Hourly billing doesn’t really make a lot of sense anymore when it comes to accountancy, if you think about it. Nowadays new software has made it much faster to complete work and so different pricing models are rising in popularity. One of the options that you’ll probably see pop up a lot are ‘fixed fee accountants’ – not sure what that means? No sweat, just read our article below to find out everything you need to know.
First of all, lets define the different terms that you might see when looking for accountancy services.
Value based pricing structures
This pricing structure puts a strong emphasis on assessing what clients are actually willing to pay. Firms that use this pricing structure are basically thinking about what a service is really worth to a customer, versus how much it costs to deliver or how long it takes to complete.
Fixed fee accountants
Fixed fee accountants on the other hand will set a single price for certain tasks, or across the board for their services. These are usually package prices that cover the request that a lot of customers make. Both pricing methods can be of benefit, so which one should you opt for?
The main reason that value pricing is used is because firms can charge more per client than they otherwise might. Clients should be aware that value-based pricing is normally adopted because firms want to increase their earnings. That said, it’s not always a bad thing. You are after all paying your firm for their many years of expertise and if you feel that they can deliver you real value then it’s worth paying for. Firms that charge based on a value-based pricing system need to be able to justify their pricing and show that they are worth the cost. The good thing about value pricing systems is that they leave more room for negotiation. Fixed fee accountants on the other hand are a lot more transparent about how they came up with their numbers but you won’t find as much room for negotiation.
What to expect from fixed fee accountants?
Fixed fee accountants are a great choice if you have fairly standard requirements. Having fixed costs in place will eliminate some of your ability to find tailored packages that are customised to your needs. Luckily most people really don’t need anything more than fixed fee accountants. Most of them will have tasks that are their bread and butter that they can help you with. If you don’t have anything super complicated that you need handling then this can be a great way to go and a very good cost-saver.
What to remember
Keep in mind that there is a bit of a science to figuring out what prices to charge. If you’re looking to work with a company but you’re not sure about their pricing then sit down and talk with them about it. Ask them what exactly you get for that price and how they come to the price they charge. Often you get great value from fixed fee accountants because they are focused on volume and quantity in their clients over taking on very complex and expensive jobs.
When looking for a company to work with remembering that things have changed. You’re not paying for just their time anymore, it’s their expertise that determines the cost. You should also remember that fixed pricing structures are a great incentive for efficiency.
Hopefully, some of the points above are informative and will help you to find a firm that will meet your accountancy needs.