If you’re planning on offering your services as a bookkeeper, you’ll know that there’s a lot to think about. Alongside considerations like what specific services to offer, how to make sure you’re properly qualified, and how to market yourself, is the question of how to charge for bookkeeping services.
Historically, bookkeepers and accountants alike have charged an hourly rate for their services. The longer they work on the books, the more it costs the client. But should you use this pricing structure just because it’s always been done that way? How to charge for bookkeeping services will depend on your preferences and the way you work.
Charging an hourly rate
The most common way of charging for bookkeeping services is by the hour. This means deciding how much you feel each hour of your time is worth, and charging a total fee for each task based on the number of hours it takes to complete.
How much you charge per hour depends on a range of factors, including your level of qualification and experience, what services you are offering, and your location. As a guide, many bookkeepers charge between £12 and £25 per hour.
There are both pros and cons to this method of charging.
- If you charge an hourly fee, you know that you will get paid for the hours you work, and won’t lose out if a job takes longer than you think.
- Some argue that you are likely to do a better job when charging per hour; this is because you spend as much time on the job as it requires, rather than rushing to complete it in the amount of time you first estimated.
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- The client is more likely to rush you through the work so that they pay less, meaning you could be under more pressure and making less money.
- Conflict could arise between how many hours the client thinks you have worked, and how many you actually worked.
Charging a job rate
Less traditional, but on the rise, is the practice among bookkeepers of charging a fee for each job performed. This involves charging a specific rate for each service you offer, regardless of the time you spend on it.
Again, there are advantages and disadvantages of charging in this way.
- You can decide your fees based on factors other than time, such as how challenging the work is, or how much you think it’s worth to the client.
- You may find that you spend less time on a task than you thought, meaning you make more money from it than if you charged hourly.
- You could find that, rather than spending less time on a job than you thought, you spend much longer on it, but cannot then charge the client for the extra time.
- As the client grows, the same task may involve more and begin to take more time, but you cannot charge for this extra work as you have already quoted for the job.
What would the client prefer?
When deciding how to charge for bookkeeping services, consider the preferences of your market; it’s not all about how much you want to make, but also about attracting the right kind of clients.
The kind of pricing your potential clients might be looking for depends on the industry they’re in, the size of the company, the work they require, and other factors. You may find that larger clients prefer to pay a fixed rate, so they know where they stand each month, and can weave it into a projected budget. Smaller, newer companies may prefer an hourly rate, so that if they have less money available one month, they are able to reduce your hours.
Think about your target audience; you might find it helpful to speak to people to find out what kind of pricing structure they look for when employing a bookkeeper, and how their business context affects this.
An important part of success as a self-employed bookkeeper is ensuring you have the right qualifications. Take a look at our accounting qualifications here, including the AAT Level 2 Bookkeeping course, which you can study online from home. To find out more about running your own bookkeeping business, watch our recent webinar recording.