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Help with charge out rates

How best to set charge out rates to be competitive but profitable for compliance work

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Help!  My colleague and I charge £80 p.h and have done for years having let the work get on top of us and not properly reviewed fees etc.  We now want to build a practice with qualified staff and need to review everything from the top down including our fees and associated charge out rates.  I would be interested what everyone else thinks is 'right' in terms of charge out rates for a ACA qualified accountant outside of London and the home counties.  The work would be Limited company accounts upto £500k turnover, sole traders, VAT etc.  I'm looking for specifics as when I look at staff costs the variance is so large as to make it meaningless so we would like to look at it from the angle of chargeout rates instead.  We will probably move to a subscription model but for now interested to know what others think is a fair chargeout rate.  

I don't think I made myself clear above.  I would like to know what others charge out for a senior accountant or client manager role?  i.e. £100 p.h. etc etc.  Appreciate any help.

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Hallerud at Easter
By DJKL
03rd Dec 2019 11:36

Three times staff cost was how we worked in days of yore, total gross salary plus NIER plus ER pension plus cost any BIK, , say £60,000 divided by worked hours in year say (260 days- 28 hols)*7=1,624 hours, rate cost £36.95 per hour, charge out £110.85 per hour

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By JDBENJAMIN
03rd Dec 2019 13:04

You're assuming the staff member does nothing but chargeable time. In reality, in a small practice, 10 hours per week will end up as non-chargeable one way or another, so the true needed break even cost is around £52 ph. I think a multiple of 3x would be uncompetitive, but a charge out rate of £80ph would not strain the market.

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Hallerud at Easter
By DJKL
03rd Dec 2019 13:24

Depends on the staff member- partners, yes, managers, perhaps, others- not so much.

When I did work in practice full time at a manager level I got pretty close to 35 chargeable hours a week (albeit I did work at times (mainly unpaid) a lot more than 35 hours, but then I also did have a lot of "admin" duties like managing/overseeing the firm's investment business compliance which did not have any fees but commissions)

Re multiples, 3 was the bottom end, some firms were charging 4-5 in the 1990s.

I accept I may be out of kilter though I must admit when I had the P/T practice by the end of it I was billing at nearer £60 per hour for all hours and that included a fair bit of bookkeeping so likely circa £40 re bookkeeping and £100 or so re more value added activities, but I had virtually no costs to meet.

The old rule of thumb was 1/3rd staff, 1/3rd overhead,1/3rd profit for the partners.

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By Justin Bryant
03rd Dec 2019 15:11

Yes; I love the way the costs are worked out precisely but the income/profit margin is simply based on (a rounded) 3 x that.

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Hallerud at Easter
By DJKL
03rd Dec 2019 19:59

Is it six minute units of time for solicitors these days?

At least if I did not use up more than half of a 15 minute unit I tended not to bother charging the client, so with us they got up to 7.5 minutes at no cost. (Ever feel like a taxi?)

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By Br1ghtsm1les
03rd Dec 2019 13:30

.

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By JDBENJAMIN
03rd Dec 2019 15:18

That's a point.

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By SWAccountant
03rd Dec 2019 16:22

And a good one at that.

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By Rammstein1
03rd Dec 2019 16:45

I think they forgot that by posting a comment they would lose anonymity. The question has been edited instead.

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