Whether you’re just starting out in your freelance bookkeeping business, or you’ve been doing it for years, the topic of fees is always a hot one.
That’s because fees are a work in progress and something we’re never quite “done” with forever. We all need to keep the balance between how much you charge for your bookkeeping services, and the fees clients are willing to pay.
Why you probably need to raise your rates
One of the biggest obstacles to overcome, especially for new or emerging freelance bookkeepers, has to do with fees.
This is especially tough when trying to expand a meager client base. The complaint I often hear is:
“Prospective new clients say they want bookkeeping help, but don’t want to pay anything more than a slave’s wage ($15/hour or less)!”
It seems like a catch-22. You need to get clients to make money, yet the clients either don’t have the capacity to pay your fees or they don’t value your services enough to agree to your rates. How, then, can you even grow your business, much less consider charging more?
Quite frankly, the problem is not with these potential clients and what they expect. The problem is more likely a combination of how you are approaching new clients and your fees:
- Who you offer your bookkeeping services to
- Your fees are just too low
To address the first point, if you accept just anyone as a new client, likely you will end up taking on more than a few “undesirable” clients. While you may need the income and they may need the help, these should not be the only criteria for accepting a new client.
We all need to recognize when a potential client does not “qualify” to hire you!
Simply put, you need to come up with a list of specific qualifications for the clients you are willing to work with – and then stick to it. Think of it like a job description in reverse – if they don’t qualify, you move on, looking for a better fit. Otherwise, it just won’t turn out well for anyone.
Your Ideal Client checklist will protect you from accepting “unqualified” clients whose main focus is getting your services at the cheapest price possible.
This leads to our second point regarding fees…
Your Fees Are Too Low
How do you know if your fees are too low?
The short answer is when you are working too hard and just barely turning a profit (if you are making a profit at all), then you’re not charging enough.
As a business owner, you have many more costs than those of an employee. Therefore, you should NOT set your rates at the same level as a bookkeeping employee would get paid. You simply won’t be able to stay in business if you do.
Also, if you set your rates so that you are the “most affordable” bookkeeper in your area, you will also attract the worst type of clients – those who either can’t afford professional level services or who simply do not realize the value of accurate financial records to manage their business effectively.
To find out at least what average pricing for freelance bookkeepers is in your area for comparison, you can review the bi-annual Intuit Rates Survey as a starting point.
How to implement a fee increase
Once you’ve decided to raise your fees, then you face the question of how do you roll out your new rates, both to existing clients and to new clients.
Raising your rates is easiest when handling new client inquiries, since they don’t know what your previous rates were. You may be pleasantly surprised to learn that many of them will gladly accept your new rate.
For existing clients, you can decide on a case-by-case basis whether an increase is warranted. The easiest way to approach this is to target the bottom 20% of your clients. You know, those who are difficult to work with, always asking for more free help and are slow payers. By raising their rates you will likely cause them to decide to go elsewhere.
This is a no-lose situation for you. Either they leave and make room for higher paying clients, or you get paid better for the grief they cause you. Either way, you’re better off!
The hardest part is mustering the courage to just doing it! In fact, yesterday received a message from one of our fellow bookkeepers who took my advice on this route, and while she was prepared to lose these low-quality clients, not one of them even balked at her rate increase!
Bottom Line: Examine your fees and see whether by undercharging you are not only attracting the wrong clients, but actually preventing your business from reaching the success you deserve.
By the way, if you have been trying to find new, high-quality clients (who isn’t?), you’ll definitely want to join me this coming Wednesday for a free, LIVE webinar I’m hosting with my very special guest Allison Babb Phillips. She’s an amazing speaker and entrepreneur.
Join us for “4 Surefire Ways to Quickly Get New Clients”