Fixed Price or hourly rate

How do you charge ?

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With system setups for example accounting with Electronic point of sale.  I normally charge hourly rate but that has caused consternation with one client.  There are a number of apps that some clients require intergrating with their accounts software and in some cases it is a learning curve too if say I have never used it before as there are so many apps nowadays.  Furthermore, in the early days of a new client they do require a lot of support/training.

I have had some issues in the past which has taken more hours (than budgeted) to fix and why I choose an hourly rate.  

How do others charge ?

Replies (11)

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By tracey2412
12th Nov 2018 10:28

Hello! I run a bookkeeping practice (sounds grander than just lil ol'me!) & have alwayscharged by the hour although I am somewhat rubbish at keeping track so the client generally ends up better off. However, I really do want to move to retainers/value pricing away from hourly for a number of reasons, so like your question. I have started to introduce retainer fees for a few existing clients. BUT for new clients I always say until we do maybe 2/3months - see whatyou have got, what works, what needs tweaking (overhauling), til client decides how much they want to do themselves, are we training staff, etc. no way can we put a fixed price on it. So 2/3 months hourly rate, then review? Does that help at all? Or if the client insists & you still want the work, put a figure double what you might think & credit at end if you don't do so many hours?

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paddle steamer
By DJKL
12th Nov 2018 10:57

By the hour.

I will certainly try to give them an indicative price at outset but I still list the hourly rates in the engagement letters rather than the indicative figure given.

I am certainly not changing, after 33 years on this basis, and with very few more years now left to go, I do not see the point of any big life changing events- in fact I spent part of the weekend sizing up my study and calculating all the extra space I would have if I did not have any client files. I really think, with MTD for vat, I will be out of practice some time late next year and with the files all away and in store they could be replaced with say a model railway or some other space intensive hobby.

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By Maslins
12th Nov 2018 11:26

Fixed fees. We have just one package, so if you meet the criteria, you pay £X. Occasionally a client will drift away from those criteria (eg their business grows substantially) at which point we'll discuss with them, but more likely encourage them to move to a different firm rather than increase our fees.

Yeah it can be a case of win some lose some, as inevitably some clients are more effort than others. The really bad clients we encourage to move on.

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By andy.partridge
12th Nov 2018 12:07

Hourly rates are inherently dishonest in our business, but occasionally they are a necessary evil when quantifying a piece of work is difficult.

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By ireallyshouldknowthisbut
12th Nov 2018 12:17

Depends on the horse and the course.

I much prefer fixed, as its simple and there is no time wasted on billing, although I flex it up/down if a job is a lot bigger or small than originally thought, or changed from the prior year.

For hourly I find you need a lot more communication to manage expectations, and I always bill at the end of the month.

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By MissAccounting
12th Nov 2018 12:25

For compliance work its fixed fees but if I was looking at something bespoke such as your intergration project I would charge by the hour but give a fee estimate based on x hours @ £y.

Having been royally [***] over by a solicitor's fees recently I think its important to be transparant with all of your fees. I would also tell the client that youve worked on similar intergrations but this is the first time with software x and as a result may take longer (or less) that planned.

Get something signed too! Ive started to issue annual fee summaries and get them signed with the LOE etc. Belt and braces and all but no point working for nothing if a client disuptes something and you cant take them to court.

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Oaklea
By Chris.Mann
12th Nov 2018 13:12

I took the view, in 2014, to begin to follow the fixed fee route, wherever possible and practical.
Around the same time and, at 58 years (young) I also decided to move towards embracing as many elements of general practice, as I could.
For whatever reason, apart from my dealings with HMRC, I enjoy the work more now, than I ever have.
Around 30% of my annual fee income, is by way of monthly arrangements.
There will be, undoubtedly, occasions where a fixed fee would be highly inappropriate and, I'll undoubtedly cross that bridge, when I come to it.
Paul Scholes is an advocate of the fixed fee arrangement and, I have to agree with his sentiments.

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By Matrix
12th Nov 2018 13:51

I don't do bookkeeping so got a bookkeeping firm to set this up for a retail client and they charged a fixed fee which included visiting the premises and training. If you have done it before then charge a fixed fee of say £300-£500 and say what it includes. However you should not be charging for learning how to do it.

If you don't want to learn all the apps and are a tax specialist as indicated by your name, then maybe outsource this work and just do the accounts and compliance and get a lower cost bookkeeper to quote. This works well for me and each bookkeeper contracts directly with the client.

In any case your hourly rate for tax advice should be different from the rate for bookkeeping so is this causing an issue if they are the same?

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Teignmouth
By Paul Scholes
12th Nov 2018 18:24

About 13 years ago I read Trashing the Timesheet, sent to me by the ACCA, and saw the light, which, at it's most basic illuminates:

Firstly; that clients are not paying you for time but rather what you do in that time. In other words they just want the tax return and don't care whether you were hungover or dosed up on cocaine when you did it, handle it with pen & paper on on a computer etc etc.

Secondly; billing by a charge out rate ignores a crucial element of service provision, ie how much the client values the work. In my case that meant that £200 for a tax return, would be laughed at with derision by a client who could do 90% of it themselves and laughed at with joy by a client who thought I was god by being able to do it.

I should also add that billing by time has only been around for about 60 years. A number of partners in my first firm refused to record their time, seeing timesheets as new fangled nonsense from "over there.

"Fixed price" means different things to different people. There are shopping lists, where firms charge fixed fees for different classes, or combinations, of work and quotes of a fixed fee for each client and the work they require. I use the latter.

Disclaimer: Having spend a dozen years in high charged debates on here about this, I am not saying my way is better than your ways (we could well end up charging the same fee for the same piece of work) it is just what works best for me and my clients.

http://www.verasage.com/wp-content/uploads/2000/01/Trashing%20the%20Time...

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blue sheep
By NH
20th Nov 2018 10:22

I use a combination of fixed monthly and fixed annual fees and have done that for the last 20 years. As others have said sometimes you win sometimes you lose.
I take the view that why should accountancy be any different than any other service, if I want something doing I will always ask how much it will cost, if someone says to me I charge £x per hour but have no idea how long it will take, I am highly unlikely to engage their services.

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By echohead
21st Nov 2018 00:16

I moved to value pricing about 6 months ago and it was the best thing I’ve done.

By asking the appropriate questions and pricing from a menu of services it provides choice for a client from 3 packages with the cost determined by what they wish me to do for them.

By moving to monthly fees at the same time I’ve seen an average uplift in fees of around 40-50%.

In my opinion hourly fees don’t work for clients as they are too much of an unknown and fixed fees create situations when I would win some and lose some which again isn’t fair to client or accountant.

Just my opinion ....

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