Pricing structure

leross

Hi all, I am hoping for some advice on my pricing structure for Bookkeeping/accountancy. I understand it varies by area but local accountants keep their prices to themselves unless you meet for a consultation!

Initially I am planning on keeping my prices fairly low to help build a client base and there will be some adjustments dependent on requirements but this is what I will use as a base:

Self assessment - £80
Bookkeeping and self assessment - £180
VAT - £70 per return
An hourly rate of £12 per hour if that is preferred to a set annual fee

Any advice would be gratefully received, I feel if I keep doubting my prices then I will end up chopping and changing them so I need to feel confident in what I have decided. Thank you

leross

£12 an hour for the bookkeeping side then the fees mentioned for the returns

leross

I should also point out that this will only be for sole traders/self employed as I am AAT level 3 qualified

leross

Yes, I have years of experience working for other companies. However I have recently decided to work for myself, I am now studying level 4 but in the meantime I want to grow my business. From my research it seems accountancy fees vary considerably, I want to ensure my fees are competitive and fair for the services I will be offering.

MarieNoelle

Hi @leross
Where are you based and who are your clients?
Hourly rates for bookkeeping do vary but I would suggest £15-£25 if you have years of experience.
@burg has been running a fees survey for the past few years
(I guess Ian is very busy this year as we haven't had one for a while )
I will post a link of the latest one when I find it!

leross

Hi @MarieNoelle, I'm based in Essex. I am literally starting out, the clients I have in the pipeline are either small businesses who are established but with a small turnover or brand new businesses, obviously I am hoping to take on more clients over the upcoming months with varying requirements. I was originally thinking of charging £15, however with the doubt in my mind over fees and to be competitive I reduced it to £12. Perhaps I'll reconsider and stick to £15.

leross

I've just found the fee survey, thank you @MarieNoelle it was really useful.

MarieNoelle

Just a thought, are you applying to be a licensed bookkeeper (I think the entry level is to have completed at least level 3)?
Make sure you have PII and be registered for AML before your offer services to clients.

leross

I will be applying, I'm just waiting for my level 3 certificate. I have insurance in place and have registered with AML and The Information Commisioners Office. Onwards and upwards!

Bmer82

Bare in mind whilst low pricing will entice clients will they

1. Be the right kind of clients you want to service?

and

2. Be so price sensitive that once you decide you need to increase your fee structure will they all move on?

that said for start ups I can understand cost leadership strategy as they will generally understand price increases due to their growth and may lead to more lucrative long term relationships

leross

This is the mindset I'm now trying to engage @Bmer82 , I need to be confident in my prices and if a potential client thinks they're too high I need to let them walk away, although I am very eager to get started it will be far better in the long run to have a quality client base. Slow and steady!!

Bmer82

@leross prior to letting them walk I would advise trying to highlight the "added value" that the client gets when contracting you. make sure you have this rehearsed as many people will not fully understand your offering vs A.N.Other

burg

@MarieNoelle Will be doing another fee survey soon. Yes I've been busy!

@leross You need to find a happy medium for now between lower fees to start building a client base and not so low that you will lose clients as soon as someone else cheaper comes along. Our bookkeeping hourly rates are £22 and accounts work charge out rates start at around £30 depending on the staff members level of experience. My charge out rate is £120 per hour. It took me time to get that far.

To get a good idea of charge out rates take what you want as your gross salary hourly rate and times this by three to get a base point. No work that only 70% of your time will be chargeable so divide by 70 x by 100 and you have a basepoint. Now you can calculate how long you think a set of accounts might take and come up with fixed fees.

leross

Thank you @burg, that really helps as did the survey!

Neillaw

The problem with setting low start up prices are your then stuck with these prices as the client doesn't want to see a large increase in his cost base. This usually ends up with you dealing with clients who then become a bind once you start getting proper priced clients.
If your going for the low price I would put this down as a one year or two year fixed price with an increase after this period, if the client doesn't like it they will go somewhere else but these are the clients you don't really want anyway.
(Luckily your in Essex so they won't come my way!)

Monsoon

Please don't devalue the profession by charging such low rates . You - we all - are worth much more. Don't fall into the trap of starting low to get clients, you're not doing yourself any favours in the long run!

Some very aged blog posts of mine here might help:

https://justanothermip.wordpress.com/2011/03/26/accountant-what-to-charge/
https://justanothermip.wordpress.com/2011/03/26/are-you-charging-what-you’re-worth/

Good luck with your venture.

leross

@Monsoon Since my original post I've reconsidered, increased my prices accordingly and things are going well! I completely agree that initial low prices is a trap that will not be beneficial to me or the profession. Thank you for the blog links, at a glance they look really useful and I will definitely be reading

Bmer82

good posts Monsoon very informative