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A bit of benchmarking on hourly rates

A bit of benchmarking on hourly rates

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Could anybody tell me what level of hourly rates some of the larger accountancy firms would charge?

By large accountancy firms I mean not the big four but those in the top twenty firms in the UK. I know there will be quite a range between junior and senior staff but I am interested to get a feeling for where the average might lie. The reason I'm asking is we have the potential to quote on a project for a company and we know that we are going to be up against at least a couple of firms from this tier of accountancy. I want to know where to pitch our services 

Any help will be greatly appreciated as winning the business would be something of a feather in our cap. 

Replies (38)

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Adam Spriggs profile image
By Adam Spriggs
30th Oct 2013 09:57

It would depend where in the country you are as obviously rates in London are higher than others like Bristol and Manchester which are in turn going to be higher than say Brighton or Devon.

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By johngroganjga
30th Oct 2013 10:52

I am a little out of date, but extrapolating forward from when I came out of such a firm four years ago, I think partner rates outside London will be in the range from £250 to £290.

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Replying to ireallyshouldknowthisbut:
By plummy1
30th Oct 2013 11:57

Thanks

We are in the South-East so those fees levels look about right to me and provide some encouragement for us. Thanks for taking the time to reply.

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By rhangus.
30th Oct 2013 16:07

Daily or Hourly Rates?

I'm so sorry I thought these were daily rates. To obtain the rate you seek perhaps I can suggest picking a normal hourly rate and multiply by pi and then divide by the fraction of the day. Additionally, maybe the London weighting should now officially be lifted and we should do all we can to ensure rents/property prices are now properly wages driven down to rates similar to the rest of the country to prevent Nigel, on retiral, coming up Noaf, to buy that chosen fraction above, of the superior nation.

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Routemaster image
By tom123
30th Oct 2013 16:19

I pay £160 / hr

I pay £160/hr for a top twenty firm in the south west.

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By I'msorryIhaven'taclue
30th Oct 2013 16:22

A matter of choice

I've seen insolvency practitioners in the South East charge £150 hr for their fresh out of university trainees.

Rhangus, we live in a free market economy and whether you charge £290 hr or £290 day is up to the individual. I'm reminded how, one lunchtime, I witnessed in the car park of a CPD venue a bloke race up at two on the dot in his old Sierra, and trot across the car park double quick whilst putting on his tatty looking jacket and trying to stuff down a sandwich. It was a hot day and he looked hot and bothered. A minute or so later a second guy pulled up sedately in his Porsche, got out unhurriedly and put on his immaculate suit jacket. He looked as though he'd just eaten a lunch, and strolled across the car park cool as a cucumber. Takes all sorts.

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Replying to KevinMcC:
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By ver1tate
30th Oct 2013 21:01

CPD points

Yes I have also seen the types in the Porches at CPD venues. They mainly sign in, go off to the pub for the day, returning in time to sign out and get their CPD points. Also applies to accountants, doctors and so on.

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By rhangus.
30th Oct 2013 17:11

Indeed

I too remember a hot day once. Seems a very distant memory now. I also seem to remember a lot of irrelevant nonsense I shan't bore everyone with. What a load of tosh. I can just imagine, young Nigel looking cool to you and you only, after coming out of his Porche (it was a Golf GTi in my day, said Nigel snr to young Nigel) while the rest of the planet think, what a xxxxer.

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By Maslins
30th Oct 2013 18:05

Insolvency staff in my experience tend to be about double the hourly rate of accounting staff at the same level.  People can make their own assumptions on why.

My last employed role was as an ACA qualified corporate tax senior in Central London, £180/hour.  From memory the managers were £200-250, partners £300-400.  This was ~5 years ago, but the economy's been fairly ropey in that time so can't imagine they'd have rocketed.

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By plummy1
30th Oct 2013 20:56

Thanks Again

All very useful ...........well almost all. 

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By merlyn
30th Oct 2013 21:00

Top 20

I worked for a top 20 until last year and whilst the rates did vary depending on which office was doing the work, as a general guide juniors were £100-150, Manager level £200-£300, Directors £350 and partners anywhere from £400 to £500. 

However like most accountancy firms they don't work on a 100% recovery rate and most of these rates would be discounted if the client queried the bill.

 

 

 

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By The Innkeeper
31st Oct 2013 08:26

Stir the Pot with Solicitor rates

A friend of mine is a partner in one of the top city firms and his rate ---- pushing £700per hour from the wrong side. And he does  a 6/7 hours chargeable. I don't have any idea what his recovery rate is

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By rhangus.
31st Oct 2013 09:13

Beware Mr Client cos in a sea of accountant sharks lurks............ the solicitor shark. "You're gonna need a bigger boat"

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By andrew1211
31st Oct 2013 10:17

At my firm (top 10 but not top 4) were around £325 for partners, £175 for managers, £200ish for directors. Recoveries were typically 70%ish.

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By plummy1
31st Oct 2013 16:41

Thanks Again

Thanks for all the feedback. I believe we will be more than competitive with our fees. I think we are in more danger of under selling rather than over-selling our services but we want to make sure the client gets value for money. 

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By rhangus.
31st Oct 2013 17:16

Somehow, I really doubt it

In all my years doing this within various firms but latterly in my experience of taking on new clients from other agencies, I have rarely seen Value For Money for a client in the service he received for the money he paid. It takes someone within our own industry to know what VFM is in terms of accounting services and merely getting someone's time for the going rate, in my opinion seldom constitutes Value For Money for a client. Nevertheless, press on sir, whatever your service is, it will doubtless be below average in price with your immediate competitors and average in service too, so your conscience is clear.

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Replying to Justin Bryant:
By JCresswellTax
01st Nov 2013 09:19

Whal

rhangus. wrote:

In all my years doing this within various firms but latterly in my experience of taking on new clients from other agencies, I have rarely seen Value For Money for a client in the service he received for the money he paid. It takes someone within our own industry to know what VFM is in terms of accounting services and merely getting someone's time for the going rate, in my opinion seldom constitutes Value For Money for a client. Nevertheless, press on sir, whatever your service is, it will doubtless be below average in price with your immediate competitors and average in service too, so your conscience is clear.

Outrageous comment unless you know the OP personally!

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By Jim100
31st Oct 2013 21:04

outrageous

I appreciate this maynot be the forum but these hourly rates are just ludicrious.  Neither the clients get value for money nor a particularly good service but they brand is good and this what all matters to them.  They don't even question the fees when 15 minute call is rounded up to an hour.  In fact the hourly rate is more than those given if you consider the rounding up. 

It annoys me no end when they can go to a sole practioner and get a better service at quarter of the cost.

 

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By plummy1
01st Nov 2013 00:31

Interesting Comments

I'm glad my question has stirred up so many comments good and bad. I agree that value for money can be very subjective but am disappointed that someone should  choose to make comments when  it is clear they don't know which service we provide, don't have any idea of our experience in providing that service and lastly how our rates compare to the market. 

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By David Winch
01st Nov 2013 13:09

Oh Dear, Oh Dear

Three Points

Why set your prices by comparison with the rest of the market? What if they're all wrong? What if they're all undercharging? Their clients won't have let on that they'd have been prepared to pay a lot more!There is no law that compels sole practitioners to pass on their lower overheads in the form of lower prices.  If they do a better job than the big boys they should be charging more than the big boys (and girls).Charging for your time/effort is probably the daftest way of charging.  Tell your clients so, but they should know it anyway. They want a quick job but you want a slow job for a start!

Instead, develop the skill to help your client understand for themselves what having the work done is worth to them, and then charge a small fraction of that value.  Then find a way of working 'smart' such that you can fit in many more pieces of work.

This way your 'effective' rate will be huge. My best ever has been £6,000 per hour doing things this way!

David

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By MargaretThornton7
01st Nov 2013 13:53

Most of the work we do we charge of fixed fee whether it is accounts or advice. If it is a very unknown length of job there is a clear range of fees with parameters. Increasingly we are billing up front and collecting by direct debit.

In what other industry does anyone recall giving an open ended cheque to your supplier which increases the slower the job is done?

 

 

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By miketombs
01st Nov 2013 13:54

Charging by the hour....

...is daft if there's any alternative.

For tax planning advice the going rate seems to be moving to 25% of tax saved (proper planning, not 'pay yourself £641/month and take the rest in dividends') but sometimes there isn't really a 'value' to take a percentage of. However pretty the statutory accounts are, if that's all the client is getting he won't see a huge value so then our role is to educate them about what it takes to convert their carrier bag/excel spreadsheets/sage dowload or whatever into what they need to end up with.

The really silly thing about billing by the hour is that the slower you are the more you get paid, and equally badly if you invest in slick systems and staff training to be more efficient you get paid less.

Imagine getting off a train that was delayed due to signalling faults and being told that because you used the carrage for longer than normal there would be a surcharge, or paying less for your ticket when HS2 comes in because the journey time is shorter.

We don't sell time, we sell advice, peace of mind, business improvements, tax savings etc.

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Replying to DJKL:
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By andy.partridge
01st Nov 2013 14:46

Not really true, is it?

miketombs wrote:

The really silly thing about billing by the hour is that the slower you are the more you get paid.

If it were true you must think I could live off doing one small job a year. Of course it doesn't work like that.
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By David Gordon FCCA
01st Nov 2013 14:02

Think like an accountant should

 

 You should know what your best quote is, in order  not to lose money.

 Use it.

 If you want to run a "Loss leader" that is your choice, and risk.

 The big firms do exactly this to get business. It is called competition.

 About three years ago a local ACA leafleted local companies offering audit at £25.00 per hour.

 I sent a copy to the ICAEW.

  

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By peterhool
01st Nov 2013 15:33

Budget v Reality

Time costing is useful for budgeting how productively time is spent especially for monitoring staff work and planning staff capacity for increased client loads.

 

However it clearly does not have to be an absolute measure of value. This thread is witness to that and I can think of many examples meriting purely value based fees.

 

The OP needs a reliable yardstick based on the typical competition he foresees and it is a fair bet that time estimates and cost rates will be an issue even if the ultimate unique perceived benefit has a significant value attribute.

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By rhangus.
01st Nov 2013 19:03

What a buffet of stupidity or is it simply lack of Client Care?

JCress

and average in service too

yup cos I'm guessing which is quite clear and your trying to say its outrageous.

I'm speaking generally as most people get and in any case, though it is not the best way of selling his services, I guess it could be worse when I'm suggesting while he wants the job he is below average in price for an average service.

Not outrageous in terms of my experience within this field, but I will not be patenting the slogan.

 

 

David Winch

Let's hear your biggest achievement rip off of £6k p/h in detail then please, or was it a fiver for 3 seconds of your invaluable time? This must be where I am going wrong then.

You simply find stupid clients then do you who are looking for "assurance" and presumably also a quick lesson in how to empty their bank accounts?

I thought accountants like yourself perhaps charges large hourly rates for what you claim you know rather than a commission on the worth of the job.

How do you work out the worth of a job. surely you are not saying, "£well you are likely to have a tax bill of £12k so if I get it to £2k lets call it £2.5k fee and then I can tell the lads on the forum or down the pub I've done it in a couple of days for a nice little earner. Mind you, looking tat that, half of you in this thread don’t get out your bed for less than £200 p/h.

 

 

 

Margaret Thormnton

"A very unknown length of job" has this hidden meaning or are you just saying, like we all know it pretty much usually is with a new client in that we do not know how long it will take to do a proper job for the client?

 

MikeTombs

I like it all, it's food for thought, 'till we come to the very last bit.

How do you fee someone for tax savings? Compared with what, and how do you forecast their saving?

Mike do you then skip all that conversion of paperwork, spread sheets and explanations into accounts and tax returns and just ask the guy what tax he wants to pay then as that is what it sounds like to me.

 

 

 

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Replying to mobeenafzal:
David Winch
By David Winch
01st Nov 2013 19:24

Not an accountant

rhangus. wrote:

David Winch

. . .

I thought accountants like yourself  . . .

Just to clarify, I am sure my namesake David Winch has been called many things - but "accountant" is not one of them!

Cheers,

David Winch (I am the accountant - the one with glasses and less hair!)

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By pauljohnston
02nd Nov 2013 06:48

just to add to the debate and

may help or no the poster.

Recently I was talking with a partner of a medium sized firm and he related the following:

They had been approach by a client of one of the "big 4" who had ben quoted £25000 for a job.  The firm  had reviewed the job and quoted £15000 only to be trumped by the "Big 4" who lowered its quote to £12000

 

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By David Winch
02nd Nov 2013 14:59

For @rhangus...

...and anyone else who is interested.

I have not charged large rates or small rates for my time since Easter 2008.  From that point I have helped potential clients to understand the full value of no longer suffering the pains and the knock-on effects their 'problem' is causing them. (Far from selecting 'stupid' clients, this requires them to have a modicum of intelligence.)

To put it into your words, this is how the client works out the worth of the job.

They then share their perception with me, and I then quote a price that is a small fraction of that value (after, of course, checking that I can deliver the work at a cost to me that provides me with a handsome profit).

So, far from 'emptying their bank accounts', I am helping them increase their bank balances to a considerable degree.

On one occasion, remarkable only in as much as it worked out later to be my highest ever effective hourly rate, I helped the client to understand the value, quoted my price, got the order and, when I looked at the job in more detail, I saw a way of working far smarter - that is to say achieving the result with less effort, without compromising quality - than I had anticipated at the time we were talking.

The client was so happy with the minimal investment needed to achieve the result that he'd payed me in advance, and I was able to please him even more by delivering that result a little earlier than he expected.

Nobody ripped anybody off. The client happily paid what he considered to be a very reasonable price for the result and was delighted by the outcome.

It just happens that the arithmetic comes out at £6,000 per hour as the effective rate and, of course, there's no likelihood I would have got the work if I'd quoted it that way!

As always, quoting a time-based rate would have focused the client's mind on cost and not on value. And aren't we all entitled to a share of the value we create for our clients?

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By rhangus.
02nd Nov 2013 15:51

Any more vague

and we could be talking football or zoos.  Just what are you talking about David?

I simply cannot fathom the words you spout.

Just why does your client have to work out a worth and then share a perception of that with you?

if the result of this big job, "Sweeney terms" here guv is to get this inconvenience but legal requirement done and with no-one likely coming behind you, then why not turn your 6k p/h into 6.3k or 6.35k with the hiring of some monkeys to do some of the ticking and the directors would be none the wiser. You've shown yet another efficiency and everyone's happy 'cept maybe the next investor or a potential banker throwing the public's money away at yet another unworthy businesses.

 

Your client sir has likely no clue of what value is sir in this accounting/audit environment except in comparative terms with some other rip off quote. Am I right sir or am I not?

 

"needed to achieve the result" - care to expand sir? Clue - is this the inconvenience known as an audit which the directors must pass each year to carry on with running the business on behalf of the owners, possibly themselves in this case and your rip off sir is less than another bigger rip off because no one needs to pay those ridiculous rates, do they?

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David Winch
By David Winch
03rd Nov 2013 11:17

@rhangus

I am puzzled by your references to "ticking" and "audit" since David Winch (the one to whom you are replying) is not an accountant and not an auditor either.

You mention football.  Do you consider that in a particular team all of the players who play for the whole 90 minutes should be paid the same amount?  Suppose a player is brought on as a substitute only for the final 9 minutes - should he be paid only one-tenth of what he would have been paid had he played for the whole game?  Would that still apply if he had scored the winning goal?

Or are there limits to the applicability of time charging?

David Winch (the accountant one)

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By rhangus.
03rd Nov 2013 12:05

Well, just a rant really in line with the sheep, blah dee blah

See where it says my name above, in the one before it says his name, david winch, sorry for the logical approach. Assumed it was him, like me, making the comment. Whoever you are, I'm not wasting my time on you as you are continuing down a moronic avenue where you get puzzled with ticking and audit. Can't you think outside the box just a smidgen? Let whoever goes under the name of mr winch speak for himself and attempt to answer the slightly challenging Qs that seem way beyond you Mr Anon. btw you don't write instruction manuals for things in some of the well known logical ways they do these days leaving those of us with a brain making obvious assumptions and then being left with either 3 spare bits or a grinding stop in the instructions where it says very precisely phrases such as "turn it around" or use the light brown one when the choices are beige, tan or buff. in the machine gun style of a few on here I now move to, why does he work out the hourly rate, as we all do and pretend its not there, and not charged that way, when it is always but always a consideration? I feel like one of the crowd now with his 5 minute, ill thought, rant off his chest. 

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David Winch
By David Winch
03rd Nov 2013 12:20

@rhangus

Your comment speaks for itself.

David

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Jennifer Adams
By Jennifer Adams
03rd Nov 2013 14:14

HMRC assumes an average of £23 per hour...

BIS issued a consultation paper a few weeks ago (accountingweb will be responding with your comments by the way!) and at the end of that paper the writer detailed the figures he/she (!) used in their calculations. Here is the link to the article I wrote on the paper followed by the text written:

https://www.accountingweb.co.uk/article/bis-proposes-simpler-company-fil...

Incidentally, page 34 of the document makes for interesting reading in that BIS have included a cost benefit analysis of the estimated savings by companies that currently use agents (invariably accountants) to submit AR’s. Using an average completion time of two to seven minutes and an average salary for an accountant of £23 per hour (i.e. approx £38,640 per annum) this produces a total saving of £2.6m per annum which we must assume is less chargeable income for accountants and eventually a lower tax take for the Treasury.

As I say accountingweb will be responding so if when you have read the article you want to make a comment please do and I'll include in our response.

Thank you

Jennifer Adams

Associate Editor

 

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By plummy1
03rd Nov 2013 14:17

As a matter of interest.

Funnily enough we do not normally charge by the hour for our services but I believe those we may be competing against do. My intention will be to try and scope the work and quote a fixed fee for providing the service as I think the client will be more inclined to go for this degree of certainty rather than an open ended agreement based purely on hourly rates.

Having said this I will have to estimate the length of time it is likely to undertake the work to come to a fixed fee arrangement. As long as I can balance this against the benefit to the client. 

I personally think what David Winch is saying seems rational in that you do not want to hamstring yourself by looking at what your competitors are quoting if you can deliver greater benefits to the client why limit how much you charge? 

I fear I my be fuelling the flames again and I have obviously hit on a raw nerve with some people.

 

     

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By merlyn
03rd Nov 2013 14:24

apples and oranges
Isn't it simply the case that for very standard services such as tax return competition that most firms will work at a standard/fixed rate as the amount of work can usually be ascertained in advance. However for more complex tax work until you actually start it's impossible to know how long something will take and so a per hour charge is applied ?

It's basic economics though, people will charge what the market will pay and if the market rate goes down and firms don't change their pricing then they will loose clients.

That said the cheapest is not always the best solution, we have a number of clients who went for the cheapest quote when choosing their accountant and it's such a false economy as they don't get the best advice and in some cases no advice on how to save on tax at all.

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By pauljohnston
04th Nov 2013 08:38

@merlyn

Dont forget that if the accountant does not think it is worth doing the work and may be higher risk then a client could loose out too.

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By rhangus.
04th Nov 2013 09:46

Re Mr new, Mr Merlyn or Mr Johnston above

If you'd expand your point somewhat and shall we say, de-pidgin, the English, we'd find, here and now, the whole problem with accountants and their attitudes towards the client whom I believe they class as 2nd rate, not caring and charging just what they can knowing he is, generally speaking, none the wiser. Shame on most of you, taking advantage of clients, even though I know that lack of knowledge, which is nothing for them to be ashamed of, to be an annoyance for us all but certainly not something to take advantage of by extracting tonnes more money from them.

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