Charge for bookkeeping by estimating the hours a client takes each month, pricing a package at a rate that covers those hours with room to spare, and charging a separate one-time fee for catch-up work. The tables below do this for three packages at $295, $560 and $890 a month, with the margin on each, a rule for the cleanup fee and the points that belong in your engagement letter. The numbers are illustrative. Replace the time estimates with your own, because your speed and software decide your margin.
Start from the hours a client really takes
Take a fictional client, a six-person landscaping company with 3 accounts (two bank accounts and a credit card), about 300 transactions a month, 40 invoices and 12 vendor bills. Here is a month of work, timed:
- Review and categorize 300 transactions at about 0.6 minutes each: 3 hours.
- Reconcile 3 accounts at about 20 minutes each: 1 hour.
- Track 40 invoices and chase the late ones, 2 minutes each: 1.3 hours.
- Enter 12 vendor bills at 3 minutes each: 0.6 hours.
- Month-end report and a call with the owner: 1 hour.
- Questions, messages and client chasing: 0.5 hours.
Total: 7.4 hours. Keep a time log for a month or two on a real client before you price a package. Guessing from memory is how bookkeepers end up working for $30 an hour without knowing it.
Hourly, package or value pricing
Compare three ways to bill the same client, assuming you want about $75 an hour of billed time.
- Hourly: 7.4 hours x $75 = $555. A heavy month at 9.5 hours is $712; a light one at 6 hours is $450. The client can't plan, and you invoice for every fix.
- Package: a fixed $560 for a defined scope. The client budgets, you earn more in a fast month and less in a slow one, and you have a reason to get faster.
- Value pricing: priced on what the work is worth to the owner, such as job-costing reports that show which crews make money. Here you'd add a job-cost report to the package for $150 more, $710 a month, because the owner uses it to bid. This works only if the extra work is real and the client sees it.
Hourly suits unusual work and cleanups. Packages suit the monthly routine. Value pricing suits advisory work you can point to. See hourly rate versus flat fee for the general case.
Package 1, 2 and 3 with margins
Assume your cost per hour is $40 (your wage as a contractor or employee, software and overhead). Each package states a limit and a scope.
| Package | Scope | Est. hours | Price | Cost at $40/h | Margin |
|---|---|---|---|---|---|
| 1: Essentials | Up to 150 transactions, 2 accounts, monthly reconciliation and profit and loss statement | 3.5 | $295 | $140 | $155 (53%) |
| 2: Standard | Up to 400 transactions, 4 accounts, invoices and bills tracked, monthly call | 7 | $560 | $280 | $280 (50%) |
| 3: Plus | Up to 800 transactions, bill pay, payroll entries, job-cost report, quarterly review | 12 | $890 | $480 | $410 (46%) |
The effective rate per hour is $84 for package 1, $80 for package 2 and $74 for package 3. Bigger packages get a slightly lower rate per hour because they carry more volume, but the gap isn't large. If package 2 starts taking 9 hours a month for three months in a row, either the client has outgrown it or your process is slow. Repricing is on you to notice. Published bookkeeping price guides show wide ranges by region and complexity, so use them to check you aren't far off, not to set the number.
The one-time cleanup fee
Catch-up work is a different job, and it should not be bundled into the monthly price. Rule: estimate hours as months behind, times hours per month for cleanup, times a mess factor of 1.0 (neat), 1.5 (mixed) or 2.0 (chaotic). Quote a fixed fee after a paid diagnostic.
- The landscaping client is 6 months behind and moderately messy. Cleanup runs about 4.5 hours a month, less than the ongoing 7 because there is no client chasing or reporting each month.
- 6 x 4.5 = 27 hours x 1.5 = 40.5 hours x $75 = $3,037. Quote $3,000.
- Charge a $150 diagnostic first, credited to the cleanup. Take 50 percent up front.
Spell out what you'll deliver: all months reconciled, uncategorized items cleared, a list of questions the owner must answer, and the date. If the owner doesn't supply statements, the date moves.
Add-ons: payroll, bills, reports
- Payroll entries: $50 per pay run (illustrative), when the payroll service does the filings and you post the journal.
- Bill pay: $6 per bill, so $72 for 12 bills a month.
- Sales tax report preparation: $75 per period.
- 1099 preparation: $25 per form.
- Custom reports or a budget review: hourly at $75.
Each add-on should map to a minute estimate. If you can't say how long it takes, don't price it yet.
What goes in the engagement letter
- Scope: exactly what the package includes and the transaction limits, and a list of what it doesn't (tax filing, payroll tax filing, audit or tax advice unless you are qualified and say so).
- Client duties: statements and receipts by the 5th, access to accounts, answers within 3 business days.
- Your deliverables and dates: books closed by the 15th, reports sent by the 17th.
- Fees, billing date and payment method, and what happens on a late payment. See late payment fees.
- Overage: what happens above the transaction cap.
- Term: month to month, 30 days' notice either way.
- Confidentiality and who owns the records.
Your state may have rules about titles and about what services need a license, so check them. The general layout of an agreement is in a plain service agreement template, and the scripts for moving a client to a monthly fee are in how to ask for a retainer fee.
When to raise a package price
Review every January and whenever the three-month average time passes the estimate by 15 percent. Raise by 5 to 10 percent with 30 days' notice, or move the client to the next package if the transaction count has grown. How to raise prices without losing customers has the wording. For the wider set of pricing choices see how to price your services and how much to charge for consulting. For getting the clients in the first place, see getting clients for a bookkeeping business.
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