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What Client Fees?

Acceptable multiplier of an accountants fees to achieve reasonable profits?

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I am curious, what do other accounting practices think is an acceptable multiplier of an accountants day rate (plus employer contributions) to achieve reasonable profits. Taking into consideration the client fee needs to cover the other indirect costs and staff memebers who do not do chargeable work e.g. admin.

Would a 3x multiper of the accountants day rate and associated employer costs seem reasonable?

We charge a fixed price but I do want to consider whether some of the clients are actually profitable... I do appreicate there are many variables that will affect what someone may consider a reasonable multiplier to e.g. 'other staff' to accountant ratio, local renting costs etc. However, I am looking for a ball park figure.

Any answers would be highly appreciated.

 

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By bernard michael
10th Jun 2020 08:52

Surely you start from what you consider a "reasonable profit" and
add back your costs to get to the fees base. I like to to make an unreasonable profit but never quite get there

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Routemaster image
By tom123
10th Jun 2020 08:59

I imagine most service businesses look at a charge out rate of 3 x salary.

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Hallerud at Easter
By DJKL
10th Jun 2020 09:24

In the 1990s when I was more involved with a firm with staff and was under the microscope for my/my group's recovery rates, we worked on a three times multiple. I know at the same time the local PKF office were working on four times and I heard a rumour that the really big boys were on five.

The very rough split was 1/3rd staff costs, 1/3rd office overheads and 1/3rd partners profits.

When I worked part time for myself I had a notional salary for myself (what I earned in my day job as an FD per hour) and doubled it to compensate for non billable time expended and for subs/software/equipment/stat/publications etc- these never really amounted to that much.

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By Michael Davies
10th Jun 2020 10:43

Yeah And I worked out when I was working for a mid tier firm that I was bringing in fees six times my salary and benefits.I wasn’t particularly bitter about it.It was just the way the system worked.

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Red Leader
By Red Leader
10th Jun 2020 11:03

You need timesheets.

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