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A Definitive Guide on Bookkeeping Services Pricing

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A Definitive Guide on Bookkeeping Services Pricing

So, you finally started your bookkeeping firm, and everything seems in order. You have a great team and a vision of your business’s goals. All that’s left to do is put a price tag on your bookkeeping services, and then you realize it’s not as simple as it seems.

Setting the right bookkeeping services pricing is crucial for sustainability while staying competitive. Knowing that, we created this guide to provide insights, strategies, and some of the best practices you can implement to help you determine and optimize your bookkeeping pricing structure.

Factors Influencing Bookkeeping Services 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 Complexity

The complexity of the bookkeeping services you provide is a major 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 data entry will be priced lower, while tasks such as monthly reconciliation, financial reporting, 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.

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 New York, Los Angeles, Boston, etc., 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 Public Accountant) is not required to be a bookkeeper, being a Certified Bookkeeper (CB) and Certified Public Bookkeeper (CPB) can help you higher your rates.

In addition, bookkeepers with specialized training in particular accounting software such as QuickBooks Online Certification and Xero certification can also charge premium rates.

0 %
of SMEs agree that technological skills are important for accountants

while

0 %
stated that they’d pay more for ‘tech-savvy’ accountants
Source: PracticeWeb

Bookkeeping Services Pricing Strategies

After you consider all the elements that affect your bookkeeping rates, it’s time to determine which bookkeeping pricing structure to use. Here’s a detailed look at the most common pricing models.

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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.

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Fixed Fees​

Fixed fees involve monthly or annually charging 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.

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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 customize your value proposition for different client segments and industries.

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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 Optimizing 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.

Improve Your Firm’s Profitability with TOA Global’s Outsourced Bookkeeping Services

Locking in on the right bookkeeping services 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.