One of the challenges you face when starting out as an independent or freelance professional accountant is pricing your services. You need to balance earning adequate income and attracting new clients.
When you’re first starting out, hourly billing is usually the best way to go, but at some point in your career, you may want to transition to fixed-fee pricing for the services you provide clients. In the beginning while working with new clients, you don’t have any way of knowing in advance just how much work may be involved in different situations. For example, helping a client properly record invoices and receipts may be fairly simple, or it may be a nightmare if your new client just presents you with a box full of unorganized paper.
As part of determining how to price your services, you should figure out how much income you need to get by on personally and for your business. Be sure to figure in all of your operating expenses, such as computers, internet fees, and software costs. Also, remember that a lot of your working hours are going to be spent marketing and soliciting new clients, so those hours aren’t billable. You need to make up for that time by charging a sufficient rate for your billable hours.
You should also do some research on the rates other accountants in your area are charging. That way you get a good idea of what clients are used to paying. When you’re first starting your new business, it’s probably unrealistic to try to charge top dollar for your services. You want to be competitive, but you also don’t want to set your prices extremely low in comparison to other accountants because you want clients to view you as being among the best. Setting your prices too low communicates the unwanted message that your services aren’t that valuable. One way you can support the price of your services is by pointing out how much money you’re saving a client by effectively giving them access to sophisticated accounting software or offering other value-added services.
Pricing your accounting services can be challenging, but with the right research and calculations, you should be able to come up with sustainable prices. Remember, pricing correctly right from the beginning helps get your accounting business off the ground and make it profitable.