Are you charging too much or too little for your bookkeeping services?
In this guide, we’ll explore the different pricing models to help you strike the right balance and earn more revenue.
Let’s go!
Table of Contents
- How Much Other Firms Are Charging
- Why Is It Important To Get Pricing Right?
- Different Ways To Charge For Your Bookkeeping Services
- How To Decide What To Charge
How Much Other Firms Are Charging
Pricing for bookkeeping services can vary widely, from $100 a month to several thousand, with some firms even charging up to $5,000 per month.
The difference in pricing often depends on factors like the number of services included, the complexity of the work, and the value provided to clients.
You might see some articles suggesting rates as low as $250 a month, but scaling a profitable firm at those price points is tough.
I recommend pricing your bookkeeping services at least $500 a month.
Why?
Charging too little can hurt your profits, limit your ability to reinvest in your business, and prevent you from delivering the level of service your clients deserve.
Many of the busiest firms I see are stretched too thin, doing too much for too little pay.
This often leads to burnout and a drop in service quality.
To give you a more solid idea, take a look at how much other firms are charging.
Open Books
Carter Cook CPAs
EJM Bookkeeping
Acuity
Apex Accounting
Sharagon Bookkeeping Services
Why Is It Important To Get Pricing Right?
Pricing affects your profit margins, which are crucial for:
- Maintaining a sustainable and profitable business model
- Investing in skilled team members and tech
- Scaling your operations
If you undercharge for your bookkeeping services, the consequences can extend far beyond simply earning less.
Profit margins will be too thin to afford top talent and tools, limiting your ability to take on more clients, forcing you to remain heavily involved in day-to-day operations, and capping your earning potential.
On the other hand, overpricing can price you out of the market and cause you to lose clients to lower-priced competitors. It may also lead to:
- Difficulty attracting new clients
- Reduced competitiveness in the market
- Potential client resentment over high pricing
To give you an example of how pricing can make all the difference, check out this message from one of my Future Firm Accelerate members.
Overall, implementing the right price for your bookkeeping services is important for maintaining a healthy business that provides an ideal lifestyle for you and your team – and provides top-notch service to your clients.
Different Ways To Charge For Your Bookkeeping Services
There are four methods bookkeepers use to charge for their services.
1) Hourly Billing
Clients are charged based on the number of hours worked, multiplied by a predetermined hourly rate.
Pros:
- Simple to implement; just set an hourly rate
- Easy to track time and bill for actual work done
Cons:
- Time-consuming administrative tasks for invoicing and collections
- Sometimes disliked by clients as the hours initially estimated can be exceeded, leading to higher-than-expected costs
Example: Boss Bookkeeping
Hourly billing is the most “traditional” way of charging for bookkeeping services.
However, my main issue with this method is that it creates a misalignment between the client’s desire for efficient, effective work and the firm’s incentive to log more billable hours.
The result?
The bookkeeping services provider may focus more on billable hours rather than the value delivered to the client.
Remember: Clients pay for the value you provide, not the hours you spend at your desk.
2) Fixed Pricing
As the name suggests, price is consistent for specific services or deliverables, regardless of the client’s unique situation or needs.
Pros:
- Easier to manage; prices are set in advance for each service
- Streamlined sales process compared to value pricing
Cons:
- Profit potential is capped; you may miss out on opportunities to charge more for complex or high-value work
- You may end up doing more work than anticipated without additional compensation
Example: ABusinessManager
This model provides clients with transparent, predictable pricing upfront while promoting efficiency to maximize profit margins.
With fixed pricing, you are essentially creating a service menu that outlines specific accounting services along with their associated fixed prices.
This approach allows clients to see exactly what services are available and how much they will cost upfront, eliminating any uncertainty about billing.
Find out more about fixed and value pricing in this blog post.
3) Value Pricing
Sets prices based on the value that you are providing to your client rather than basing it on the time that you spend.
Pros:
- Potential for higher profit margins by pricing based on perceived value
- Allows for upfront pricing and upfront payments
Cons:
- More complex to implement; requires a deep understanding of client value drivers
- Sales process can be time-consuming
Example: Bookkeeper360
In this example, the Monthly and Weekly options are examples of value pricing. There’s no advertised price, because pricing for these plans depends on the provider’s assessment of the value they deliver based on each client’s specific needs.
I’m a strong advocate of value pricing.
And while this method offers the most potential revenue-wise, the process of coming up with the right price requires some legwork.
Value and therefore price is subjective and is different from person to person. There are a lot of aspects you need to be aware of if you’re choosing value pricing.
Later in this article, I’ll share a basic 4-step process you can use to implement value pricing for your bookkeeping services.
I also recommend reading Ron Baker’s book on “Implementing Value Pricing” to learn more.
You can also check out my chat with Ron on my Future Firm Accounting Podcast.
How To Decide What To Charge
The amount you can charge is all about the value you provide to your client. More value = higher price.
You can provide value for a client in 1 of 4 ways:
- Improvement of their financial situation: By keeping accurate records and providing insightful reports.
- Helping them save time: Taking care of their bookkeeping allows clients to focus on their core business.
- Mitigating certain risks: Minimize the chances of financial errors and compliance issues.
- Providing Peace of Mind: Take the stress out of financial management from your client.
To help you determine how much you should charge based on the value you can provide to a client, follow these 4 steps.
Step 1: Hold a discovery call
Discovery calls are calls are set up with potential clients to determine if there’s a mutual fit.
Here are the 2 main things you should be looking to accomplish on your discovery calls:
1) Assess Your Scope of Work
Here, you want to determine the services the client will need and the scope of those services.
If you skip this step, scope creep will likely become an issue.
Understanding the client’s needs upfront ensures you can accurately estimate the time required for each service and plan how the work will be delivered.
2) Evaluate the Value You Bring to the Table
Firm owners often skip this step, focusing on defining their scope of work and quickly sending proposals.
They forget that if you want to charge the highest prices possible, it’s about determining the value you can provide to the client.
Even if you believe you’re providing significant value, it won’t matter if the prospective client doesn’t see it.
For instance, Client A, who hates bookkeeping, will pay more than Client B, who doesn’t mind it.
In short, identify value drivers and assess the value you’re creating for each prospect.
Check out this podcast episode for a few other things to keep in-mind when it comes to discovery calls.
Step 2: Create 3-tiered pricing options
A three-tiered pricing model offers customers three client service packages: Gold, Silver, and Bronze.
If you’ve been following my content for quite some time, you know that I am a strong advocate of three-tiered pricing.
This approach works well with a productized service, bundling various services and features into one tier or a fixed-price monthly subscription.
For this step, you just need to list out the services, support, and technology for each tier, like the example below.
Example: RGB Accounting
Step 3: Set your pricing for each tier
Pricing is influenced by these factors:
- Value Provided: More value generally justifies a higher price.
- Pain Points: Clients are willing to pay more to solve urgent or significant problems.
- Profit Margins: Aim for a profit margin of at least 50%.
This part is, unfortunately, more “art” than science.
Based on your discovery call with the client, you should have an idea of how “painful” their current bookkeeping processes are for them.
Using this information, you want to guess at the highest price you think they’re willing to pay for each service level.
Once you’ve landed on a price for each tier, estimate the time required to deliver each service to determine your monthly costs.
Then compare the cost of delivering the service with the cost you will charge the client and ensure it meets your desired margins.
This part takes practice, but you’ll gain more confidence in your pricing over time.
Step 4 (Bonus): Present your tiers to the client
When presenting your tiers to your client, here are some tips to make it more likely they’ll say “yes:”
Schedule a Call, Not an Email
It’s best to do this during a call rather than via email as a call allows for a more engaging discussion.
You’ll be able to address any questions or concerns the potential client may have in real-time.
Ask “Which Package Would You Like to Go With?”
Avoid using a “yes or no” approach.
Instead, ask the client, “Which package would you like to go with?”
This phrasing may help encourage them to select from your options rather than deciding whether to consider you at all.
Start with Your Gold Tier
This is called price anchoring.
Introducing a high price first can shock your potential clients a bit, but it makes the other options seem more affordable, easing the path to closing the deal.
And if you want to dive even deeper into pricing your bookkeeping services effectively, check out my coaching program, Future Firm Accelerate.
You’ll have access to all the templates, scripts, and frameworks you need to fine-tune your pricing strategy from start to finish.
Are You Charging Appropriately For Your Bookkeeping Services?
Figuring out how much you should charge for your bookkeeping services may require some effort.
But remember:
Your pricing determines your profit margins, which form the foundation of a healthy business that provides a good lifestyle for yourself and your team – and a positive experience for your clients.
Which pricing method do you prefer?
Leave a comment and let me know.
P.S. If you’ve enjoyed this article, you might enjoy my free newsletter too. In it, I share proven tactics to help you systematize your business, earn more, and work less.
