Pricing Strategies for Bookkeeping Services:
Maximizing Your Profit Margins

Pricing Strategies for Bookkeeping Services: Maximizing Your Profit Margins

Pricing is often considered one of the most important strategies to nail down when exploring options to expand one’s bookkeeping or accounting practice. So much of one’s work as a bookkeeper or accountant involves repetition, completing the same or similar tasks for your clients over and over again. Since one often has multiple clients, there is no reason to renegotiate pricing with every new client, so figuring out a consistent pricing system is key to optimizing one’s time and service revenue. Below are some factors to look over when deciding on a pricing system for one’s bookkeeping or accounting service, how to market one’s service, and mistakes to avoid when calculating pricing for services.

Key Factors to Consider

Overhead

The first factor to consider that has a major impact on the pricing a bookkeeper or accountant can provide is overhead. Overhead is a metric that includes fixed costs such as office space and software while also including variable costs like travel expenses. To have the best margins possible and make the most money efficiently, a bookkeeper must cut their costs down as much as possible while still providing the best possible service. One should ensure that they have a good handle and understanding of all the costs associated with running their business.

Time to Completion

The next factor to think about is how much time it takes for a bookkeeper or accountant to complete each assignment or project for their clients. Time to completion may depend on various aspects, such as the size and complexity of the workload, but it is important to start with a general idea of how long it takes to complete the required work needed for completion. Experience level and expertise may also affect the time it takes to complete a project.

Client Size

The size of a client is another big determinant for pricing one’s bookkeeping or accounting services. Working for a large company or client may require some unforeseen complexities for the bookkeeper or accountant, which could require a higher price for the completion of the service. On the other hand, when working for a small company, one might see simpler needs that require fewer man-hours to complete. In that case, charging less for that client might be beneficial, especially when just starting out. However, even small businesses can have complex bookkeeping and accounting needs, so it is important to proceed with caution with this strategy.

Location

Another factor to consider is the location of the practice. If located in a major city that is known to be wealthier, a bookkeeper or accountant can charge more for a price that is more in line with the location of the city. Rural areas with a lower cost of living may see lower prices for bookkeeping and accounting services, so one should price accordingly. However, an interesting point to keep in mind is that bookkeepers and accountants now often work online and have online clients, so pricing can be even more varied for accounting professionals than it has ever been before. Because the pool of professionals has grown to both local and online bookkeepers and accountants, competition has increased as they fight for the same jobs and clients.

Services Offered

The types of services offered in one’s bookkeeping and accounting practice are important factors as they can alter the type of pricing one can provide for their work. If a bookkeeper or an accountant provides only basic services, then a lower price should be charged to price well against the competition. These services can include data entry or financial statement review or creation. Meanwhile, for more complex services, such as tax preparation or strategic planning, higher prices can be charged to compensate for the amount of work and difficulty of the project.

Market Rates

It is also important to consider the market rates of competing bookkeepers and accountants when pricing one’s services. In urban areas, the abundance of bookkeepers or accountants can be more prevalent than in rural areas. This means professionals located in major cities may need to lower prices to compete against other practices in the area. If very few bookkeepers or accountants are in the area, then higher prices may be more justifiable as one’s services may be more in demand.

Are you ready to  double your income while working half the time?

YES. I’m ready!

Common Pricing Strategies

Now that factors and aspects that impact pricing have been discussed, it is time to focus on pricing strategies bookkeepers and accountants use to stand apart from their competition. Each strategy has its own pros and cons that need to be considered and analyzed in detail before a decision on pricing strategy can be made.

1. Time-based pricing

This pricing strategy is often the default approach taken by most bookkeeping and accounting practices. This takes the math out of the equation by billing the clients for the exact number of hours a project or service takes for the bookkeeper or account to complete the service. With such a simple strategy to implement, the only true downsides to this approach include a surprise bill for clients at the end of the engagement and a price that often does not reflect the value of the service for the client.

2. Flat-Fee Pricing

Flat-free pricing is exactly as it sounds: charging clients a flat fee for one’s bookkeeping or accounting services. This strategy is as simple as it gets, only requiring the service professional to figure out the perfect price to set their services at in order to make a good amount of profit. This is perfect for the client as well, as it gives them a fair market price that they can expect for the service they are requesting without any surprise fees or fluctuations, as the price does not falter and remains constant no matter the amount of manpower required or resources devoted to the project. However, this strategy can be difficult for more complex projects that cannot be priced as easily as flat-fee pricing suggests.

3. Value Pricing

Value pricing represents a transformative approach for accounting firm owners seeking to optimize their profitability while delivering exceptional value to clients. In contrast to the traditional hourly billing model, value pricing enables firms to charge based on the client’s perceived value of their services, rather than solely on the time expended. By adopting value pricing, firms can transcend the constraints imposed by billable hours, facilitating more efficient workflows and enabling a heightened focus on delivering high-impact solutions. This approach fosters a more collaborative dynamic with clients, as pricing aligns with the value created for their businesses. This methodology rewards the firm’s expertise, experience, and the tangible results provided to clients.

FAQs

How do you charge for bookkeeping services?

Whether your firm prices it’s services by the hour or offers fixed pricing, firm owners ought to always price their accounting, tax and bookkeeping services according to the value brought to their clients. This way, you have a sustainable business that grows with the clients who appreciate the value of professional accounting and tax services.

What is the pricing strategy for accounting firms?

The pricing strategy for accountants and bookkeepers primarily hinges on four models: hourly rates, value-based pricing, fixed fees, and retainer-based pricing. Hourly rate is the common and the traditional method where your charge for each hour of work performed.

How much should I charge monthly as a bookkeeper?

Part-time bookkeepers often charge between $400 and $800 per month for basic bookkeeping needs. For full-time bookkeeping services, clients can expect to pay from $3,000 to $4,500 per month. For outsourced bookkeeping, the price can range from $500 to $2,500 per month for basic bookkeeping.

How many hours should client bookkeeping take?

If a client’s business is relatively small, bookkeeping work could take less than five hours per month. A medium-sized business could easily require more than ten hours per month, and a large business with numerous accounts and transactions can take over 20 hours per month to complete the books.

Are you ready to  double your income while working half the time?

YES. I’m ready!