Building A Bookkeeping Business: Increasing Your Prices
We don't like to do it, but we must ...
Posted by Alison Mead on 22/01/2024 @ 8:00AM
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 are getting on with the day-to-day of looking after the clients you have ...
So, what process should a bookkeeper follow to raise their prices?
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But no one at the moment can avoid the cost of living crisis, and I know your expenses will be going up as much as anybody 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 huge hike in prices in one go. 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 tend to have an annual increase too, so I try and 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 do a review of your costs and income and see what you need in order 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 having lower skill levels. As you settle into your role you may do personal development which gives you more skills, or just improve with experience.
Often, with the jobs I take on, the client does the basic data entry themselves and I then just oversee or do the more complex part of the bookkeeper. 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 said already I naturally moved away from jobs with a high element of basic data entry, or give the client the skills to do that part themselves, and have a more overseeing 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 me.
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 like with normal employment, when you start a job you are offered the going rate for the job at that time, but existing employees who have been there a long time may be on lower rates for historical reasons.
Below are 3 example emails that I've sent out to clients over the last few years giving an idea of what to say, for different scenarios. I hope that you may find these useful:
"It's that time of the year again where I review my rates and look at the costs involved with my business to see if a rate rise is warranted.
To reflect that costs are going up for all of us in all areas of business from first July 2019 my rates are rising 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."
"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 put rates up when people were struggling with COVID-related issues, but now it is time to review my rates.
I am therefore putting my bookkeeping rate up to £30 per hour plus VAT for existing clients - any new clients who come on board are paying £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 are an independent bookkeeper who would like to build up your client base and increase your experience it might be my handholding service might be just what you need to give you the confidence to take on new clients and gain new experiences.
And that means you can put up your hourly rates for an improved offering too.
Until next time ...
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about building up your client base and increasing your experience, it may be a great idea to give me a call on 01604 217365 and let's see how I can help you.
About Alison Mead ...
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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