pricing is essential for your business’s success. By understanding all the factors discussed above, you can ensure profitability and stay competitive.
Want to boost your firm’s profitability even further? TOA Global’s bookkeeping outsourcing services will get you access to a team of seasoned bookkeepers for a fraction of the price without compromising the quality of your service.
Curious to know if we’re a good fit? Schedule a no-obligation consultation with us and let’s explore working together.
