When you’re deciding how much to charge for your services, it can be tough to strike the right balance between profitability for your practice and affordability for your clients. If you’re having trouble pricing your bookkeeping services, here are some tips to help you get started.
Understand your value
Small business owners often feel uncertain about bookkeeping and can be too busy running their businesses to devote much time to paperwork, so the service that you provide is highly valuable to them.
As well as offering peace of mind from knowing that their books are in order, you can save them significant time. Finding the sweet spot with pricing will help you to attract and retain clients, as they’ll benefit from a good return on investment (ROI) at a cost that works with their budget.
Choose your pricing model
There are multiple models for charging clients and you’ll need to decide which works best for both your practice and your clients’ needs. So what are the pros and cons of each?
If you charge an hourly rate for your services, your clients will be able to see exactly how their money is spent. A key advantage for you is that you’ll be compensated if you spend more time on a project than you anticipated, which wouldn’t happen if you charged a fixed fee. However, your client won’t know exactly how much your services will cost them overall, making it harder for them to budget.
Fixed pricing is when you charge an upfront fee for a defined set of services. This pricing strategy reduces uncertainty for your client, as they’ll know the final cost before you start any work and will be able to budget accordingly. However, you’ll need to be clear about the scale of the project and be realistic about how much time you’ll need to spend on it when you’re considering how much to charge.
Some bookkeepers charge a fixed monthly fee for ongoing services. Spreading out the cost of your services over a year can be appealing to clients and could provide you with consistent income, but you’ll also need to consider the possibility of a client cancelling their subscription.
Check out the competition
Before you set your prices, it’s worth taking the time to do some market research. Find out what other bookkeepers are charging in your region by searching online or speaking to peers about their pricing models. It’s a good idea to look at prices set by similar-sized practices, with clients in comparable fields, if you can.
If you’re not sure where to begin, you could join The 6 Figure Bookkeepers’ Club on Facebook; a supportive group where there are no silly questions. There’s also the option of becoming a member of The Institute of Certified Bookkeepers, giving you access to a network of local groups that meet regularly throughout the year.
Make use of technology
Thanks to technology, bookkeeping practices can now automate more and more of their day-to-day admin and deliver high-quality services with greater ease. Automation could give you more time to focus on growing your practice or expanding your services.
Accounting software like FreeAgent can help you explain bank transactions in bulk, run reports across your whole client base and set up alerts to notify you that a client’s VAT return is due. If you’re keen to automate more of your admin, here are some tips for getting the most out of your practice’s tech stack.
Learn as you go
It’s only natural to feel worried about charging too much or charging too little, but your pricing doesn’t have to be perfect at first. Once you start to understand your annual revenue and get a clearer idea of how long it takes to complete tasks, you’ll be able to estimate your pricing with greater confidence.
You should review your pricing regularly, keeping track of the services you’ve added and whether they justify a price increase. It’s possible you’ll see some of your clients’ businesses grow from one year to the next, suggesting they may have the capacity to pay more for further services. While these conversations can sometimes feel daunting, it’s essential to communicate the value of what you do. Don’t feel guilty for getting paid what you’re worth.
Looking for more great tips? Check out our recent webinar on how to boost your self-worth and shake up your pricing to help you re-energise your bookkeeping practice.