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Charging?

MissKCBMissKCB New MemberRegistered Posts: 7
Hi

I'm currently in the process of setting up my own business, but am having some trouble trying to figure out how much to charge clients. I'm planning on offering monthly, quarterly (and depending on the size of the business, annually) bookkeeping services, producing management accounts at the end of each period also.

I understand some clients would prefer a fixed charge, but how can I know how much to charge if every client will be different and take a different amount of time?! An hourly rate will hopefully encourage people to be better organised, but will they then be put off, thinking I might drag work out for as long as possible? Is it best to estimate how long the work will take, and apply an hourly rate before giving them a fixed cost? And how do I decide my hourly rate?!

Am needing to fill in my MIP forms too, but they ask what my estimated income will be for the first year, but I'm obviously struggling!

Please help!

:confused1:

Comments

  • paulstaffordpaulstafford Feels At Home Registered Posts: 126
    The flippant answer is charge as much as you can get away with.

    Have a read of the following blog post by Monsoon. It is full of good advice on this subject.

    http://justanothermip.wordpress.com/2011/03/26/accountant-what-to-charge/
  • jamesm96jamesm96 Experienced Mentor Registered Posts: 523
    The flippant answer is charge as much as you can get away with.

    Have a read of the following blog post by Monsoon. It is full of good advice on this subject.

    http://justanothermip.wordpress.com/2011/03/26/accountant-what-to-charge/

    I was just about to recommend Monsoon's blog as I was reading through the OP.

    We've charged fixed-fees here for about ten years now and it's much better. I personally feel that time-based fees represent a conflict of interest for accountants for exactly the reason you've stated; some (unethical) accountants would not work as efficiently as they otherwise might because they're getting paid anyway!

    Do a bit of market research (as you would if you ran any other business) to find out what prices are currently being offered in the market and use that as a basis, not ignoring the fact that you can chose to use one of two generic business models whereby you either offer a basic service at a low price, or you offer a premium service at a higher price. (I mention the generic strategies simply to make the point that, if you want to offer a quality service, don't then get scared on the price and try and undercut all of the local competition; it's not workable. If your selling point is your quality of service, then that's what'll win you clients, not the price).
  • jamesm96jamesm96 Experienced Mentor Registered Posts: 523
    Sorry I meant to add, there's a book called 'Effective Pricing for Accountants' which I'm a big fan of. It is aimed more at accounting practices but many of the principles are extremely relevant nonetheless.
  • MissKCBMissKCB New Member Registered Posts: 7
    Thanks very much for the blog recommendation, will definitely have a look at that for some more help! Its all a bit daunting still at the moment, as I'm going to be doing bookkeeping at home alongside my full time job, with the intention of eventually giving up work and carrying on at home. So while I dont need to be taking home say £25k per year, I dont want to undercharge and find myself struggling when I do give up work.

    Thanks a lot!
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