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    7 Replies Latest reply on Nov 21, 2007 7:30 AM by LT Lawn Care

    Should I charge per hour or per month?

    LUCKIEST Guide
      *I have opened an office offering full charge bookkeeping services.
      I struggle with how much I should charge my clients. How does one come up with a
      fair fee? Because I truly enjoy what I do and because I truly enjoy spending
      time with my clients, I find myself giving more than I probably should. I have
      decided to come up with an agreement with every new client. A written contract
      of some sort that would detail exactly what I will do for them and what this
      will cost them. Should I charge per hour or per month? I hesitate quoting an
      hour rate as most clients don't realize that I can do their books for the month
      in six to eight hours. The hourly rate may scare them off due to the fact that
      they think it takes a long time to do a months worth of bookkeeping.*
      *Any
      suggestions would be greatly appreciated.*
        • Re: Should I charge per hour or per month?
          Techie Wayfarer
          When you talk to most of your clients what do they expect? I think hourly rates are reasonable if the client knows what to expect and is comfortable with your services, expertise, efficiency, etc. For new clients, maybe you can guarantee them a not to exceed cap if they are not comfortable with hourly initially (e.g. not to exceed X, e.g 10 hours, this way they know the maximum they will be billed for a specific task). But, remember to set the maximum reasonably, so that you don't end up taking a loss if it takes longer to work on their books for whatever reason. Depending on the scope of services you provide if you can estimate the average time to perform a specific task might not be a bad idea to have flat rate options as well for some standardized services - this guarantees both you and the client an expected amount.
          • Re: Should I charge per hour or per month?
            teacup Wayfarer
            Good idea about having a written agreement or contract for your clients. A good one will protect both you and your client. This prevents future misunderstandings, etc. down the road. Best of luck Luckiest!
            • Re: Should I charge per hour or per month?
              DomainDiva Ranger
              Charge 65.00 an hour. For bookkeeping services that seems fair in your part of the world. Accountants run 100 + per hour.

              Best, The Diva
              • Re: Should I charge per hour or per month?
                marktingcoach Newbie
                First of all, congratulations and good luck!

                The advice that has been given is excellent. Your industry usually charges by the hour, and a contract does protect both parties. My wife is an account and owns a bookkeeping firm, so my background in your field is well founded. You shouldn't worry about scaring off business as long as you keep your prospects informed about how many hours it takes to do their books each month. By spelling it out, you can show them the big picture -- demonstrating that the monthly investment is worth the service that you are providing to them and the benefits that they derive from your services.

                Don't worry about giving more than you probably should. Over delivering is essential in today's economy. It generates word-of-mouth advertising, and gives you the greatest opportunity to hold onto your clients. Just be sure that your hourly rate is profitable enough that it makes overdelivering reasonable from your perspective as well.

                As for determining what rate you should charge, determine who your direct competition is -- those who service the kinds of clients you are looking to work with. Find out what they are charging. Then, whatever else you do, do not undercut them. The only one who loses in that situation is you. In fact, one of the things I often suggest to my clients is to charge a slightly higher fee. But to do so successfully, you must consistently deliver more than your competitors.

                Good luck in your new endeavor.

                Peter George, The Marketing Coach
                • Re: Should I charge per hour or per month?
                  Lighthouse24 Ranger
                  Hey, Luckiest -

                  My suggestion would be to charge by the hour, but propose/estimate/price your services to clients by the job or month. In other words, if you estimated that you would spend 6 to 8 hours a month on the client's books and your hourly rate was $65, you could propose/estimate the service at $549. If the client hesitated or expected to negotiate, you'd have some wiggle room to still win the business. When you prepared the client's actual bill, it would show hours x rate (e.g., 7 hours x +$65/hour+) = $455 . . . so you would always be presenting the client with bills that were below your agreed upon estimate.

                  Showing your hourly rate on bills makes it easier to justify a price increase when necessary (if they can see that you've held $65/hour for three years, they can understand the need to bump it up -- especially if you're only bumping it up to what you told them three years earlier!). Of course, for a client that readily accepts $549, you could charge that, but provide services for him/her longer without raising your fees.

                  Hope this helps. Best wishes!
                  • Re: Should I charge per hour or per month?
                    SCORE108 Wayfarer
                    I would recommend the hourly charge. With a new client you may not know what problems you could run into especially if they do not submit the information in good order. If you have to spend more time you should get compensated more. You can be selective in what hours you charge for. If you do something extra for them you may consider it good will building and decide not to charge for it. I think $65 would be a reasonable rate unless you have stiff compensation that charges much less. You could put the hours on the billing and if they are unusually high you could itemize the extra hours with a detail as to what they were spent on. In this way you can train the client to submit the work to you in such a manner that you do not have to spend the extra time again. Communication with the client about the billing will build their confidence in your service.
                    • Re: Should I charge per hour or per month?
                      LT Lawn Care Wayfarer
                      Hourly will work for most small business clients, it is less scary and I think most small business owners think they are getting what they pay for if you are charging them by the hour.