You may have already done the difficult part of starting your own bookkeeping business; you've found clients, you've decided on your pricing, and now you're getting on with the day-to-day of looking after the clients you've ...
Bookkeeping is hard, Numbers and figures abound, Balance must be kept
However, no one can avoid the cost-of-living crisis at the moment, and I know your expenses will be increasing just as much as anyone else's. If you don't raise your prices regularly, then you will effectively gradually be doing the same job for less and less money each year.
"Also, by raising your prices regularly, you can do small incremental jumps each year!"
This means you're not suddenly giving clients a considerable price hike all at once. You will also set an expectation that this is what your clients need to anticipate, and if you are doing a good job for them and they value you, they will be happy to pay the increased fees to keep their continuity of service.
I have never yet had a client leave me because I have put the prices up for them; they mostly say I charge too little for what I do for them and the peace of mind I give them. I know from experience, though, it's so easy to just keep working and forget to review your prices for that client you love working with, or who you think may struggle with a price rise.
"I have to put software prices up annually anyway!"
Xero tend to increase their prices every September, and Sage tends to have an annual increase too, so I try to keep my bookkeeping rate increase to a different time of year so it doesn't hit the client all at once.
So, what process should you follow to raise your prices? Firstly, I would review your costs and income to determine what you need to continue your business. I will also consider what I do for my clients and how my experience has increased. A bookkeeper just starting out may charge a lower rate due to a lack of confidence or lower skill levels.
As you settle into your role, you may engage in personal development, which enhances your skills, or simply improve with experience. Often, with the jobs I take on, the client handles the basic data entry themselves, and I then oversee or perform the more complex part of the bookkeeping. This means I spend less time on their books, but I give a higher value, so the hourly rate should be higher than if you are just doing basic data entry.
I would always give my clients plenty of warning about a rate rise, and give them a chance to move away if they wish, if you are no longer the best fit for them. This might seem like a bad thing at first, but as your experience increases and your offering changes, the clients you first took on may no longer be the best clients for you.
As I mentioned earlier, I naturally moved away from jobs with a high element of basic data entry, or tasks that require the client to develop the skills to do that part themselves, and have taken on a more advisory role, as that is what I enjoy. I have passed on the more data entry-heavy jobs to other bookkeepers who are looking for a different client base than mine.
Often I will start new clients off at a higher rate than existing clients are on, as again when you start out you may go in at a lower rate, but as you gain experience and take new jobs on you can start out at a higher rate, but you may find it hard to raise the prices for those original clients who started with you.
It's similar to regular employment; when you start a job, you are typically offered the prevailing rate for the position at that time. However, existing employees who have been there for a long time may be on lower rates due to historical reasons.
Below are three example emails that I've sent to clients over the last few years, providing an idea of what to say in different scenarios. I hope that you may find these helpful:
Example Email: "It's that time of the year again when I review my rates and look at the costs involved with my business to see if a rate rise is warranted. To reflect the rising costs for all of us in all areas of business from July 1st, 2019, my rates are increasing to £27. I hope that is acceptable to you and we can continue to work together to keep your systems running as smoothly as possible."
Example Email: "I have done a review of my rates and have realised that I have been the same bookkeeping rate since August 2019. I didn't want to increase rates when people were struggling with COVID-related issues, but now it's time for a review. I am therefore increasing my bookkeeping rate to £30 per hour plus VAT for existing clients. Any new clients who come on board will pay £35 per hour plus VAT from now on. I hope that is ok and the new rate of £30 per hour will be charged from 1st August 2022."
Then the following year, example email: "With the cost of living and inflation going up, I am going to have to make my bookkeeping rate £35 per hour for all clients with immediate effect. I had kept my long-standing clients at a lower rate since the last price rise, but I feel I need to bring all clients in line now. I hope that is ok and you are happy to keep working with me at this new rate, which comes into force from April 2023."
And if you're an independent bookkeeper looking to expand your client base and gain more experience, my handholding service may be just what you need to build confidence and take on new clients.
And that means you can put up your hourly rates for an improved offering, too.
If anything I've written in this blog post resonates with you and you'd like to discover more about increasing your prices, it may be a great idea to give me a call on 01604 420057 and let's see how I can help you.
Alison loves bookkeeping and supporting bookkeepers. She has been helping clients to be better bookkeepers in Sage 50 for over 24 years and has been Xero Accredited in accounts and payroll for a number of years too.
She specialises in a very unique hand-holding method of training, helping bookkeepers and business owners to use their accounts software as and when they need support in setting up and producing their invoices, reports and financial information.
Alison combines her role at Silicon Bullet with her Forever Living network marketing businesses and is often to be seen at business networking meetings as she likes to keep busy.
You know what they say: if you want something done well ask a busy person!
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