How Much Should You Charge?
This is always a hot question, especially when you are in the planning stages of your business. But that is also the best time to set your sights for how your business will give you the lifestyle you seek!
One of the biggest problems I see many new bookkeepers and consultants make (yes, I made this mistake myself too!) is to set their rates too low. Do not undervalue the benefits you provide others! If you don’t value what you do, neither will your clients. You will also damage your credibility in your clients’ eyes.
The first step in learning how much you SHOULD be charging for your expertise is to see what others are doing. You DO NOT want to set your rates below your colleagues. If you feel you need more experience, go ahead and set your rates closer to the lowest rates they are charging, but not at the bottom. As your confidence builds, you should raise your rates. So that means your rates should be going up at least once per year.
As a guide to follow and get your bearing on what other successful freelance bookkeepers and QuickBooks consultants are charging for their services, here are two recent national surveys that you should take some time studying.
By reviewing these real world results, you will not only get a good idea about how much you can charge for your services, but also zero in on the profit centers you would like to develop and specialize in as you grow your business.
I’ll look forward to hearing your comments about how you are doing in setting your own rates, or raising them as the need may be.
When it comes to your fees, the best way I’ve found to know if you’re charging enough is to just go ahead and raise your rates, and then see if anyone complains. If no one is complaining, your fees are not yet high enough!!
And the best part is that when you charge just a little bit more than you really feel like you “should,” the clients you attract will be the kind who highly value what you do and are the easiest to work with. I’ve done this many times in my own business, and despite the fear of losing clients that is always there, it just doesn’t happen. The only clients you ever lose are the price shoppers who are the hardest clients to work with and don’t pay on time or value your services anyway.
So again, think long and hard about how you want your business to succeed, the kind of clients you want to serve, then set your rates (fearlessly) in line with your intended outcome.
20 Responses to “How Much Should You Charge?”
Deb Frawley on June 10, 2008
Thanks Gabrielle I found this article to be extremely informative. It couldn’t have come at a better time for me as I’ve been questioning my rates. Very happy to have found your blog.
Gabrielle on June 10, 2008
Hi Deb,
Glad you found this blog too!
So does this mean you’ll be raising your rates? There is a huge need for competent bookkeepers, and that need is only going to increase as time goes on. (I’ll be talking about the reasons why in a future article.)
So if you’re providing quality bookkeeping service, then there’s no questioin that you should be fairly compensated. And if you are fairly compensated, you will be able to prosper in your business, which means you will be able to continue to provide quality service for your clients (who value your services), and their business will prosper too. It is an upward spiral. Everyone wins!
Gabrielle
The Freelance Bookkeeper » Should You Charge a Fixed Fee or An Hourly Rate for Your Services? on May 27, 2009
[...] Marketing, Q & A Have you wondered about this question? Right after being asked about how much to charge for bookkeeping services, usually I hear this one. And of course, the short answer is, it [...]
Carol on April 8, 2010
EXCELLENT INFORMATION
PLEASE HELP ME FIND GOOD CLIENTS NOW !!!!!
(860) 983-6477
Gabrielle on April 9, 2010
Hi Carol,
As a business owner, you must decide who qualifies as a “good client” and building a business can happen quickly, but it is not the same as opening your doors and suddenly “good clients” come flocking to you.
If you want to get into action NOW and start attracting and finding “good clients” then here’s my bootstrapping action plan for you:
1. Read through the other posts on this blog and subscribe to updates in the box at the upper right of this page.
2. Educate yourself proactively by reading the books available on starting your own bookkeeping business, including the one I co-authored, “How to Start a Successful Home-Based Freelance Bookkeeping and Tax Preparation Business” (see the Resources link at the very top right of this page)
3. Get out there and start telling everyone you know about your business and asking them for referrals. Get introduced to CPAs in your area (through friends), you can even send letters to new start-up businesses, getting the information from the public listing of new business registrations with your state (check online).
There are many, many ways to get your business going and finding great clients. But you need to start with one at a time and you need to realize that YOU are in charge of your business success. So go make it happen!
Hope that helps.
Gabrielle
K Johnson on June 3, 2011
What is the best way to deal with a potential client who thinks you are charging too much money and asks you to show them why I charge what I do?
Gabrielle on June 9, 2011
Great question, and much of it depends on how YOU present your services.
Clients judge your rates by the value they perceive they are getting. If they think you charge too much, it’s because they don’t think you are offering enough value for the money. WHY they have that impression could be (1) because they are looking only for the cheapest rate and do not understand the true value of the services you have to offer, or (2) you are presenting your services in a way that does not demonstrate value and puts the potential client in a commodity mindset.
If you think the client falls into category #1 – you don’t want them as a client, so don’t try to convince them. Send them on their way. They will never be satisfied, overly demanding, constantly complain and be slow payers.
If you are purely quoting an hourly fee and say that you will do their bookkeeping each month, you may be guilty of being in category #2 (and you will attract category #1 prospects). In general, discussions with potential clients should center around their needs and the solutions and benefits you provide (not the tasks that you do) BEFORE you ever discuss your rates.
Sara on November 12, 2011
I want to raise rates for one of my clients, but I am unsure how much is acceptable for a single increase. My first instinct is to raise by $5 per hour but I have no specific basis for that particular amount. I think it is an appealing amount because I like round numbers. How do I choose an amount and justify it when it is not based on a certain percentage of my current rate? It might help to know that my current rate with them is already pretty high, but I have worked with them for over 2 years without any increase.
Gabrielle on November 15, 2011
Hi Sara,
Good for you in raising your rates! And you can raise it to whatever you think makes sense. You don’t really have to “justify” it to the client other than to remind them that your rate has been the same for the past two years, but costs continue to escalate. Then raise it by your $5/hr or whichever amount makes sense for you. Your client need only equate the amount being paid with the value they are receiving. Remember, you are not just like every other bookkeeper – you know THEIR business and provide the services THEY need.
Hope that helps. Just remember, you are the boss of your business, so you get to decide what you will charge. Ultimately, the only way to know if your rates are too high is when you can’t find any clients to pay it. And quite honestly, there will always be clients to pay your rates if you are providing high quality service (value).
sara on November 15, 2011
Thanks, Gabrielle! I feel a little better about my choice now. I have been really wrestling with this increase. Last week the executive director of the organization actually suggested that I give myself a “bump up” in my fees for the coming year. Since that time I have been trying to decide if I should just go for the gold and add $5, or if that would be going overboard with the suggestion. I don’t want to seem like I am abusing them, particularly since they are already paying me more than any of my other clients. I think I will take your advice and propose $5 with confidence. If the E.D. thinks it is too much, I’m sure he will let me know. I know the organization is very happy with my work so most likely they will not object. Thanks again for your advice and for all continuous wonderful insight.
Gabrielle on November 21, 2011
You are very welcome, Sara, and quite honestly, when clients SUGGEST that you raise your rates, it means that they feel that they are getting far more value than they are paying for. Also, since you say that they are paying more than any of your other clients, maybe it’s time to raise your rates with your other clients, too! January 1 is a great time to raise your fees, but send out the warning shot now. I bet you can start off 2012 by making more money without adding to your workload or your client base! Congratulations!!
JG on November 15, 2011
Does anyone know where to find more updated information? Or where to find the NACPB rate information? (The existing link in the article does not connect to rates/fees.)
Thank you.
Gabrielle on November 15, 2011
Your timing to ask this question is good, JG! The revised rates survey from Intuit for 2011 have been published. Stay tuned for an updated article on this topic as well.
Dahlia Yvette Savedra on December 26, 2011
Hi Gabrielle! I am barely learning of your blog and I hope that you can help me. I am in the process of starting my home-based bookkeeping service. What bookkeeping do you recommend I use? I have been advised to use Quickbooks, but since there are different types of Quickbooks software, I was wondering which one would be the best for me to use for my business. Your help is greatly appreciated.
Thank You
Yvette
Gabrielle on December 27, 2011
Hi Yvette,
If your clients are in the USA primarily, then yes, you should be using QuickBooks. Your best bet is to use the Accountant edition, since that has all of the capabilities of the other versions of QuickBooks, plus specific features for accounting professionals. That way, you can serve any clients who are using QuickBooks (for the same version year or one year prior).
Yvette on January 12, 2012
Hello Gabrielle:
Thank you for the information. I am so excited to begin my bookkeeping service. So, Quickbooks Accountant edition it is. If I have any other questions, I will definitely submit my question.
Thanks,
Yvette
Schequetta on December 27, 2011
what if you have a client with more than one account. should you give them a discount for the second account or keep the price as though it were a new client?
Gabrielle on December 28, 2011
Schequetta,
By “more than one account” do you mean you are keeping the books for more than one business, but both businesses are owned by the same client?
If that is the case, then it’s up to you how you charge. YOU are the boss of your own business and how you want to charge for services. You might consider giving a package rate for both businesses, but that is completely up to you and somewhat depends on how profitable the client is for you.
So bottom line, it’s whatever you think is appropriate for the situation. It’s your business – you make the rules!
Carolina on January 25, 2012
I just came across this. Thank you so much! I’ve been doing taxes for 6 years now and want to do bookkeeping, too. I’m nervous about starting my own business but excited at the same time. Thank you so much for this great article!
Gabrielle on January 29, 2012
Carolina,
Remember, “by the inch it’s a cinch”!
If you’ve already been doing taxes, especially if some of those clients own businesses, that might be a great place to start. If they are your own clients, you could start very softly by suggesting ways they can improve their bookkeeping system. If they are your employer’s clients (and it is okay with your boss), you could also let them know that you are starting your own freelance bookkeeping services and give them your card and ask them to pass it along to any other business owners they know who might need your help. If you are an employee right now, you might also start by offering to do bookkeeping for your employer’s tax clients on a subcontracted basis. That means your boss is just expanding the services being provided to existing clients, you do the work, and you basically share in the revenue. Just some ideas that would be a gentle way to get started.