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Hourly Rate - Advice needed

  • 9 posts
  • # 109976

Hi all,

 

Apologies if this has been asked on numerous occassions, but I am having difficulty in finding any real help and advice on what I realistically should be charging my clients.

I have alot of years experience with doing accounts while being employed, however, I am only just starting out as a self employed bookkeeper.  As yet I have no clients of my own, and am in the process of sorting out some local adverts, but I am struggling with my pricing.

Appreciate this can be a sensitive subject and not something everyone would want to share, but I would really welcome any guidance on the matter.

Many thanks.

Lorraine

Lolo Bookkeeping Services

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  • 119 posts
  • # 109990

Hi Lorriane

I use, what I call my "1200 rule".

This says that you can expect work 1200 paid hours a year (100 per month / 25 a week). Remember that much time will be spent on internal admin (AMLR etc) and marketing/networking etc (hence 25 rather than 35 per week). Taking a month to equal 4 weeks rather than 4 and a bit allows for holidays.

Calculate how much income (take home after tax) you need in a single year to cover your cash outgoings. Consider: mortgage or rent, utilities, council tax, groceries, insurance, holidays, gifts, Christmas, birthdays, wine, home maintenance, motoring costs, pension contributions, savings and investments.

Use the following link to gross this up to allow for tax and NIC (assumes sole trader or partnership rather than Ltd co).

http://www.uktaxcalculators.co.uk/reverse-tax-calculator.php

Divide the result by 1200 (chargeable hours per year), round up to the nearest £1, then double it (to allow for your business overheads) to give your Hourly Rate. Depending on your experience and market positioning etc, the result should be somewhere between £20 and £40 p/h?

Hope that's useful. Obviously you can vary the 1200 figure according to your own circumstances.

Phil



Edited at 20 Aug 2015 01:35 PM GMT

  • 26 posts
  • # 109992

Hi Lorraine and anyone else who is about to embark on starting their own practice.

 

My name is Cheryl and I am hoping to follow your footsteps in the coming months. I am currently waiting to take my BA7 exam in September and then I will be branching out into the world of Bookkeeping practice.

 

I would love to hear how you are getting on and be able to ask advice from someone who has gone on  ahead of me but also be nice to be able to talk to someone who can relate to where I am in the currently in the world of own practice.

 

Here is my email add: cherswaby@hotmail.com. Please feel free to stop by and say hello. Would love to hear how you are all getting on and it goes without saying I wish you all the success in all your endeavours.

 

Kindest Regards

 

Cheryl Swaby AfICB

  • Fellow PM.Dip
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  • 336 posts
  • # 110014

Hi Lorraine and Cheryl

there seems to be, and has been for the 5 years I have been on this forum, a reluctance to share hourly rates.  However, I have to say that Phil's suggestion of £20 - £40 per hour as a starting rate is grossly exaggerated for most of us and good luck to anyone earning this rate - I envy you!

I live in a very rural area of North Yorkshire where there was no competition for bookkeeping and equally no 'groundrules' for a rate to charge.  As a newbie I felt I had to keep my rates reasonable and at a level where local self-employed people could afford me.  As a result I have a very full order book and almost (but not quite) more work than I can manage on my own.

I have increased my hourly rate each year to most of my clients and am still just below the £20 per hour rate.  I could not justify increasing it much higher, and I know that I would not be fully employed if I did.  A couple of years ago I even had one regular client inform me (when I raised broached the subject of a £1 per hour increase) that she 'had never had to pay a bookkeeper so much'  and she replaced me when I left (to work with a client closer to home) with someone £4 per hour less.

At the end of the day I personally feel that you need to pitch your rate at what you feel you can justify locally, and this will vary according to where you live.  So long as you write into your contract a reasonable annual rate review you can raise your rates as you need to.

I am sure that there will be bookkeepers out there who will shout me down and say that I am under-selling myself but I am convinced that I provide an excellent service for a realistic price and I have an exceptionally good relationship with all (30+) of my clients.

I'm happy to share my hourly rate with you if you want to e-mail me privately at bookkeeping@beckcottage.com

Kind regards

Debbie

  • 794 posts
  • # 110018

Hi everyone,

Well to quote Linda Evangelista who would not get out of bed for less than $10,000 per day........

I would not work for less than £20 per hour - in fact most of my clients pay me between £32 and £40 per hour as I mainly charge a fixed fee.

The ones who are charged hourly are not less than £25 per hour.

Even charging £20 per hour if you take 20% off for tax you are down to £16 before allowing for other expenses.

Marilyn

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  • 119 posts
  • # 110022

I did think about the experience factor and noted that Lorraine had many years employed accounts experience, so that is one reason why a said £20 as a lower figure. Naturally there are many factors, including area of the country, as well as experience, demand that will determine the hourly rate you can charge. 

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