What is your hourly rate ?

What is your hourly rate ?

Didn't find your answer?

I only started my practice six months ago is fairly new

I know from seeing other posts there are a lot of practioners with so much experience that do give so much good and valuable advice to us novices. Hope in future, I maybe able to also support start ups.

Anyway, I work from home at the moment so don't have much overheads.  Actually, far too confortable to even contemplate moving to a office.  Only have a few clients at the moment but business is picking up.

Now the million dollar question - what is a fair chargable rate.  I do have fixed fees but for additional work I charge £80 an hour for highly technical stuff e,g tax planning and £50 an hour for general administration and accounting work. This this sound reasonable. 

Replies (34)

Please login or register to join the discussion.

avatar
By David.Griffiths
04th May 2013 11:48

How long is a piece of string?

I don’t work on hourly rates, rather on a quote for the job. This is based on two factors, what I think the job is worth to the client, and, what I think the client will (can afford to) pay.

I did once quote £1,000 for a job and finished it in less than 2 hours, so in theory made over £500 an hour, but then again I bet if I worked it out there are other jobs where I only make £20.

The point is you can charge what you like, if the client won’t or can’t afford to pay it, then it’s irrelevant.  

Thanks (2)
RLI
By lionofludesch
04th May 2013 12:10

I gave up all that detailed time recording years ago.  I found I was just spending hours keeping records only to say "I can't charge that much" when the bill came around.  Agree absolutely with David.Griffiths above.

Thanks (0)
Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
04th May 2013 12:26

Fixed fees

I agree with David, I just quote a price for a job, which is loosely based on a notional hourly rate crossed with market value.

£80 for tax and £50 for general sounds in the right ballpark, but fixed fees for fixed jobs are much easier to suss out .

This old blog post of mine might interest you.

http://justanothermip.wordpress.com/2011/03/26/accountant-what-to-charge/

(and to actually answer your question, my rate is £75 per hour, £85 for tax. I don't do admin/bookkeeping, that's charged out at £20-30ph depending on staff member. I very rarely raise an invoice based on my time, though).

 

Thanks (1)
avatar
By User deleted
04th May 2013 14:38

Fixed fees

I charge fixed fees but I work the original quote out based on an hourly rate of £75 for everything x how many hours I reckon it will take me. Sometimes I'll end up making less, often more. I do work out how long the job took at the end of it just so I can see if my quoting is accurate, both for the particular client and in general. 

Thanks (0)
avatar
By Jim100
05th May 2013 01:48

Fairness

Really is a question of fairness to yourself and clients.  Often I question are the fees fair as there is lots of accountants out there that can do it cheaper and there is competition from places like India too.  I just worry can I charge £75per hour in the future.  I can't see it increasing.

I know the larger accountancy practices charge anyway from £150 per hour onwards and they seem to rip off clients but due to their brand clients come back for more.   Neither you get a personal service. 

 

Thanks (1)
avatar
By bernard michael
05th May 2013 10:47

I charge a fixed fee but include all ad hoc advice, which normally involves 2/3 phone calls/e-mails per annum. This is mainly self preservation as I would rather know about problems in advance and resolve them. It also makes the client dependent rather than asking "men/women in pubs"

However if the extras look like being lengthy a separate fee is charged

Thanks (1)
avatar
By David.Griffiths
05th May 2013 11:14

Amazing

I have recently taken over a client from a large (10 partner) local firm who have 3 or 4 offices in surrounding cities.

I was staggered to see the following entry on one of their long and detailed bills to the client –

“To emailing you to inform you that your accounts are ready for collection - £40. “

No wonder the client left.

 

Thanks (3)
Man of Kent
By Kent accountant
06th May 2013 15:13

Dark ages

Charging by the hour is a return to the dark ages and will put you behind the competition.

Use an hourly rate as a bench mark and a means of pricing work, but don't charge clients by the hour for standard compliance work. 

What rate you use will depend on how you value your work, how much you want to earn, what type of clients you're targeting, how long it will take you to do the work etc, etc.

If you're quick and efficient you may be able to earn £75+ per hour. if you're a bit of a plodder and not able to plan then £30-£40 an hour may be more appropriate.

Thanks (0)
avatar
By The Innkeeper
06th May 2013 16:22

How long is a piece of string ?

twice the distance from the middle!! ( well it is Bank Holiday)

Thanks (2)
avatar
By David Winch
08th May 2013 11:26

Are You Getting The Picture?

All the advice so far is that you should quote a fixed fee that is fair to both you and your client - and don't even have an hourly or daily rate.  It's all extremely sound advice, Take it on board!

Also, there's no reason on this earth why your overheads should have any impact on the prices you quote.  As long as you cover them, handsomely that's enough.

Work with your client to help them understand for themselves the full value of you resolving whatever issue they can't or don't want to resolve for themselves.  You also need to discover what, for clients in your target market, is a compelling, bite-your-hand-off, determined-to-find-a-way-to-afford-it RoI (value vs price).  Combine the two figures to give you a price.

At the same time, you'll know your own compelling, bite-your-hand-off, determined-to-find-a-way-to-provide-it RoI (price vs cost of delivery).  Combine this with price and you have your cost of delivery target.  If it's not obvious how you'll meet this target, you'll need to get creative.  If you absolutely can't find a way of meeting it, you'll have to walk away from the opportunity.  You can't help everybody.

If you don't know what 'compelling' is in your market, start somewhere between 10 and 20 fold!

Remember, it is your duty to charge different prices for different value.  It's legal, ethical and moral to do this.  It's wrong not to!

David Winch

Make Sales Without Selling and Get Paid What You're Worth

Thanks (0)
avatar
By andrewbs1
08th May 2013 11:26

At the risk of being very unfashionable and in the dark ages I do actually charge an hourly rate in that ball park of £50 to £70.

I want to charge the client a 'fair' fee which bears some resemblance to the amount of effort that has gone into the job. I also want to be paid a fair remuneration. I use a simple App called Minuteur which I simply click on whenever I am working on a client. When I have finished I transfer the time to an Excel timesheet. The latter forms the basis for my billings and enables me to  see how many chargeable hours I do in a month / year. I can easily plan and control my business (I am a one man band).

 

There is just something wrong about making £500 per hour or £20 per hour. I am not a salesman or a cowboy. I am a professional accountant who my clients can trust.

 

Thanks (1)
avatar
By David Winch
08th May 2013 11:41

Why?

Why Andrew?  Why do you want your fee to "bear some resemblance to the effort"?

Carl Marx was wrong.  Effort doesn't equal value.  If it did, the diamond in the diamond mine and the rock sitting next to it would be equally valuable!

You deserve a share of the value you help to create, but if you create no value, there's nothing to be shared.  You don't deserve to get paid just for showing up.

And what is wrong with making £500 per hour? I once did some work at an effective rate of £6,000 per hour, but I know I'd never have got the work if I'd quoted it like that.  And I suspect the same is true for David Griffiths and his £500 per hour.

If the client rightly believes they are paying a fair price for the value of the result your effort produces, and you deliver that result within their desired time-frame, they'll neither know nor care how long you actually took to produce it.

If, like David G and me you can finish the work quickly, that's called working smarter, not harder!

Thanks (1)
avatar
By User deleted
08th May 2013 11:38

As the Scottish hotelier ...

... on Little Britain would say, ask me on a Monday ...

On that subject, found this, quite topical, and would be funny if not so believable!

Thanks (0)
avatar
By Laurence52
08th May 2013 12:07

Ridiculous fee

Someone who I had done some work for many years ago rang me a couple of months ago to say he had just become self employed and also had one let property.

 

When the subject of fees came up his idea of what a fee for the accounts and tax return was in a range between £20 and £70. That's in total, not an hourly rate.

 

The conversation ended pretty quickly.

 

Thanks (0)
avatar
By andrewbs1
08th May 2013 12:08

 

 

'If the client rightly believes they are paying a fair price for the value of the result'

 

If you were honest with your client and told them you made £6,000 per hour, what do you think there reaction would be?

 

Your clients may be different to mine but i expect that my clients would feel ripped off.

 

Effort does include the time and the 'value added'. It seems to me that because a client is getting a big tax rebate that somehow we are entitled to as much of it as we can grab without them knowing because we have added value.

 

As a profession we are going the same way as the Banks, Energy companies and MPs. I'm sick of rip off Britian. Let's be open, honest and fair!

 

 

Thanks (2)
Replying to ireallyshouldknowthisbut:
avatar
By User deleted
08th May 2013 12:27

Don't forget ...

andrewbs1 wrote:

'If the client rightly believes they are paying a fair price for the value of the result'

If you were honest with your client and told them you made £6,000 per hour, what do you think there reaction would be?

Your clients may be different to mine but i expect that my clients would feel ripped off.

Effort does include the time and the 'value added'. It seems to me that because a client is getting a big tax rebate that somehow we are entitled to as much of it as we can grab without them knowing because we have added value.

As a profession we are going the same way as the Banks, Energy companies and MPs. I'm sick of rip off Britian. Let's be open, honest and fair!

... ambulance chasing lawyers, PPI refund firms, pay day loan companies  ...

Thanks (1)
avatar
By Ian Lawrence
08th May 2013 12:16

Sometimes I don't want the risk on an unknown job so I charge by the hour.  £105.  When I see  the fee protection insurance covers me for £130 I think this is relatively low.

Thanks (0)
7om
By Tom 7000
08th May 2013 12:34

QDOS Insurance

They cap their insurance payouts at £130/ hr...still charge £150 tho for tax investigation work and bill the client the other £20...if that helps

 

Everything else like the first post fixed fees...then when it takes you 15 mins to d a return you can still charge em £300, not £37.50 ;o)

 

 

Thanks (0)
avatar
By eddies368
09th May 2013 08:40

Experience

When a client realised that some advice for which he was charged £100 had only taken 10 minutes, I pointed out that he wasn't paying for the 10 minutes but the 40 years' experience that enabled me to give the advice. He left perfectly happy!

Thanks (5)
avatar
By David Winch
09th May 2013 12:16

Hear, Hear

Yes, @eddies368

Spot on!  Those 40 years have enabled you to work smarter, not harder!

I still fail to see why anyone's clients would be upset by getting a better result than they expected, sooner than they anticipated, for the price they'd already agreed.  How can the client feel ripped off?

My effective hourly rate is no concern of theirs and I am not being in any way dishonest by not seeing the need to share that information with them.  If I am smart enough to create £60,000 of value for them (and charge them just £6,000) in an hour, that is a result of my talent and dedication.  They could have taken the same path as me.

As I said earlier, I am aware of possible reactions to quotes of £6,000 per hour which is another good reason for not having an hourly or daily rate.

If you've followed my many other posts on similar topics, you'll know that I do not advocate "we are entitled to as much of it as we can grab."

I believe the provider deserves a share of the value they help create, but that that should be a "fair" share. And I believe the simplest definition of fairness in this instance is when client and provider get approximately equal return on investment ratios.

That is to say, when (Value - Price)/Price is approximately equal to (Price - Cost)/Cost.

You're trying to create a 'client for life' so there's no need to seek 'every last penny', ever!

Thanks (0)
Replying to Ruddles:
avatar
By andy.partridge
09th May 2013 12:38

Old fashioned, maybe but . . .

David Winch wrote:

Yes, @eddies368

I still fail to see why anyone's clients would be upset by getting a better result than they expected, sooner than they anticipated, for the price they'd already agreed.  How can the client feel ripped off?

It might be an old-fashioned and diminishing point of view, but there are clients who understandably want to see some evidence that you have put in some graft for their money. It is perfectly natural for a client to feel aggrieved if they believe, or are led to believe, that a piece of work is difficult or complicated, they agree a fee on that basis, only to find that it took just a few minutes to sort out. Value pricing still has some way to go before the perception that it is a means to fleece gullible people is eradicated.
Thanks (1)
By ShirleyM
09th May 2013 12:50

I agree, Andy

I can see why value pricing is attractive to some, but it does seem all one-sided, eg. if the client puts a high value on the work, agrees to pay a high value and then both sides are 'happy'.

But what happens if the client puts a low-value on the work but the accountant knows it will take hours, and may NOT lead to future business or earnings ... does the 'value pricing accountant' turn it down ... or maybe charge a fixed fee rather than value-pricing?

Thanks (0)
avatar
By Ken of Chester le Street
09th May 2013 13:13

Whatever you do, always be wary of clients who come to you because they tought someone else charged them too much (Unlless they came from one of the large practices).  They'll always be wingeing aboiut fees.  Also, be wary of clients who say  their previous accountants "had my books for 4 months". The word" books" was probably a courtesy title for incomphensible rubbish. 

If you can avoid indicating a charging rate do so. I always used to try to see a copy of the last accounts, and see what the accountancy charge was.  

When I retired in 2010 I  was using  a  charging rate of about £70-80 for tax planning and contentious work, and £50 for accounts, or £20-30 for work that could be done by a junior.  Sometimes I overrecovered, usually the opposite. This sounds a lot to someone who is paid a wage, becauue they have no overheads., and I avoided mentioning my charging rate if I could..  Moreover, what happpens when you employ staff? are you texpected to divulge all their charging rates? And even if you are working from home there are overheads that don't depend on property, eg,  CPD, computers, internet and the largest overhead of all, non-chargeable time.

There used to be a myth that accountants "don't charge for the first hour.". I hope that has died out, along with the practice of getting an hour's free advice and going away.  Then there's clients who ask for itemised invoices- this was something a consumer magazine suggested.   Whatever infomation you put in will be challenged.  Just "Accounts, tax return and maters arising" will do.

My institute operated a fees comparison service, which analysed  charging rates provided anonymously by users of  the scheme, and  they  isued a report ased in results. Charging rates varied according to geography, and managers tended ot be more expensive than partners.  IIf you have access to such a scheme use it!

Thanks (1)
By coolmanwithbeard
09th May 2013 14:02

the trouble with time is....

A big difficulty is software if I write out a tax return by hand and calculate using pen and paper and maths or I do it on Digita with all the info brought forward and enter half a dozen numbers and print it out do I charge by the hour? The cost to the client would be very different but the end result (and therefore value to the client) would be the same.  This applies to so much of our work now, I can go from bookkeeping to accounts package to CT package very quickly and easily just concentrating on the stuff that needs doing along the way. If we concentrate solely on time we don't give anyone a fair result

Thanks (2)
avatar
By Ken of Chester le Street
09th May 2013 14:19

the trouble with time

coolmanwith beard has got a point. Your charging rate should include the cost of the software including the time cost installing it and loading the data on to it. 

Another reason for not disclosing your charging rates.  They are for budgetting,  not for the public domain, and they used to be kept secret.

 

And before I was in practice and a humble manager they were a stick for my principal ot beat me with! 

Thanks (1)
avatar
By David Winch
10th May 2013 12:27

Why 'one sided'?

 

Shirley

Why 'one sided'?

You are quite right that when a client puts a high value on (the results of) the work, they are happy with a (proportionally) high price, as will be the service provider.

But when the client puts a low value on the work, which therefore demands a proportionally low price, the service provider has two options.  Either they can probe for more perceived value and/or come up with lower cost ways of delivering an acceptable result or, if the provider's RoI is still deemed too small, they turn the work down.

And whoever said that fixed fees are an alternative to value-based pricing?  Fixed fees are always a great idea, and value is the best basis for a fixed fee.

 

And Andy, of course your client wants evidence that you've put work into creating the result, but the result itself provides all the evidence they require!

Undoubtedly they believe the work is difficult or complicated.  That is why they aren't doing it themselves.  You have chosen to do this type of work because you don't find it difficult or complicated.  It's what you do.  That's why the client has asked you to do it!

It would be amazing if you weren't able to do it a lot faster than they imagined they could.

Thanks (0)
Replying to Duggimon:
By ShirleyM
10th May 2013 12:41

@David

David Winch wrote:

 

Shirley

Why 'one sided'?

You are quite right that when a client puts a high value on (the results of) the work, they are happy with a (proportionally) high price, as will be the service provider.

But when the client puts a low value on the work, which therefore demands a proportionally low price, the service provider has two options.  Either they can probe for more perceived value and/or come up with lower cost ways of delivering an acceptable result or, if the provider's RoI is still deemed too small, they turn the work down.

 

... you have just answered your own question ..... you will take the higher 'value' but not the 'lower' value, therefore it is one-sided.

Thanks (0)
Replying to Duggimon:
avatar
By andy.partridge
10th May 2013 14:55

Maybe, but I'm not convinced

David Winch wrote:

 

And Andy, of course your client wants evidence that you've put work into creating the result, but the result itself provides all the evidence they require!

Too many are trading in smoke and mirrors and taking advantage of their client's ignorance. Some of it is downright immoral comparable to an emergency plumber charging £hundreds to a pensioner for changing a washer.
Thanks (0)
avatar
By User deleted
10th May 2013 14:59

But, as others have said ...

... it is the previous 30 years experience that alllows you to do a job in 10 minutes.

You are paying for the skills, not the time.

As a one man band it is very hard to accurately measure time anyway. Clients pop in and out, the phone goes, an urgent e-mails pings in so anytime records will be a rough guide at best; for instance, if I break off for a detailed five minute chat with a client on whether he should buy or lease his new car I cannot go straight back into making sense of my clients very messy bank reconciliation.

Thanks (0)
By ChrisScullard
10th May 2013 16:46

Surely in amongst all the debating about fixed fees, value pricing, etc there has to be an appreciation of the minimum you want to recover per hour? 

Personally I always work on a fixed fee basis (unless it's a tax enquiry).  I have a pretty good idea how many hours of bookkeeping, accounting adjustments, etc, etc are required, what level of staff would be doing it (if I had any) and what their cost would be with all my other overhead factored in, and I know what minimum mark up I want on that, giving a notional hourly rate.

The fixed fee has to cover this notional hourly rate or the work isn't worth doing.  Now if I can find a way to charge more than the notional hourly rate, i.e.: throwing in an element of value pricing, or find a way to reduce the number of hours work by being efficient, then great, I increase my margin.

If you ignore notional hourly rates how can you possibly know if your resources (i.e.: yours and your staff's time) are being used appropriately?

Thanks (0)
RLI
By lionofludesch
12th May 2013 12:10

That's true

If you have staff, you need to keep a track of what they're doing. On the other hand, I worked for a firm some 20 odd years ago who jacked up their hourly rate by 50% overnight in an effort to be more profitable.  We ended up writing off around 30% of the time costs on each job so that was a big success, wasn't it ?

Thanks (0)
Mark Lee headshot 2023
By Mark Lee
01st Aug 2013 11:08

It wasn't £500 for an hour. Nor £6,000 for an hour

I spent many years getting to the stage where I could give advice quickly and efficiently. I stayed uptodate. No one was paying me for that time. If, as a result I could resolve an issue and was able to advise a client within 60 minutes (in total) all they really cared about was the value they had received.

Let's assume another accountant (X) was not so uptodate and had to research the same issue such that it took them 5 hours in total. Again the client wouldn't really care. They also wouldn't be happy to pay for 5 hours of work if they thought the issue was one the accountant should already have known about.

Assume 2 weeks later another client wants similar advice; does X also charge them just the one hour it now takes him, as he's already recovered the extra time he invested in researching the same issue for the previous client?

The fee is the fee for resolving the issue and giving the client peace of mind. Occasional high fees "for an hour's work" are generally misnomers. The real time involved includes all the prior conversations, the set up, the training and the research to be in a position to provide that hour of effort. 

Mark

 

 

 

 

Thanks (0)
avatar
By andy.partridge
01st Aug 2013 11:23

@ Mark

The key to fairness is transparency. If they want to pay you £6,000 for work that they know takes up an hour of your time (because of all the research, training, CPD you have undertaken over the years to complement a natural talent) that is fine.

If, however, the fee is agreed and there is some mystery about how it was compiled and is conveyed in a manner that makes it difficult to compare with other providers it might not be quite so fine.

Thanks (0)
avatar
By swatt66
02nd Jun 2015 22:16

Reasonable excuse for late filing

Which of these are the five reasonable excuses for late filing of tax return?

1) My accountant forgot                   

2) Broadband failure, filed one month later

3) Broadband failure, filed next day

4) Hard drive failure, filed next day

5) Brain fell asleep 31 Jan before completing filing and woke after midnight          

6) Heart attack 31 Jan

7) Heart attack 1 Jan - non fatal

8) Heart attack 1 Jan - fatal

9) Dog ate homework              

10) Notified of terminal cancer November, still alive 31 Jan

11)  Didn't receive reminder from HMRC

If chosen randomly you have a 1 in 462 chance of getting the right answer.

 

Thanks (0)