I was just curious to find out what everyone else finds is the service that generates the best rate per hour for them, and what that hourly rate is.
Please exclude from this advanced tax planning strategies, just include compliance and consulting please - the rates for tax strategies are a bit distorting!
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For what it's worth
We are a small practice in SW London.
Before we dumped hourly rates in 2008 we used, as a guide rather than charged, £110 ph for me and £75 per hour for my accountant members of staff for most routine compliance work with perhaps a +/- 20% on each if we felt the particular piece of work warranted it.
All too hit and miss and blunt an approach so pleased not to have to bother anymore.
But ...
... it works out around £300p/h
If I had enough I could have a very happy life on 1 day a week at work.
Don't know and don't care
I operate fixed monthly retainer fees for a list of services, and don't know and don't care which services are more profitable than others, because once you've abandoned your time sheets and time based billing, it no longer matters. I look at it as a whole - not just for the individual client, but for the entire client base.
If the fee is £100 per month, to include payroll, VAT returns, annual accounts & tax and general queries, etc., then I can't say which bits are more profitable than others. Some years I spend longer on some clients and less on others, then the next year it may reverse according to the ebbs and flows of their business.
As for monitoring my business, I just look at the total monthly income from standing orders - as long as it's on an upward trend, and I don't find myself working longer hours on ALL clients as time passes, then I know I'm on the right track.
After all, estate agent's charge x% for selling your house, whether it takes 5 viewings or 50. A sofa costs £500 whether the salesman has to spend 10 minutes with the customer or a whole afternoon. By the same token, I don't think it's right to charge more for a client needing an extra meeting. Of course, like any other business, there are ground rules such as deadlines for providing information, minimum standards of record keeping, etc for protection against life's takers!
If I divide by gross fee income by the number of working hours I do, I come out at around £100 per hour and this is fine by me. If that means I'm doing one person's accounts for £200 per hour, another firm's VAT return for £25 and someone else's payroll for a fiver, then that's fine, I don't care. I don't care because I wouldn't do a VAT return in isolation without also doing the accounts and tax, and I wouldn't do a payroll without the accounts and tax either, nor would I refuse to do VAT or payroll for an accounts/tax client - it's all part of the overall service.
What hourly rate ?
Hourly rates are totally misleading.
There are some hours I work for nothing, others where I earn £50/hour, others where I earn £200/hour, and sometimes there will be hours where I earm £1,000/hour - though not enough of these :)
It all depends on what you're doing, who you're doing it for, what you quoted them, and whether you encounter any problems. It also depends on how many cups of coffee you drink during that hour etc.
Hourly rates are totally misleading.
Hourly rates are totally misleading.
There are some hours I work for nothing, others where I earn £50/hour, others where I earn £200/hour, and sometimes there will be hours where I earm £1,000/hour - though not enough of these :)
It all depends on what you're doing, who you're doing it for, what you quoted them, and whether you encounter any problems. It also depends on how many cups of coffee you drink during that hour etc.
I couldn't agree more. I dumped hourly rates/timesheets years ago and it was the best move ever.
The only time I use them now is to cost one-off specialised time-limited work and even then, I have usually decided roughly what I am going to charge before I even consider rates.
I have one job ....
that works out at about £200 - £300 per hour (4 x the normal) but then I treat the bounty as a sort of commission as the problem I helped fix has earned the 4 partners about £150,000 each over the last 3 years. So its's quite cheap really!
What do you call a deer with no eyes?
What's weird is that, not that long ago, this sort of question would have generated a battle of time billers against a small number of quoters (easier than value billers) but in this one the quoters seem to be in the majority. Maybe the time billers don't want to publish what they bill per hour and the quoters don't have to, because they have no idea.
I can understand your question and never guessed at your motive but, think about it, when I quote & bill my clients for the anticipated work in the forthcoming year and don't keep timesheets I actually have no idea which type of work for which type of client actually brings me in the best hourly rate. So I'm afraid expanding on the question is unlikely to get any more feedback.
What's important for me is keeping me & my staff OK with efficient and fulfilling work with a good band of clients balanced with providing what clients need and appreciate, which inevitably will mean me earning £XX per hour from client A and £XXX per hour from Client B, for essentially the same piece of work, possibly in the same amount of time. The cream then comes from the extraordinary or advanced work with which, depending on the client's perception and understanding, the fees produced can be extraordinary.
You mention needing a system in place to measure effectiveness but you are forced to use an hourly rate for this if you are timesheet based. Once the timesheets go you can plan far more effectively looking at people, types of work, busy & unbusy periods, salaries & overheads and other real factors such as the minimum fees in the year ahead.
As an example, I didn't need timesheets or rates per hour to know that payroll/PAYE work for 20 clients was causing a disproportionate use of people, paperwork, emails, phone calls etc and that by selling it on to a dedicated payroll sub-contractor, we could far better use our time and resources to do what we were good at and enjoy more, ie anything but payroll work.
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If everyone is happy with what they take home each month, that's brilliant - but wouldn't you like to maybe do more of the stuff that pays better hourly rates and earn more if everyone is getting value from it?
A nice theory, but not practical unless you intend to become highly specialised, and, have a lot of clients who need that specialisation (unlikely).
When you take on a client it's to do everything, low paid boring routine VAT returns, and the occasional high paying one-offs.
Forget the whole concept of "hourly earnings". When I price a job up I know it's likely to take about x hours a year/month/week and that is one of the considerations I take into account, along with many others, when reaching a price for the job.
The only place you should see a timesheet is on Antiques Roadshow, because thats exactly where they belong.
1 thanks
no idea(LOL)
hourly rates are subjective & depends on the client perception of the work undertaken
we work on fixed rate contract where possible
clients have a perception of max costs irrelevant to time costs
time cost analyses have been abandoned a llong time ago
you have to be flexible with clients in these harsh economic times
Yes, Yes, Yes
I find it so encouraging to read that Paul, Ken, Owain, Nigel and Harvey have all dumped the dreadful hourly rate and trashed the pernicious time-sheet.
When you help each client understand what value they will derive from your work and base your charges on that value so that both you and the client make a healthy profit, what more can you need?
If the OP really wants to concentrate and specialise, then focus on what's interesting for you and the clients, where you have an affinity with the niche and the service. Your expertise and reputation will grow, your fees will rise and it will become the most profitable activity for you. What works best for another firm isn't guaranteed to work best for you.
I once went back and calculated my effective hourly rate on a particular job because I thought it might be quite high. It was £6,000 an hour. The client was delighted to pay me £500 for the result, neither knowing nor caring that the work had taken me 5 minutes!
David Winch
This says it all really
I once went back and calculated my effective hourly rate on a particular job because I thought it might be quite high. It was £6,000 an hour. The client was delighted to pay me £500 for the result, neither knowing nor caring that the work had taken me 5 minutes!
David Winch
It is always a great delight to do a piece of work for a client using one's hard one expertise and to charge him a fee which he is happy to pay. In David's case, if he had charged a lot less, the client probably would have thought that something was wrong and would not value the advice given.
On the other hand, I have some clients that I charge £500 and the work takes me an inordinately long time. You just have to regard it as swings and roundabouts.
We like fixed feees
but just so often it is impossible to work on fixed fee. For instance the first VAT return when one has not been doing the bookkeeping upto that point.
Lucrative work
Bookkeeping is by far the least profitable. We charge out at £20-25ph and employee salary is a direct cost of this. But, it brings in the year end work, and it's still a profit with no real extra overhead, so there's no reason not to.
My charge out rate is typically £75 per hour so any jobs that require consultancy (because we work on fixed fees and only charge out by the hour when we have to) will earn that. But how many of those do you get a week? As a general practice, not many.
I find that routine work can earn more than that. I price jobs with fixed fees, on a cross between notional hourly rate and market value. E.g. if I estimate it will take 3 hours but an "average" fee (thanks Steve Holloway for the survey) is £400, then I will quote around that, meaning an effective hourly rate of £133, if I got my estimated hours right.
As others have said, that's balanced by the same fee for a client who takes up triple the amount of time due to complexities. Many days I work for zero but my employees earn me money.
It's all swings and roundabouts. As long as my turnover and profit is increasing and, more importantly, my clients are still telling me they are happy, I know I am doing something right
I always feel I earn significantly less than many accountants (right now I could walk into employment for a lot more), but it's enough to keep me in nice new shoes ;-) And I get to choose my own working hours and I love running my business. That'll do for me :)