A Guide to Pricing Accounting Services for Higher Revenues

The unfortunate truth is that most accounting firms don’t know how to price.

I know, because I was once one of those firms…

And I’ve coached hundreds of firm owners along the way.

I know we’re trained to be good with numbers, but when it comes to putting a dollar amount on our own services?

We freeze like deer in headlights.

But here’s what’s more painful than not knowing how to price:

Pricing way too low.

That’s why, in this article, I’ll show you how to properly price your accounting services.

You’ll learn how to leverage fixed and value pricing strategies so you can finally enjoy real profits with every client.

Let’s go!

Table of Contents

• How Important Is Pricing in Accounting Firms?
• Why Is It Difficult to Price Accounting Services?
• What Are the Differences Between Fixed and Value Pricing?
  • Fixed Pricing
  • Value Pricing
• How to Price Your Accounting Services: 4 Steps
  • Step 1: Ask Your Clients Questions
  • Step 2: Define Your Scope
  • Step 3: Establish Your Prices
  • Step 4: Cement an Agreement

How Important Is Pricing in Accounting Firms?

When I launched Xen Accounting in 2013, I had no idea how to price.

My initial pricing was so bad that my highest plan cost $275/month.

(Ouch!)

I believed that to make more revenue, I simply had to find more clients.

But what that meant was that if I wanted to hit big figures, I had to take on a lot of clients.

That meant taking on insane workloads (which often lead to 60-hour workweeks or worse).

To try to fix this, most firm owners hire more people and add more automations.

But this ends up complicating their work even further…

So they work even more.

The solution is more fundamental than that:

Pricing better (read: higher).

With higher pricing, you can:

• Multiply your revenues without adding more clients
• Significantly decrease your workload without sacrificing revenue
• Filter out the clients who don’t respect your expertise (i.e., clients who work with you only because you offer cheap services)

Pricing higher is what allowed me to profitably sell Xen Accounting just five years after I started it.

(Surely, this couldn’t have been done with $150/month clients. 🙂)

Since then, pricing has been one of the most important lessons that I’ve taught the firm owners I’ve coached.

Personally, I think the biggest advantage of good pricing is the freedom and the peace of mind it gives you.

Higher pricing means being able to earn the same revenue with fewer clients, which means you work less.

Oftentimes, the clients who agree to increased prices are the clients who genuinely respect your expertise — which means a lot less stress.

Why Is It Difficult to Price Accounting Services?

The difficulty in pricing accounting services mainly comes from the fact that we’re used to the hourly billing model.

It’s easy to see why everyone uses it — it’s very easy to calculate your returns that way.

But when you price by the hour, you’re basically saying:

“I have no idea what this is actually worth to you, so I’ll just charge you for my time and hope it works out.”

Now, there are better alternatives to hourly billing: fixed and value pricing.

However, that presents a different challenge…

There’s no formula or calculation you can do to find the “right” figures.

It’s based on your understanding of your services’ perceived value to your clients and, based on my experience, feel.

(Which is basically the opposite of what accountants are trained to do.)

Before I show you how to do this right, we first need to clearly differentiate fixed and value pricing.

What Are the Differences Between Fixed and Value Pricing?

The two following strategies can yield better profits than if you were billing by the hour.

(Far better profits, to be honest, if you can communicate that value to your clients well.)

They offer different advantages, and the right pricing model for your firm will depend on your clients’ needs.

These pricing models offer different advantages, and selecting the right one depends on your firm’s goals and client needs.

Fixed Pricing

With fixed pricing, you are essentially setting up a service menu and attaching a fixed price to them across the board.

If you’re charging $500 per month for bookkeeping, then that’s the amount you charge whether your client has 50 or 200 transactions per month.

The beauty of this approach is its simplicity.

You quote one price every time without extra steps.

The drawback?

You can end up with clients who suck up most of your time paying the same as your ideal clients who barely need anything.

That 200-transaction client might take you 8 hours a month while the 50-transaction client takes 2 hours.

Same $500.

Worth it?

Probably not.

That’s what value pricing fixes.

Value Pricing

In value pricing, you price each client differently based on their specific situation.

So, instead of charging all clients $500 for monthly bookkeeping like in the previous example…

You might charge $600 per month for a client with only 50 transactions per month.

Or you might charge $2,000 per month for a client with 100 transactions and needs to call you multiple times a week.

Yes, value pricing takes more work upfront — you can’t just quote from a menu.

But it allows you to command far higher prices than other pricing approaches.

Think about it…

When you price by value instead of time or transactions, you’re no longer competing on cost.

You’re competing on results.

Like I said in one of my podcast episodes, clients don’t care about what you do.

Clients pay for the results you deliver.

A company won’t care if you’re charging $500 or $2,000 if you’re helping them identify $10,000 in tax savings every month.

You can even use a hybrid approach between fixed and value pricing.

For example, you can use fixed pricing for commoditized work like basic tax returns.

Then, you can use a value-based pricing approach for things like advisory work, complex bookkeeping, and anything custom.

How to Price Your Accounting Services: 4 Steps

These four steps work whether you’re using fixed or value pricing.

There’s something important you need to know, though:

They work best when you structure your services into three-tiered packages.

(I’ll talk more about that later.)

For now, let’s start with how you can find pricing numbers you’re happy with.

Step 1: Ask Your Clients Questions

Before you can think about pricing, you need to have an in-depth conversation with your prospective client to assess their needs.

This is also known as a discovery call.

Your goal here is to ask questions — don’t worry about making the sale (yet).

Ask open-ended questions, and avoid assumptions.

Business owners are all different…

Some hate dealing with accounts payable, others can’t stand reconciling bank accounts.

Your job is to figure out where their real pain lies.

Here’s an email template you can send after you get in touch with them (feel free to swipe):

Here’s the key: the price you set has to explicitly address the problems you uncover in this conversation.

If you’re trying to sell advisory services to someone whose books are a complete disaster, you’re going to get rejected.

They need basic cleanup before they need cash flow analysis.

If they mention hating accounts payable but you don’t offer bill pay services, refer them to someone who does.

Remember, building trust matters more than closing every deal.

(If they trust you, they might refer clients to you later on.)

Step 2: Define Your Scope

After you understand your client’s needs, you’ll need to define your scope of work before you set your prices.

With hourly billing, you just let the clock run.

Client asks for extra work? Great, more billable hours.

But with upfront pricing, scope creep can easily eat through your capacity.

If you quote a fixed price, every single minute you spend needs to be something you explicitly agreed to do.

Otherwise, you’ll find yourself working for free on what seemed like a “good deal.”

Define everything, be specific, and use parameters wherever possible.

Here are examples to help you better understand how to define your scope:

Example #1: Monthly Bookkeeping Services

Check out these two scopes:

• Scope 1: Monthly bookkeeping services for $500 per month
• Scope 2: Monthly bookkeeping services for $500 per month (includes monthly bank and credit card reconciliation of up to 100 transactions per month on a cash-basis with a 4-week month-end close)

See the difference?

Scope 1, which is much more common, gets you in trouble.

Let’s say that the client starts at 100 transactions…

All good, right?

But six months later, they’re at 300 transactions.

Meanwhile, you’re still charging $500.

(Good luck explaining why you need to raise prices without looking like you’re trying to rip them off.)

With Scope 2, on the other hand, you’ve got clear boundaries.

The client goes over 100 transactions?

That’s a different service level with different pricing.

Be even more specific if you can:

• How many bank accounts will you reconcile?
• Which financial statements will you provide?
• What’s your turnaround time?

The more detailed your scope, the fewer surprises you’ll have later.

Never quote a price without defining exactly what work you’re agreeing to do.

Remember, “monthly bookkeeping” can mean a thousand different things to a thousand different clients.

If you’d like to learn more about defining your bookkeeping scope, feel free to check out my guide to packaging your bookkeeping services.

Example #2: Financial Reporting

Let’s say “monthly financial statements” is included in your pricing plan…

That’s not clear enough.

Some clients expect a basic Profit & Loss and Balance Sheet.

Others want cash flow statements, variance reports, and a detailed explanation of why their numbers look the way they do.

(Guess who’s doing the extra work for free when expectations don’t match?)

Be specific about:

• Which reports you’ll provide (P&L, Balance Sheet, Cash Flow Statement)
• How often they’ll be delivered (by the 15th of each month)
• What format they’ll be in (PDF summary or full QuickBooks access)
• Whether you’ll provide analysis or just raw numbers

Don’t assume they want the same reports as your last client — ask what they really need.

More importantly, put it in writing.

The client who just wants to see if they made money last month has very different needs than the one preparing for a bank loan.

Step 3: Establish Your Prices

Most accountants think this is hard because there isn’t exact math to it.

(They’re right. There’s none.)

The easiest place to start is to know your costs to deliver the service.

This is where Steps 1 and 2 become critical.

You understand their needs, you’ve defined your scope, now you need to forecast how much time this will actually take you.

Notice I said forecast, not calculate or measure.

With hourly billing, you look at your costs after the work is done and hope the client pays your invoice.

With upfront pricing, you’re estimating your costs before you start and pricing accordingly.

One thing you need to accept:

You’re going to be wrong sometimes.

(Don’t worry, you’ll get better as you do more engagements.)

Once you know your forecasted costs, you’re ready to apply the fixed pricing or value pricing approach to arrive at your final quote.

Setting Your Prices: Fixed Pricing

Fixed pricing is the “McDonald’s” approach: same menu, same prices, every time.

Here’s how it works:

i. You create your service menu

For example, your services could look like this:

• Monthly bookkeeping: $500
• Tax return preparation: $800
• Financial statement prep: $300
• Payroll processing: $200

ii. Define what’s included

Remember Step 2 earlier? Your scope definitions become critical here.

That $500 bookkeeping better specify how many transactions per month, number of maximum bank accounts, turnaround time, etc.

iii. Calculate your costs and add margin

If monthly bookkeeping takes you 4 hours at $75/hour cost, that’s $300.

Add your desired 67% margin, and you get $500.

Fixed pricing works great for high-volume work and services you do the exact way every time.

Truthfully, it’s not my favorite pricing method.

It’s more efficient and scalable than hourly billing, but you’re ultimately still competing on price instead of value.

This is why value pricing is the one I recommend most. 🙂

Setting Your Prices: Value Pricing

With value pricing, you price based on what you think the client will pay, not what it costs you to deliver.

For instance, a company landing $2M contracts might pay $2,000 for the same bookkeeping work you’d charge a small retailer $600 for.

Your Discovery Call from Step 1 becomes absolutely critical here.

You need to understand their business, their pain points, and most importantly, what solving those problems is worth to them.

Want to know how I value price?

(You might not like it.)

I literally pick a number out of thin air based on my conversation with the potential client.

There is no formula for determining what someone is willing to pay — the more value you establish in that initial conversation, the higher you can price.

This method is easily the one with the highest potential for revenue.

This is why it’s one of the most important lessons that I teach in my Future Firm Accelerate program.

Many firm owners have used it to increase their revenue, like Gary below:

Here’s the process:

1. Look at their situation first
2. Determine what they actually need
3. Figure out what you think they’d pay
4. THEN compare it to your costs to see if it makes sense for you

See the difference?

Fixed pricing starts with your costs and adds margin.

Value pricing starts with their willingness to pay and works backward.

The drawback here is that it’s difficult to hit the bull’s eye.

That’s why value pricing is best paired with a three-tiered pricing strategy.

How to Implement Value Pricing With Three-Tiered Packages

Three-tiered packages are Bronze, Silver, and Gold service levels that give clients options to choose from.

This approach works better than single-price quotes because it allows potential clients to self-select the package that best fits their needs instead of a take-it-or-leave-it option.

Here’s how to structure it:

• Bronze Plan: Your absolute minimum price. This protects your time and weeds out price shoppers.
• Silver Plan: Your “sweet spot” pricing. This plan should be noticeably better than Bronze with features that clients value.
• Gold Plan. All the bells and whistles. Because this will include all of your premium services, the gap between Gold and Silver can be bigger than Silver to Bronze.

For instance, if you provide bookkeeping services, here’s a simple example of what your three tiers could look like:

• Bronze: $500/month (up to 75 transactions, basic reports, email support)
• Silver: $1,000/month (up to 150 transactions, detailed reports, phone support, monthly review call)
• Gold: $2,000/month (unlimited transactions, custom reporting, weekly check-ins, priority support)

Here’s an example of a three-tiered plan from Bookkeeper360:

If you’d like to learn more, check out my guide to three-tiered pricing.

Step 4: Cement an Agreement

Once you’ve got your price figured out, you need to get it into a formal agreement.

Most firms do this by creating a PDF or Word document and sending it over email.

This works, but it’s clunky and involves way too many steps for both you and the client.

I went through this as well when I was running my first accounting firm, which led me to discover Ignition (then Practice Ignition).

Ignition (affiliate link) is a proposal software that lets you create professional proposals with three-tiered pricing options and takes clients straight from quote to signed agreement.

You can bill and get paid on the platform too.

From the client’s point of view:

1. They get an email
2. They review your proposal and pick the package they want
3. They enter their payment information
4. They sign

This process is much smoother than engaging in back-and-forth emails and chasing signatures.

You don’t need to use Ignition, but you should find a way to make the signing process as easy as you can for your clients.

Increase Your Accounting Firm’s Profits by Pricing Better

That’s a wrap!

This guide will help you command the prices your expertise deserves and stop competing on cost.

Here’s what you’ll see when you price right:

Clients who value your work, fewer scope creep headaches, and margins that allow you to enjoy your accounting firm.

Now, I’d like to hear from you.

What’s your biggest challenge with pricing right now?

Is it the Discovery Call conversations or picking the numbers?

What pricing mistake have you made that I should have warned people about in this guide?

Let me know in the comments!

Work Less.
2x Your Prices.
(4 Steps)

There's a simple 4-step process you can follow to double your prices as soon as this week.

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Work Less.
2x Your Prices.
(4 Steps)

There's a simple 4-step process you can follow to double your prices as soon as this week.

​

Type your email below and I'll share it with you right now for free.

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GET THE 4-STEP PROCESS TO 2X YOUR PRICES

We respect your privacy. Unsubscribe at any time.