Are you getting "Stuck" when it comes to pricing your Bookkeeping Services?

While you may have done all the research and have all the tools to figure out HOW to charge (pricing model, fee calculators, set fee packages, etc),?if you are starting out in your Bookkeeping business journey, you may be feeling like you have "all the gear, though no idea" when it comes to figuring out WHAT to charge.

If this sounds like you, don't worry - you're not alone. I get a lot of queries from my Bookwiz Academy members asking about what calculation methods, or formulas they should be using when figuring out what to charge. Even those who have adopted a Fixed Fee strategy, are still finding themselves feeling a bit "stuck" and fearful of getting their pricing wrong.

There are many Bookkeepers still turning to more traditional methods to price their bookkeeping services?-?using metrics like the number of bank transactions or number of payslips issued to determine how much time something will take, which they then, in turn, feel they can convert over to some sort of a fee.

However, in a world of automation, systemisation, and other complexities (such as complicated Awards), this method can be both outdated and unreliable.??Automation and the general evolution of our industry has seen a shift away from a lot of the manual transactional component of the work we do for clients, and 'quantity' has given way to 'quality' as a key metric. While there may have previously been a significant difference in time spent reconciling a 'small' transactional account compared to a 'large' one, with technology and automation, this distinction has become less significant.?

More significance should be given to the?'quality' that is offered - this includes?the value, complexity, depth, and breadth of service, digitisation, access to real-time data, efficiency, education, and the extent of the role we play in helping build, grow and scale our clients' businesses. Using the size of the transactional accounts as an example again - a client with only a few transactions can sometimes be more complex than a client with significantly more transactions, therefore it's no longer a reliable method to use.

While it would be amazing to be able to offer a "formula" to use to figure out WHAT to charge your clients for each type of work, unfortunately, a one-size-fits-all?approach is simply not feasible. ?Every industry, niche, client, and business is unique. Every task, service, deliverable, or expectation is also unique. And so are your own business (and personal) needs. So, while there are certainly guides to follow to help you determine what to charge, there isn't a blanket set of numbers for all.?

Even once you calculate your base, or minimum fees (which will likely be slightly different for everyone), you will still need to customise your packages and proposals to meet the individual needs and value associated with each client.

So, while it may not be the answer you were hoping for, it's important to understand that?pricing is not a rigid formula, it’s a process that involves adapting to each client's specific needs and problems, and the environment in which you operate?(your industry, niche, and specific complexities). As you gain experience, your ability to accurately assess and customise your pricing will improve.

And?while you navigate that process, remember...

• You WON'T always get it right, and that's okay.
• You CAN protect yourself for occasions when you don’t get it right.
• Your pricing skills WILL improve with experience.

Top Tips for Figuring Out WHAT to Charge

When determining what to charge, I recommend that you first:

Understand your industry/niche

Contact your industry association and trusted peers, jump onto industry chat groups, and even ask a few others operating in your industry or niche. Fees can vary widely across industries, as the complexity of the work, tasks involved, or industry-related expectations or requirements also vary. You may like to create a Competitor Research Spreadsheet to track your findings, so you can gain an understanding of 'ballpark' figures. Don't feel pressured to price match, though use it as a guide to understand the industry and market in which you operate.

Understand your own financial requirements

Make sure you have a solid understanding of your own needs. Your minimum fees, break-even, revenue, and profit goals should all be accounted for in your baseline pricing options, to which you can then add further value (and profit) as you build out your packages and proposal.

Understand the real issues, level of complexity, and client expectations?

This is where?a super thorough client discovery session and scoping process are vital. The more prepared and comprehensive you can be in this stage the better. You need to have a complete understanding of the technical scope, though also the true complexity of the tasks and the expectations of the client (including the?level of service and communication required to manage them).

The more complex the task (or the client), the higher the fee. For example – you would charge more for tasks such as inventory management, payroll with a complicated award and a large number of employees, industry-related complexities, advisory-level services, special reporting requirements, rescue work, etc.

When doing the file review during the discovery session, yes you can check for bank feeds, and the number of accounts, and run your eye over the transactions to get some idea of how much is going through the business, though you don't need to price based solely on a specific number of transactions.??Instead - look at the complexity, the client's pain points, and the requirements of the overall job.?

Always be transparent and set clear expectations

Communicate clearly with your client from the very start so that they understand your approach to scoping and pricing. Educate them about your review and onboarding process, communicate that some tasks are more complex than others (and require a higher fee), and let them know about scenarios that may trigger a review or fee increase (e.g.; ad-hoc tasks, clean-up work, tighter turn-around times, increased workload, increased communication needs, new tasks not accounted for in the original scope). This will lay the foundation for any reviews or re-pricing that you need to do in the future, should 'unknowns' pop up or you discover you didn't get it quite right on the first go.

Understand your value, and charge for it

Don't be shy - acknowledge all the amazing things you do for your clients, what you help them achieve, and both the tangible and the intangible value you provide. Integrate value conversations into your discussions with clients - celebrate the quality of the service you provide and the outcomes you help them achieve. Be confident in communicating your value and incorporating this into your fees.

Don't commit to pricing too early

There’s nothing worse than being locked into a price before you’ve properly scoped the job or built a solid understanding of the overall complexity and requirements. Never commit to pricing before you are confident that you have factored in EVERYTHING and accounted for all scenarios. Let your client know that you are invested in this process and that taking the time now to ensure that you have a proper understanding of their needs will benefit them in the long term. You can then work on three pricing options to include in your proposal, with a tiered approach to the level of service and value (and price), that they can select from. This will help establish a clear connection between the level of service, value provided, and price.

And finally – protect yourself with a comprehensive Letter of Engagement

If you are worried about things ‘popping up’ or getting it wrong and having to ‘wear it’ - you can protect yourself by covering it off in your Letter of Engagement.

Your Letter of Engagement outlines the basis of your engagement (background, history), the scope (based on the findings of your discovery session and the package they have selected), the fee schedule, and any terms and conditions.

I recommend referring to your industry association when creating your Letter of Engagement template. Though, when it comes to pricing, important inclusions in the T&Cs will protect you from unforeseen factors and changes to scope. Make sure you address?items?like:

• What occurs in the event of a change in scope?
• What is the schedule for regular scope or fee reviews? I recommend at 1 month, 3 months, and then 6 monthly thereafter.
• What scenarios may trigger an 'out of schedule' scope or fee review/increase? E.g., unknown factors arising, industry / regulatory changes, increased volume of work or level of complexity, new reporting or communication requirements, new tasks or requirements.

Your Engagement Letter is a tool to account for and protect yourself – use it!

As mentioned, figuring out WHAT to charge your clients is a process, and it seems to be a process often fraught with fear, imposter syndrome, and a general lack of confidence.?However, if you use the tools, and work through these considerations, it will put you in the best position to price correctly and with confidence. And if you get it wrong, or things change, have confidence in your Letter of Engagement, knowing that you've prepared and protected yourself for these scenarios.?

If you are keen to hear more about pricing, check out the comments for a link to my upcoming Free Webinar, The Bookkeepers Guide to Pricing.