2018 Billing Rate Survey: Rates by Region, Credential & Certification
Intuit ProAdvisors, Michelle Long, CPA, and Heather Satterley, EA, surveyed more than 1,000 accounting and tax professionals and promoted via social channels. They analyzed results independently to provide an in-depth look at several areas of business, featuring rates and technology adoption.
The rates QuickBooks® accountants charge for their services varied widely across the United States and Canada, and seemed to be affected by many different factors. In a related article based on the results of the 2018 Billing Rate Survey, we focused on the billable hour and how hourly rates differed based on professional designation and certification level. We found that the more credentials or certifications professionals earned, the higher the rate they charged the client. However, other factors may affect the rates these professionals are charging for the same services, including geographic area, population density and how the work is performed.
Rates by Geographic Region
According to our survey of more than 1,000 accounting professionals from all over the United States and Canada, we found that the areas with the highest hourly rates were the Atlantic and the northern regions, while the lowest rates seemed to vary depending on the type of service. The central region was lowest for accounting/bookkeeping and QuickBooks troubleshooting, and the southwest region was lowest for third-party app consulting, IT consulting, training and other services. Here’s a short list of the highest and lowest rates by category:
Population density also played a factor in billing rates and the results are not surprising: respondents living in rural or semi-rural areas reported the lowest rates, while urban dwellers reported the highest.
The survey was designed to measure the fixed rate accounting professionals would charge their clients for specific engagements. In one scenario, we asked respondents to consider a local bicycle shop that needs monthly bookkeeping services to help tie out the books and pay the bills. The question and average rates reported by designation and certification status are displayed below. Canada quoted the highest rate at $536 USD ($429 CAD) per month, while the northwest quoted the lowest fixed monthly rate.
The results by professional designation were not surprising here, either: CPAs and accountants with other certifications quoted the highest rates, while enrolled agents and bookkeepers quoted the lowest.
The average fixed rates by certification level were interesting; those certified in QuickBooks Desktop Enterprise Solutions quoted the highest rates overall, while those who were not certified reported the lowest. This additional data validates what we presented in our previous article that showed the higher the certification or credential, the higher the rate.
Automation = Lower Rates, but Why?
Another scenario question sought to quantify the difference in rates when work for a client is performed through manual data entry, versus using Bank Feeds and rules to enter transactions. The amount quoted when manually entering data was on average 20 percent higher than when Bank Feeds and rules were used to complete the work.
It’s important to dig into this question a little bit deeper and look at why these rates are so different. If rates are being discounted to encourage clients to use these timesaving tools, then a discount may make sense. However, 20 percent is a rather large discount to offer as an incentive, and if practitioners reduced this to even 10 percent, they would see a big boost in the profitability of the job. Another theory could be that practitioners are penalizing clients who either refuse to allow a connection to the bank feeds or are unable to provide one.
As automation becomes more commonplace in the way accounting professionals do their work, it will take less time to produce the same results and provide the same value to our clients. Some may argue that as costs decline, fees should as well, while others say that providing the same value to the client should command the same fee regardless how you complete the work.
Big Changes in the Way We Bill
We reported in a related article that average hourly billing rates reported in our 2018 survey showed an increase over those reported in the 2016 survey. We also found that there was a significant shift from hourly billing to other billing methods. The percentage of respondents billing hourly decreased for all services, while value pricing increased across the board by more than 20 percent for all types of services (except tax preparation). The most significant increase in value pricing was seen in monthly accounting and advisory services, which both increased by more than ten percentage points in two years.
What Does it all Mean?
The big takeaways from this year’s rate survey are clear. Billing rates increased, and accounting professionals are moving away from the billable hour, embracing value pricing and fixed fee billing models for their firms. The amount charged for the same services is less when automation features, such as bank feeds with rules, are used, but the question remains: are accountants rewarding their clients who adopt automated technology, or are they penalizing the ones who aren’t? Or, perhaps the lower rates for automated services are a by-product of the switch from billing clients monthly based on hours to annualizing the fees into fixed monthly amounts.
Heather has been an Intuit Certified QuickBooks ProAdvisor® since 1999, achieved her QB Advanced certification in 2007 and her QuickBooks® Enterprise Solutions certification in 2010. She heads up Satterley Training & Consulting and is an Enrolled Agent permitted to practice before the IRS.
Michelle Long, CPA, is the owner of Long for Success, LLC. She is an international speaker for Intuit, co-host of QB Power Hour and Ultimate Accounting vCon, and author of five books, including How to Start a Home-Based Bookkeeping Business & QuickBooks Practice Set. She has been recognized as one of the Most Powerful Women in Public Accounting, Top 10 QuickBooks ProAdvisors (Top QuickBooks Trainer/Writer and Social Media Leader) and more.
October , 2018