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Book-keeping hourly rates

Book-keeping hourly rates

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Having specialised in book-keeping for 5-10 person companies for many years that part of my world is coming severely apart. I have quoted for several companies in the past 6 months but none have taken up the quote. More disturbingly, companies I have dealt with for 20 years or more are departing, many taking the work in-house. I can only assume that my current hourly rate of £43 is deemed far too high and the fact that I am 4 times as fast as the average book-keeper, and the benefit of using me is that tax fees are vastly reduced is not felt to be an issue any more.

New tax prospects are going to resist the present hourly rate quite clearly. One already has, but I didn't read the situation properly to recover it.

What hourly rate is reasonable for a very small company, bearing in mind the competition. £25?

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By SE_Confused
23rd Nov 2011 11:27

£15-25 i see advertised

£15-25 i see advertised frequently

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By happy
23rd Nov 2011 11:32

Rates in 2011

£43 is far too high - take a look at the competition online in particular, you'll be astounded.

You are also competing with accountants like Mazuma who do the lot for less than an hour of your time.

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By andy.partridge
23rd Nov 2011 11:42

Don't charge by the hour

If I were a client I would not take the risk that you are 4 times faster than the average bookkeeper. Your rate does not sound in the least attractive. That is not to say that you are not good value for money but I recommend you market your fees differently.

With your vast experience you ought to know how long a job might take and so be courageous and offer a fixed monthly fee. Clients generally want to know how much a service is going to cost them, not how much it costs them to burn an hour of your time.

Also, it'll stop clients glancing at their watches and tutting when you have spent longer in the toilet than they deem acceptable!

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By MikeH
23rd Nov 2011 11:47

Sorry but it is simply too much to request. I appreciate their may be regional variances but I know local accountants will send in one of their team at an hourly rate of £25 to £30 and they have all the usual overheads etc. In Warwickshire £14 to £20 for a sole trader or sole director company providing the service is typical.

It may be difficult to prove or demonstrate you are 4 times faster than another bookkeeper.

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By Steve Holloway
23rd Nov 2011 11:53

My bookkeepers charge £15 per hour ...

but they are bookkeepers and not accountants doing bookkeeping like you. The charge out rate is not your issue it is that you are providing something other than you describe. I had a plumber out the other day to fix my shower ... I would have been quite surprised if he had offered to fit a new boiler while he was there.

What you are offering is a management accounting package to your clients ... now come back on here and ask how much others would charge for that! It won't be £15 and likely as not it won't be quoted by the hour but for whole the information package you offer to the business owners.

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By Tonykelly
23rd Nov 2011 11:54

£43 per hour for book-keeping

I don't think we are quite there yet.

On a 40 hour week you are looking at £80,000 per annum for a book-keeper.

This is how the client will price up the job.

Self-employed book-keepers charge in the range £18 per hour to £30 (absolute max).

 

 

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By Figurate
23rd Nov 2011 12:15

Too high

Sorry, I also think £43/hr is too high.  I'm very fast at bookkeeping, too, but only charge around half that.  Plus, I also tend to do bookkeeping on a fixed fee, the same as for year-end accounts & tax returns.

Louise

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By zarathustra
23rd Nov 2011 12:11

waay too much £20 - £25 where I am

waay too much, its £20 - £25 ph where I am .

I have seen the mazumamoney website. How do they do it for that price?

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Replying to hje:
By petersaxton
23rd Nov 2011 20:54

Detailed pricing

zarathustra wrote:

waay too much, its £20 - £25 ph where I am .

I have seen the mazumamoney website. How do they do it for that price?

I bet they just have an account called "Transaction without paperwork" and charge extra for removing transactions from that account.

If Moonbeam thinks £43 an hour is good value for money I would agree that fixed fee quotes is the only way to get the business. Nobody will pay that rate when there's bookkeepers willing to work for £15 an hour.

I've done bookkeeping for some clients but never on a fixed fee basis. It can be unbelievable what mess can be caused. Invoice in one name payment in another. A concession in a store with wrong calculations. Negative "petty cash". Unexplained transactions on the bank statements.

Why should clients have a fixed fee when we don't have fixed work? "To get the work" isn't a good enough answer usually.

I would only agree to a very detailed pricing model. Low prices for normal transactions that can be done in less than a minute but a lot more for a query that can take 10 minutes to sort out.

 

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By Ding Dong
23rd Nov 2011 12:21

agree with others

£43 p/h is too high

The bookkeepers I/my clients use vary from £10 to £25 - the best I know is an ex practising accountant in her 50s who left practice to have children 25 years ago and started bookeeping after that - she charges £14ph which is too low for her skills but she is happy.

I agree with other posters on offering fixed fees - another option would be to take bookkeeping offsite where possible so the client does not see what time you are taking so as long as they are happy with the fee you could find you are earning more than £43.

 

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By Moonbeam
23rd Nov 2011 12:36

Fixed Price Book-keeping

As Steve Holloway says, I am not a bog standard book-keeper, and do management accounts, provide business advice to the owner etc. Book-keeping is always done in my office, never on their premises.

The problem is that they clearly don't want to pay what I'm charging, however marvellous they tell me I am, and I have to change.

Thank you for the suggestion of charging a fixed rate package. Using a pure book-keeping element at a much lower rate of around £25 is the only way I'm going to keep the current people. The management accounts element/year end accounts can be £50 per hour. The management accounts element only takes 2/3 hours of my time monthly for most clients.  And I'm going to have to quote on that basis for future similar work.

Unfortunately my cost structure is based on the current hourly rate and it is going to be a very serious matter to bite the bullet. I'm only sorry I didn't see the writing on the wall at least a year ago. It's a very sad weakness I'm going to have to pay for.

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By Steve McQueen
23rd Nov 2011 13:33

@ Moonbeam

It's never to late to make the move to fixed fees.

I took an old practice over that was chraging by the hour and in 6 mths changed it to fixed fees.

Yes, with fixed fees, you win some and you loose some, but over all the practice increased in profit. I then did some basic marketing (direct mail at that stage) which brought in enough to replace that I had lost by going fixed fees.

When I sold the place up, I was on a EBIT of 34-35%, which for a 12 person practice is pretty good.

The boys who bought it were earning much less, yet they insisted on taking my stuff back on to hourly rates and so 60% of the clients walked out the door within a year.

The key to fixed fees is to have a good think about what you are actually doing for the client and then package accordingly. You need a FULL list of all your services and a price for each, so entering invoices is one line of the list, reconciling bank statements is another line etc through to discussing accounts with management which is yet another line. Each line is then given a price. I came to the price by a) looking at what everone else was charging and b) Working out my old charge-out rate x hours I expected that service to take.

Client LOVE fixed fees, for they know where they stand. They also get a much better understanding of the value you are creating for them.

One final point, you MUST only do that which you have quoted and been engaged for. You must resist the urge to give advice or just reconcile that account or deal with that PAYE issue if you are to make fixed fees work, which can be hard if that's not your style, but you soon can get into the habit of creating "work orders" telling the client what the problem is and getting their buy in to pay you for sorting it out.

Good luck with the change over. PM me if I can help in any way.

Steve

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By Moonbeam
23rd Nov 2011 13:40

Steve Mcqueen - You May Have Saved Me taking Beachy Head Option

I have been feeling really suicidal about the whole matter since yesterday when I at last faced up to the truth. You seem to be telling me that this could be a marketing opportunity rather than a bankruptcy matter.

Thank you for your kind offer of further advice.

I shall pm you shortly.

 

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By Robjoy
23rd Nov 2011 17:57

Definition of bookkeeper?

If you look up permanent full-time "Bookkeeper" jobs on recruitment agents' sites you'll see lots offering £8 per hour, or even less! I know you are much more, but your potential clients don't know that, so maybe they're comparing you with someone who only knows how to generate sales invoices, print statements, input purchase invoices and run a basic payroll.

There's a gap in the accepted job titles. I have always called myself a bookkeeper - I'm not a qualified accountant and didn't wish to seem to claim I am - but I'd rather call myself something like "Accounts Manager".

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Replying to Knight Rider:
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By sarah douglas
23rd Nov 2011 19:11

Hi 

Hi 

£43 is way too high .  I am not sure how you know you are four times faster then other bookkeepers , for example how do you know and I suspect a client would ask the same .  I am also very fast but it is up to the client to decide that.  I am not suggesting you are not good, but I do question your judgement about speed compare to other bookkeepers.

 

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By sarah douglas
23rd Nov 2011 21:39

Well Said Peter

Hi Peter 

We discussed this very issue at our ICB conference in London.  We highlighted the fact that fixed prices can lead to a bad job been done because enough time as not been allocated. 

Any one who is a good bookkeeper and who is worth paying for knows that you can get that one page in a bank rec that causes loads of work

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By Steve McQueen
23rd Nov 2011 22:43

Fixed fees

Guys, you want an extention on your house. you ask two builders for a quote. Both come and have a look.

One comes back to you with a detailed list of the work they will do and the price they will charge. They have a very clear paragraph at the bottom of the quote setting out the assumptions they have made and the circumstances that will chnage the quote. They also set out the proceedures for discussing the process for agreeing any new costs that occur when they get stuck in.

The other comes back to you and says "I've no idea how much its going to cost. Let me build it and then I'll give you the bill."

Which one do you pick?

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By sarah douglas
24th Nov 2011 00:08

Not like for like

Hi 

I not sure you are comparing like for like.  Two different jobs .  

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By petersaxton
24th Nov 2011 00:11

You are not comparing like with like

It's very different considering an extension that may cost £30k to bookkeeping for a few hundred pounds a month.

I used to go to a client and do bookkeeping at his premises.I'd get there and I couldn't log on to the accounts. He'd always be changing his computers around. I couldn't use the printer because he'd changed some wires. There were bank statements missing. Payroll records missing. Purchase invoices would be missing. Cheque books stubs would be blank.

Despite this I doubt anybody would take somebody on to do bookkeeping if they charged extra for any of the above.

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By Steve McQueen
24th Nov 2011 08:40

Okay, if you don't think it's like for like...

...what about Hairdressers? Dentists? Private Doctors? Physiotherapists? Personal Trainers? IT Consultants? Roofers? etc etc etc... about the only two services left that manage to get away with hourly rates are lawyers (and I have seen a few of them offering fixed fees now) and accountants! The simple fact is, CLIENTS like fixed fees. We may not like fixed fees, but clients do... just as we like to get fixed fees when we contract for other services from other trades.

And I can assure you that if you want to grow and develop your business today, you HAVE to have fixed fees (or as I prefer to describe them to prospects "agreed fees for these listed services") or you rule yourself out of 75% of the market before you even start!

As I said earlier, that does not mean that you never charge more despite whatever rubbish you find when you get there. It does mean that you need to clearly define and communicate what you are going to do and how much it is going to cost and that if things are different to this, you will do X to agree what the new fee is going to be...

...I get quite a few unsolicited PM's on here along the lines of "how did you grow a practice so fast and sell it on for so much, I'm struggleing for work..." the reason I did, is because at heart I am not an accountant, I am a marketing man and I listen to what the market wants and the market wants fixed fees for defined services.

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By Old Greying Accountant
24th Nov 2011 09:23

The point of a fixed fee for book-keeping ...

... is yes one month may be a pig and you spend more time than budgeted, but over the year there wil be good months where it all goes well, and if you educate your client over time there should be more and more good months.

As other similar threads have said recently, when you take on a new client you have to suck it and see before arriving at the right fee, but if you have been dealing with a client for 5 years there is no reason why you cannot know the annual time cost and break that down to a monthly amount, with the caveat as mentioned above, your fee explicitly states what is included and what will trigger additional charge.

A better analogy to a builder may be a garage servicing cars, they charge a fixed fee for a service, some will go like a dream, others will be a chore, the plugs will be jammed in, the oil filter wont undo etc etc, but overall there is a mean time, and if they find non service items you get an extra bill, like new brake pads, but they call you and discuss with you before fitting them.

But, to answer the question, £20-£25 per hour is what you should expect to achieve for book-keeping, and the other work should be detailed and charged separately.

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By Moonbeam
24th Nov 2011 09:31

For Goodness Sake - Keep an Open Mind!!!

My charging structure worked for the first 22 years of my business life. It has taken me far too long to accept that it no longer works and the market is punishing me accordingly. For those who think my charges are outrageous, 30 odd clients who didn't know each other were happy to pay the same chargeable rate for a variety of skills and many are still with me. Presumably they are not all stupid. Although I work on an hourly rate, the clients look at what they are paying in total monthly and that figure is much the same as the previous month. So after a long period of time, they must have felt the value of what I bring with me in addition to the book-keeping activity was worth what they were paying. In effect I am the company in-house accountant, but accessible by phone and email rather than in person. I would guess this is a sort of value pricing in effect. It costs £15,000 a year to run my business before I take a salary, because I have to have good quality systems and software and these things don't grow on trees.

Now the whole economy is on the slide, clients are forced to look at all options for reducing prices so we are in a different era. I have been worried sick for the last year and a half because it was almost impossible to get new clients, and I really couldn't see what I was doing wrong.

Steve McQueen has the best suggestion to help me move on. I have all Peter Saxton's concerns about how you deal with the endless queries due to the rubbish submitted by the client. However, I have only ever had a few clients who are in this league and I generally take on well-organised people that can be adapted to a fixed fee option quite easily.

Marketing is very poorly embraced by many in the accountancy profession. We must think the unthinkable and get on and make changes. I'm a fine one to talk, but with Steve's help I am going to do this. My bank account demands that I do so. I really think others can learn from what Steve has said. Where else would you find an marketing expert who understands upside down and back to front what challenges accountants face?

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By petersaxton
24th Nov 2011 10:04

I've an open mind and I've thought about what works for me

I have a client who I charged about £800 + VAT last year. I've just charged her £1,700 + VAT this year. She had a lot of issues with QuickBooks. She's rubbish at it but she's used it for years. She phones me and asks how to run a report. I go through it with her. She messes up entering the dates. She get angry with QuickBooks. She needs to access previous data file but her IT person has moved the file. I suggest she contacts IT person. She says no because IT person charges £60 an hour. I think I should have said I charge £120 an hour to get her phoning IT person about QuickBooks problems!

If I said to her I would charge a fixed fee for unlimited support she wouldn't agree to the fixed fee.

If I wanted to agree a charge every time she phoned and refused to help her if she didn't agree it would destroy the relationship.

I set out in the invoice the dates she phoned me the dates I emailed her the dates I phoned Intuit the dates I emailed Intuit the dates I visited her. She hasn't complained about the invoice yet!

She's now got a bookkeeper. Bookkeeper phones me and says that client has used company chequebook to pay personal bills and personal cheque book to pay company bills.

Fixed fee - no way; charge extra for every ridiculous cock[***] up - no way.

I have 200 clients who are happy with the hourly fees I charge (I keep the fee the same if there are not a lot of problems to sort out). If I put fixed fees on my website and look for fixed fees what would my present clients say?

If you are just starting out and need the work you may have to offer fixed fees. I am not starting out and don't need the work so I'm not going to change. It works for me and I'm sure Steve's way of working works for him. 

 

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By bblr
09th Dec 2012 13:40

Hi all..I know this thread is a year old now but I'm new to all this and quoting clients is a bit of a minefield. I've found this helpful in that I seem to be charging the right rate for the job. Onward and upward!!

 

Cheers to all

bblr

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By gbeman
13th Aug 2013 17:37

Offer both

surely the simplest answer is to offer a choice - fixed fee or flexible hourly rate?

or even fixed fee with hourly rate for 'extras'

i have clients who each prefer different things: some want on-site some want off-site, likewise with the billing. overall i would say people prefer fixed because they know where they stand with their cash flow.

best of luck whatever you decide :)

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By MET128
28th Jan 2014 21:46

so what would you charge as a fixed fee?

 

 

I have a potential client who wants a fixed rate quote, but I haven't used fixed rates before and I am unsure what to charge. I don't want to put him off by suggesting too high a price but on the other hand I don't want to undercharge!

 

This is for doing the bookkeeping and producing a draft set of accounts for the accountant.

I think his turnover is about 100k per year.

What would you charge on a fixed fee basis? 

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By suecaswell
29th Oct 2015 13:25

Charging fixed fees or hourly rate - I do both!

What an amazing collection of advice everyone has given, such a wealth of information.

I offer both a fixed fee or an hourly rate.  To new clients we start with an hourly rate, then once things are running smoothly and I can see how they provide the information (quality and quantity). I then move them over to a fixed monthly fee.    

I charge between £10 and £17 an hour (£15 average) for basic bookkeeping.  Management Reports and Tax returns are done at £20 - £25 per hour depending on the client.  The key is flexibility, for example a client I've had for 5 years was struggling financially during the recession, so I dropped my fees and showed him how to do the basics.  

I work from clients offices or from home so I don't have office costs or software to purchase.

 

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By Mcgerj1
01st Feb 2016 13:41

New Business

I have found this to be invaluable.  I have set up a new company and was wondering the best way to cost.  Your advice on running things for a while to appreciate the full scope of works is spot on.  It may not be the work that is the variable - it might be the person/business owner/point of contact or the industry.

Thanks for posting this.

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