How to Package and Price Your Bookkeeping Services

Like many of us when you first started your bookkeeping business, you likely opted to charge clients by the hour for your services. That was the standard practice and that’s not a bad idea when you are just beginning, don’t have much experience and aren’t sure how long each task takes.

But as the years pass, it makes a lot of business sense to start offering “packages” for your services.

This is how it benefits your clients:

They know exactly what they are getting and they begin to rely on you as a trusted and valued partner.
They can budget better, because they know precisely how much your services will cost and like the fact there are no billing surprises.
They don’t have to expend time explaining new work each month.
They never hesitate to ask questions since they know the clock is not ticking every time they call which further builds the relationship

Of course, it is also a great benefit to the smooth operation of your own business for the following reasons:

You know as each month arrives what services you already have to do and how much time remains open to seek out and secure other clients.
You can budget your own business better, because you know how much of your income is recurring each month.
You can upsell and cross-sell additional services to these clients easier than new clients because you become extremely familiar with their companies and their needs, and they learn to trust you and depend on you.
Your understanding of their industry grows and you are able to deliver a consistently high level of service and even anticipate issues that could arise and make valuable recommendations.
As you improve your efficiencies your profitability will increase. If you were still billing hourly then each time you do something more quickly you make less money. In effect you are getting punished the more you improve. It makes no sense.

What kinds of packages work best in the beginning?

One question that we are asked is what kinds of services should be combined into a package.

Obviously this is dependent upon the services you offer along with those that your client needs. But, our answer sometimes surprises as we say that you need to first break down what services go together monthly, and which ones are needed weekly, and then figure out what falls naturally together.

Are you a full service bookkeeping firm or do you provide specific services like conversions, ecosystem creation and setup, or do you just provide payroll or tax?

For example, many of the tasks of any bookkeeper fall naturally into a monthly cycle. Owners who want to stay current with the financial performance of their business, keep on top of compliance issues, and will want relevant financial reports to access certain KPI’s they may be tracking on a monthly basis. Depending upon the client these reports – say cash flow for instance – might be a weekly requirement. Do they need customized reporting? Is that another service you could package for them?

Sometimes, you may want to package the frequency of the services and not necessarily just the services themselves.

As a company grows larger and more stakeholders are involved, the importance of having weekly reports become more crucial, especially if the company is particularly judicious about its credit management and cash-flow figures and is interested in outside investing and rapid growth.

Perhaps weekly reporting is a requirement of the credit facilities with their financial institution.

Companies with more than a few employees will also need payroll services on a regularly scheduled basis.

Once you know the cycle, be strategic in your packaging

To grow your company by working more and more with the delivery of packaged services, you also have to ensure that the packages you offer are profitable to you, and that the work is something you have an interest in and the ability to specialize in.

If you are venturing into bundled services for the first time, it is a good idea to offer three options to clients: an essential service package, a better service and a best service package, or silver, gold and platinum idea. One of the most successful versions of offering clients a choice of three is Starbucks with their Tall, Venti and Grande. They do it because it works.

Make sure that the services that give you the highest profit and which you are best equipped to do fall within the middle package, since when given a choice of three, it’s a good bet that the majority of your clients will opt for the middle package.

Clients don’t want to under-buy and find that they aren’t getting all the services they really need, but at the same time, they don’t want to pay for the top service and end up funding some things that they don’t really need or use.

What to include in each package and how to price it

In your minimum package, provide only basic bookkeeping and no frills. This will keep the price lower, but you need to be sure that you charge enough to ensure you make a profit.

The middle package might offer extra reports, payroll if needed, sales tax preparation, face-to-face meetings, guaranteed turnaround time, and, if you have the trained staff, even tax preparation services.

The top package includes strategic extras and higher level services that you and the client discuss and can be customized to each client.

One important consideration to always keep in mind is to always be sure to look at your packaged services from your client’s point of view as well as your own. What is of value to them? What will help them to better manage their business? Sometimes, things that appear to have little value, or cost to you, may have great value to your client and will appear in your package as a huge value add for the client.

By far the hardest part of selling bookkeeping packages is determining what price you can charge for it.

If you overprice your services, you will lose clients; if you underprice it, you will lose your business as it become increasingly unsustainable.

So at the end of the day, for your smallest package, sell it for the best price you can while factoring in your time, expertise and overhead costs, and ensure that you still make a healthy profit.

Here is a word of advice when it comes to pricing your packages that we have learned during our pricing journey. If you never get push back from the prospective clients when discussing pricing then chances are your pricing is too low. Keep adjusting them up until you find the point of pushback.

The formula doesn’t change as you move up the ladder of additional services.

When you need to customize

The value of offering fixed-price services soon becomes apparent as you gain more stability. You also know where your greatest service demand is, and if you have staff assisting you, you can make sure they are well trained in the areas where they are most needed.

Ultimately, however, you will find that some clients in your top category want additional customized services. It is good to offer these as well since they are often challenging and interesting to produce, and they are the most profitable areas of bookkeeping. These are often those advisory services that we hear about.

Customization requires charging a premium price, and yet if you have the skills and experience to provide these additional services, the client is happy to pay them.

These may include things like job costing, inventory management, preparing budgets, and doing cash-flow forecasting, for example.

The requests for customization are quick reminders that you can package your services, but you cannot clone your clients. They are all a little different and have different needs. Their industries may also be unique and that is part of the challenge of delivering good service under these many variable conditions.

Considering a niche

This is also a great reminder for us of the value of finding a niche so you can avoid, or at least minimize this challenge. The variations of client needs are one of the main reasons some bookkeepers decide to perfect their skills in one niche and service it so well that they can sustain themselves in this one area alone.

As examples, some bookkeepers become expert in handling businesses in the ecommerce or contracting industry, or in the export business, or even in the farming sector. They have unique needs, specific cycles, and different compliance issues, so a higher degree of specialization is needed.

This is something to think about when you start to consider segmentation and fixed price packaging of your services.

Rules of packaging

Whatever option you select when it comes to packaging your services, make sure that you communicate clearly to your clients precisely what is included and that anything customized over and above that package comes with additional cost.

This will help to avoid misunderstandings down the line.

Meanwhile, keep aware of the issues your clients are facing and what additional services might be helpful to them. Cost out these services so that you will know whether or not you can provide them profitably.

Start selling your packages carefully and strategically to some of your most stable clients at the start before you market them to the general public. That will allow you time to see if you’ve got it right, if the packages are profitable to you, and if they include all the essentials so you don’t have to keep going back to the client with add-ons.

Thank you for taking the time to read this post. Until next time, take care.

This blog is for you and we hope you will enjoy the content.

Please let us know if there are any specific topics you would like us to address in the future.