How did you recalculate your payroll fees

How did you recalculate your payroll fees

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I only have about twelve payroll clients but have acquired another  few in the last month. 

Now auto enrolment is at my doorstep and some clients have staging dates in the next few months my thoughts are"how do I price the fees". Hw much extra was added to your payroll costs.

I haven't really spent any time looking at the possible administration burden of auto enrolment until today. If for example I charge £125 per annum for monthly payroll for 1-3 employees then how much would you add on for pension provision.

I  presume bit of guess work is required until the process is up and running and a review implemented after say three months on the fee price.

As a one man practice I was only going to bolt on the NEST platform with Moneysoft.

I would be grateful for the thoughts of anyone who has recently priced, processed and now up and running with auto enrolment.

Replies (21)

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By Mick Milne
04th Feb 2016 15:54

AE

Hi Marky

I have been using Moneysoft for 2 years now for AE - at first it was a little painful, but I've been delighted to see regular updates and new features introduced by the Moneysoft team on a regular basis.

I started off with Peoples Pensions but now they're charging I'll be moving to NEST.

Pricing wise, I haven'to done enough to get it right yet, but I'm sticking £1.50 on a payslip to cover it.  

So your minimum payrun fees are similar to mine, but my biggest payroll clients are much bigger hence £1.50 on top of the payslip works well for me.  At lower volumes £1.5 per payslip wouldn't cover the extra hassle time (although I am sure in time Moneysoft software will improve again where they have direct feeds into the pension company at the touch of a button.  

Their latest additional feature is the enrolment letters which came out this month and was very welcome 

I'm making up numbers here, but I'd reckon another £10 per month to cover off the AE duties for a 3 man payroll - i.e assessment, enrolment letters, pension file upload etc...

 

cheers 

mick

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By SteveHa
04th Feb 2016 16:09

It actually didn't cost us anything, in fact we saved money, simply by switching from Sage to Moneysoft (not exclusively for AE, I've used Moneysoft in the past and despised Sage. The cost saving was an easy sell to the purse holder).

Having done my first staging (1/1/16), and not quoted extra for it since I was treating it as my testbed, to the extent that I am prepared to do AE (assessment, and production of the upload - I'm not doing correspondence or the actual setting up), the extra work was minimal, and I really think I'd struggle to justify an increase in fees.

Given that the one staged client is also, perhaps, my largest payroll by a good way, I see the rest as barely registering the extra time.

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By mbee1
04th Feb 2016 16:22

It hasn't cost me much either.  I use Iris and have subscribed to OpenEnrol & OpenPayslips for the one of my twenty odd payrolls that has staged.  The additional cost per employee is minimal and I have passed this on to the client but other than that no additional charge.

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Replying to Paul Crowley:
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By Onemanband21
07th Feb 2016 00:04

Auto enrolment

I also use IRIS payroll software with a stage date of June 2016 (  nothing done about it yet !!!! ) Will probably register with Nest.

did you not have to pay IRIS extra. For training re auto enrolment ????

 

 

 

 

 

 

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Euan's picture
By Euan MacLennan
04th Feb 2016 17:30

You surprise me

I have found that producing the (enrolment and) contribution files and uploading them to the pension provider takes at least as much time as producing payslips, submitting the FPS and when required, arranging the direct debit to pay the PAYE.  I therefore charge about double my old fee for clients who have staged, provided that my old fee did not include extra for processing adjustments, such as overtime and lots of joiners and leavers every month, for which I charge extra.

You also surprise me by only charging £10 a month for a payroll of up to 3 employees, even assuming that they are on a fixed salary each month.  How long does it take you to open the file, produce the reports and payslips, send them to the client, submit the FPS, close the file and put it away every month, plus printing the forms P60 once a year and opening up the new year's data file in Moneysoft?  If it takes you an average of only 10 minutes a month to do all that, you are charging yourself out at £60 an hour - if it takes you 15 minutes, your hourly rate is only £40.

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Replying to KevBlue:
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By NYB
08th Feb 2016 16:23

payroll Pricing

Euan MacLennan wrote:

I have found that producing the (enrolment and) contribution files and uploading them to the pension provider takes at least as much time as producing payslips, submitting the FPS and when required, arranging the direct debit to pay the PAYE.  I therefore charge about double my old fee for clients who have staged, provided that my old fee did not include extra for processing adjustments, such as overtime and lots of joiners and leavers every month, for which I charge extra.

You also surprise me by only charging £10 a month for a payroll of up to 3 employees, even assuming that they are on a fixed salary each month.  How long does it take you to open the file, produce the reports and payslips, send them to the client, submit the FPS, close the file and put it away every month, plus printing the forms P60 once a year and opening up the new year's data file in Moneysoft?  If it takes you an average of only 10 minutes a month to do all that, you are charging yourself out at £60 an hour - if it takes you 15 minutes, your hourly rate is only £40.

I agree with all of this. Don't let any of my clients know that you charge £10 per month for three employees. Its not just the actual physical time it takes. Many things have to be factored in - your knowledge for a start is worth money. can they do it? The responsibility nowadays of FPS's & AE. A Payroll Expert has to know far more than they did five years ago  Also the cost of running even a small business - there are overheads in any business.

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Chris M
By mr. mischief
04th Feb 2016 20:56

Me too

Independently I have gone in at £1.50 per payslip.  However I have not had anyone staging yet.

I am also charging a one-off fee of £100 plus VAT - for a payroll with 6 to 10 folk on it - for all the setup rigmarole.  I've got my first staging date in April.

Although I do 46 payrolls in all, only 10 need me to do AE.  I deliberately targetted low payroll input clients when I set up - limited company contractors - plus I've sub-contracted out the book-keeping on 12 clients and it turns out the payroll-heavy ones are mostly in that lot.

My book-keeper is better than I am at payroll, plus she's already had 2 or 3 successful AE staging dates, so hopefully it will just be a watching oversight for me on those ones, as with the VAT returns I've sub-contracted.

Looking at all the stuff I am inclined to think in the end that Euan's figure may well be nearer the mark.  Some of this will depend on your letter of engagement.  For example, at some stage the payroll and pension balances are going to not match up.  Sorting that out can take a lot of time, my letter of engagement for AE excludes that from the basic service.

 

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By mbee1
05th Feb 2016 10:11

I charge two fees.  I have a

I charge two fees.  I have a fixed fee per month of £13 + VAT plus £1.30 + VAT per payslip but no payroll has more than 7 employees.  Only one has AE at the moment and I'm impressed with Iris AE products and I'm adding the small charge on which takes the payslip charge to £2.00 per employee.  

All my payrolls are now completely paperless so all my reports are saved as pdf files and all of the schemes are happy to get payslips as a pdf.  Iris OpenPayslips allowa any employee to access their payslip and AE letters via a portal or smartphone app.  

I'm also lucky in that all but two schemes rarely pay differently from month to month so a typical payroll only takes me a few minutes. 

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By Marky
05th Feb 2016 11:58

Thanks for all the comments, much appreciated.

Euan thanks for your answer about the low level for monthly payroll and for the last month I have contemplated an increase. I have one or two clients that have different monthly amounts and they are not fixed amounts each month. The auto enrolment process will give me the perfect opportunity to correct my payroll fees in April 2016.

I could be wrong but probably the auto enrolment process takes more time per month than the regular payroll process so your suggestion that you would double the fee would seem reasonable.

A one off set up fee of £50 - £100 would also seem reasonable as Mr Mischief suggests for 1-10 employees.

I see that Moneysoft has a thread  directly above which I'll need to read, I think it's  about NEST but the input from everyone has been great.

 

 

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By mbee1
08th Feb 2016 12:50

There is a training cost for Iris which I didn't charge back to any payroll.  £350 ish or so I remember.  If you go for OpenEnrol & OpenPayslip the additional charge is less than £1 per employee which i am charging for.

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By bukkuz
08th Feb 2016 13:58

I charge 2 fees too

I've been with Moneysoft for at least ten years now and have always been a big advocate of the software but I find with AE there is so much more manually you have to do. Doing the normal payroll for a couple of clients 50 employees takes very little time, but doing AE for the same payroll run using Peoples Pension, has been taking a few hours. The employee assessments are wrong each time, and change from payrun to payrun so you must check these carefully. The upload file constantly needs amending, some dates are not require with Peoples Pension so need to be taken out, Deferral Date column is missing from the CSV file, that needs amending......so yes I do charge extra for AE. I think you should set a rate that you could then discount when things settle down rather than charge too little now and have to keep amending your rates. I generally charge £1.75-£2.00 per paysip, payroll and £2.25-£2.50 AE processing, 30-50 employees four-weekly pay.

Also it will help your clients to change any weekly pay staff to either monthly or four-weekly come April and the new tax year, as their processing fees will be reduced dramatically.

 

 

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By Matrix
08th Feb 2016 16:32

I charge minimum of £25 per

I charge minimum of £25 per month for non-Director payroll and will charge the same again for auto-enrolment.  This is for up to 3 employees.

The responsibility of dealing with payroll and pensions is huge and multiples of £1.50 does not balance the risk with the reward for me.

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By petersaxton
09th Feb 2016 20:14

I charge £25 per month for my monthly payrolls

I charge £25 per month for my monthly payrolls and the biggest payroll has three employees.

I have doubled the fee if they need auto enrolment although most of my payrolls don't need it.

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By nikki_h
10th Feb 2016 09:38

I've only had one client so far and staging date is 1st March. I've charged £400 for the set up of nest and this takes me to the first assessment before the march payroll run.

I currently charge £10 per employee per month for payroll and this is a 3 employee company. I've quoted an additional £10 per employee per month for ae but I might reduce this depending on how long it takes for brightpay to process the nest files.

I'm also not sure if I should charge for all 3 employees each month when only one is eligible. Also if he opts out do I therefore not charge any extra for ae? Your thoughts are welcome.

I'm looking forward to getting this first client done so I know if I want to actively seek ae clients.

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By petersaxton
10th Feb 2016 10:33

Opting out

I should think you should still charge for opt outs. But then you don't charge for another three years.

I think £400 is a lot given there's very little work involved.

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By bbethj
10th Feb 2016 10:40

£400 to set up Nest?!! 

£400 to set up Nest?!! 

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Replying to lesley.barnes:
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By umat
10th Feb 2016 13:06

its not as much as you think

I have charged £320 to set up people on NEST however that set up fee includes charges for

information provided to clients - list of providers with a review of their features, costs , etc so they can make an informed choice

letters to workers and toe the Employer

being set up as a Nest Delegate so that I deal with Nest on their behalf

There is a lot of information to set up on the Nest portal such as getting the payment reference period to align with your payroll  processing dates, putting the workers in groups , dealing with correspondence on behalf of the client - such as setting up the DD mandates.

You will also need to explain auto enrolment to the client and why they actually need it even if they have employees who may not immediately be joining a pension scheme.

So overall I dont think £400 is too much.

Obviously later on with an increased learning curve this will take less time but then the client will be paying for your knowledge and experience.

 

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By nikki_h
10th Feb 2016 12:09

I charged 400 based on some examples of fees that were discussed maybe 6-8 months ago on here. I didn't know how long things were going to take to complete. My client was ok with it. I would probably reduce it a bit next time but it still takes time to fill out all the nest info and sending things to my client to sign etc and speaking with my client about everything. 400 is only a days fees and I can see the time gong quickly if you deal with everything for a client and take 3 or 4 phone calls when they don't understand something.

The 400 includes the assessment of the staff and sending letters out which I know is simple but it still takes time. I am also full delegate of the clients nest area so deal with all the messages from nest.

So you suggest me charging the monthly fee for the opt out month but then not charge again for 3 years. And for the 2 that aren't eligible not charge unless they decide to opt in.

Still learning here and I'm sure things will change as I understand what is involved.

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By JimH
10th Feb 2016 15:26

Nest set up fees
Interesting to see the current views on initial set up fees being lower than those discussed a while back.

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By bbethj
10th Feb 2016 16:25

We charge £40+VAT to set up

We charge £40+VAT to set up Nest. It takes 15 minutes maximum. 

Payroll fees including assessment, letters etc are £35 a month for 1-5 employees. Our clients for sure would go nuts if they got an invoice for £400 for setting up Nest. 

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By DMGbus
10th Feb 2016 16:59

April 2015 example fees -with a partner

The following fees are an example as seen published April 2015, reflect the fact that a share of the quoted fees goes to a AE parter firm (middleware providor to produce communications and un-mangle .csv files online to suit pension providor) necessary due to using a payroll software inadeqate at fullfilling all necessary AE functions at the time (ie. Pegasus Opera):

5 or less employees - £100 set up fee (rising at £50 per extra 5 employees) upto a maximum £400 where over 40 employees£1,250 financial advisor fee to research, report and advise re: company pension arrangements£450 fee for financial advisor to make a resentation to staff

Above are one-off fees at outset (note that IFA does rather well out of this)

The ongoing fees set at a rate per employee per month:

Monthly paid £2Weekly paid £3

 

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