How to price accounting services

Check out our tips on the best way to approach pricing services for your practice.

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How to price accounting services

Today, the role of an accountant goes far beyond preparing tax returns and reconciling bank feeds. Accountants can help their clients make better financial decisions and run a more sustainable business. Sometimes, investing in an hour of specialist accounting advice is all it takes to provide years of value.

So when it comes to pricing your services, accounting practices have lots to think about. Should you charge for time or value? How will Making Tax Digital impact your costs? Which pricing model will help you remain competitive, and still secure a profit?

In this article, we’ll explore how to price accounting services so you can charge your worth and better serve your clients.

Why is pricing accounting services difficult?

If you’ve ever found yourself wondering – ‘How are prices set in accounting?’ you’re not the only person who’s stuck.

One of the main reasons pricing accounting services is difficult is that your clients and their needs differ greatly. Say you provide a monthly bookkeeping service, where you reconcile all of your client’s transactions for a fixed price. For a mobile hairdressing client, that might mean reconciling 30 transactions per month. For a bustling seaside cafe, you could be reconciling 30 transactions per day.

Accounting practices also have a choice of pricing models to choose from. While this is a positive – you can design a pricing strategy that reflects your services and clients – it can also create complexity for accountants and bookkeepers who are unsure which model to use.

It’s also important to note that what clients find valuable is changing in light of Making Tax Digital. Instead of traditional manual data entry services and bank reconciliation, it’s likely that clients will come to you for more advisory support instead.

As a result, pricing strategies such as hourly billing aren’t always reflective of the value accountants and bookkeepers provide. We’ll explore this more in the next section.

Different types of pricing strategies for accountants


Fixed pricing is one of the easiest models to use in your accounting practice because it works on a flat rate for each of your services.

To calculate your fixed prices, you’ll combine the cost of the service with your percentage profit margin.

So if the cost of providing monthly bank reconciliation for clients is £100 (including things like labour, and software) and you set your profit rate at £25%, the fee for this service would be £125 per month.

Fixed pricing makes it easier for you to create quotes because your fees for each service are preset. And because fees are confirmed ahead of time, clients can be confident they won’t face any unexpected charges. What’s more, if you increase efficiency in your practice, you can also increase your profit margin by making certain tasks less labour and resource intensive.

Fixed pricing does have its pitfalls. Sometimes tasks take longer than expected or require more resourcing. In this case, fixed pricing can mean completing the job costs you the profit.

If you’re going to use a fixed pricing model, be clear with clients about the scope of work. Outline all the details – like how many transactions you’ll reconcile per month, and how many drop-in sessions you can provide in a financial period.

Value based

Value based pricing works on the principle that the cost of your services relates to the value you provide clients. It’s also one of the more challenging pricing models to implement because value is subjective and will change depending on each client.

Instead of pricing up services individually, you’ll build a package based on your prospective clients’ needs. This package will have a set price, so clients know what they’re paying up front. You might choose to charge this in one fell swoop or spread the cost over each month.

Value based pricing can be super effective pricing for accountants. Instead of charging for your time, you charge for your value. Your clients’ bills won’t fluctuate based on how many hours you’ve spent working, so this gives them a little more consistency. This pricing model might also spur you on when it comes to learning new skills because you’ll be able to offer new services and provide more value.

Value based pricing does have some drawbacks. For starters, it’s hard to implement because it’s less formulaic than traditional pricing models. If you charge per hour, you can base your hourly rate on labour, materials, and how much time you wish to spend working per week. Value based pricing, by definition, means calculating a price based on perceived value.

Bear in mind that if you implement value based pricing you’ll need to set aside more time pricing up service packages – since they’ll differ from client to client. Read this guide on how to implement value based pricing for more information.

Monthly retainers

Monthly retainers are useful for clients who want guaranteed services each month, and accountants who want a consistent monthly income.

Every month, the client will pay a fixed fee for your services or time. This could include things like bank reconciliation, 1 hour of advisory, and preparing invoices. Sometimes, clients might need more support than their monthly retainer covers. In this case, you’ll need to charge for additional services outside of the scope of your agreement.

As mentioned above, monthly retainers are helpful for accountants that want some certainty about what they’ll earn each month. Clients also appreciate monthly retainers, because they know they’re guaranteed a certain amount of service over a specific period.

Monthly retainers are geared towards long-term clients, so you won’t be able to use them with everyone. Occasional, one-off services will need to be priced differently. As with fixed pricing, you must define the workload scope clearly and accurately. Otherwise, you could end up taking on more work, without the pay to go with it.

Hourly billing

Hourly billing is one of the simplest pricing models to use. All you need to do is set your hourly rate, track your time, and charge clients based on how many hours you work for them.

The main benefit of hourly billing is that all the work completed is charged for. Unlike fixed pricing and value based pricing, the total fee for work billed hourly is calculated after the work is complete.

But this also means clients don’t know how much they’ll be spending on your services until the month is up. Sometimes this creates tension with clients, who’ll see the hours you’ve spent working on their accounts, but not the value you’ve provided for their business.

Another issue with hourly billing is that it doesn’t accurately reflect value. For example, an hour of your time could be spent reconciling a client’s bank feed or advising them on the best software package for MTD compliance. Certain services will have longer-term benefits than others, but this isn’t reflected in the price.

Contingent fees

Contingent fees are only charged when a predetermined event takes place. For example, you and your client make an agreement that if a bank loan application is approved, you’ll be paid a fee by the client.

Contingent fees are only paid by the client if the pre-agreed outcome is achieved. So clients pay for results, instead of time. And accountants have the opportunity to earn a fee that isn’t tied to the hours spent working, but to the outcomes they achieve for their clients. In reality, this could mean you earn a large sum for a small amount of work.

Of course, some risks come with contingent fees. Firstly, if the agreed outcome isn’t achieved, you don’t get paid. Contingent fees also ride on an agreement, so if that agreement isn’t clearly defined, you could lose out on payment.

How to choose the best pricing strategy for your practice

While every accountant will have their preferences for pricing structure, you must consider the unique aspects of your practice before deciding on your strategy.

Follow these steps to find the best pricing strategy for your practice:

Step 1: Understand your cost structure

Before you can set your price, you need to know how much it’s going to cost you to deliver each service.

As if you were creating a budget for a client, record all of your expenses for the month and calculate the total. You’ll want to note down things like labour costs, overheads including office rent and business rates, and the cost of materials.

Don’t forget to include the cost of accounting software. Some practices pay a monthly subscription on behalf of their clients, whereas others expect clients to pay for the software themselves. Some of your clients might still be using spreadsheets, in which case, accounting software will be a new cost to consider. If you’re planning to pay for a software package, make sure this is wrapped into your pricing structure.

Step 2: Do a competitive analysis

No two businesses are the same, and neither are accounting practices. That’s why most practices provide services for a specific niche, industry, business structure or other categories.

But that doesn’t mean you shouldn’t take inspiration from your competitors. If you’re serving a local market, seeing their pricing structure can be especially beneficial if you’re targeting local clients.

You don’t need to track down every accountancy practice in the county. Try to pinpoint ones that offer similar services, or serve similar markets to yours. Then identify their pricing structure and search for client reviews to see what the consensus is.

Step 3: Get your clients’ input

It’s time to think deeply about your target market and speak openly with your clients. If you’re able to pinpoint which services provide the most value for your clients, you can use this information as a basis for your pricing structure.

For example, if you have a client that handles most of their day-to-day admin with accounting software but regularly calls you for advisory support, an hourly rate may not reflect the value you’re providing. Equally, if another client only calls on your for VAT returns or personal tax returns, a fixed price might work better.

Before fully committing to a new pricing strategy, you can always test-run it with a handful of clients to make sure it’s sound.

Step 4: Determine your desired profit margin

Once you understand your costs, competitors, and clients, you can decide on your profit margin. Depending on which pricing structure you use, you can increase or decrease your opportunity to make a profit.

For example, once your hourly rate is set your profit margin is fixed – unless you reduce your costs. With fixed pricing, you might be able to improve your profit margin by employing new technologies or creating efficiencies in your practice. And value based pricing can provide significant profit if you’re able to deliver lots of value at a low cost to your business.

Final thoughts on pricing accounting services

For some business owners, just the thought of managing their own bookkeeping and tax affairs is enough to make them anxious. If you’re still unsure how to charge for accounting services, bear in mind that you’re capable of providing immense value for your clients, just by lifting the administrative burden.

The accounting industry has changed dramatically over the past few years, especially in light of Making Tax Digital. As these changes occur, you must revisit and refresh your pricing strategy to reflect the value you provide for your clients.

Explore our accounting bookkeeping tips and guides for more tips on running a successful practice.


Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.

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