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How Much Should My Accountant Charge Me In 2020? - YouTube
Channel: Accounting and Tax Academy by Tony D
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how much should your accountant be
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charging you what exactly
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are you paying for this is a common
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question i get all the time and in this
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video i'm going to address the key
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questions and considerations
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that you need to take away whether it's
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with your existing accountant
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or whether you're looking to engage with
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a new accountant and the three key
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methodologies a lot of accountants use
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to price their services
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and some example pricing for you to take
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away
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i'm tony dangel and welcome to the
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accounting and
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tax academy now this is a common
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question i get asked
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time and time again and unfortunately
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there
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is no easy answer well it's a bit like
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asking the question
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how much should you pay for a new car
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there are
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many variables and factors to consider
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when
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buying a new car such as what mark is it
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its size
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engine capacity interior extras and so
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on
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and there lies the similarities with an
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accounting and
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tax provider service now in this video
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i'm going to break down
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the three most common methods that
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accountants use to price their services
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so you know what you are paying for they
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are
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fixed fee packages time-based billing
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and last but not least
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value pricing now responses to our
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videos have been
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great so far and your feedback really
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helps us generate relevant content such
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as this
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so please please do comment like and
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subscribe and let us know in the
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comments below
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what you want to see from us in future
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videos now let's jump into the three
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accounting
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pricing methods
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a fixed fee package is a set menu of
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services at a regular
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monthly fee now in itself there is
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nothing wrong with this
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these are what i call an off-the-shelf
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solution
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normally suitable for non-complex
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contractor
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freelancer and micro-sized businesses
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now some of the advantages of fixed fee
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packages include
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choice most providers offer three
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different tiers of fixed fee services
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such as essential gold and platinum
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levels the higher end of the tiers
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normally offer you a more comprehensive
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service
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predictability you can be reasonably
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certain as to how much you are paying
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every month
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now like a subscription service you know
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when the fee is coming out of your
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business bank account simplicity
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the services provide at the essentials
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and what i call keep out of
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jail services as a director you have
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responsibilities
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and these services will make sure you
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comply with companies house
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and hmrc regulations here in the uk
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now let's talk about the cons of fixed
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fee packages
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first and foremost is hidden costs these
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often surface once you're on board with
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the surface for example
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obtain an accountant's reference is not
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often included in a fixed fee package
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and could end up costing you around 100
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pounds plus v80
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per reference contracts some providers
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like to tie you into a fixed service
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period of 6 12 or sometimes 24 months
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and these can be difficult to exit and
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carry penalties to do so
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and lastly relevance you can often end
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up with elements of service you don't
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actually
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need to use so it's a bit like a phone
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contract that gives you 1 000 minutes
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per month free and you only end up using
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100 minutes
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and no one wants to pay for something
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they are not really using
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in the uk market today fixed fee
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packages typically range
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from between 75 pounds plus fat per
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month to 250 pounds plus fat per month
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now there are providers that price
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outside of this but it's more of an
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exception
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fixed fee services can vary from
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provider to provider in terms of the
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elements of service
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within each fixed fee so look at them
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carefully and don't just focus on the
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headline fee
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some are more watered down than others
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and you'll end up paying more
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through hidden costs later on
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time-based fees are services you pay for
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based on the time spent on that
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particular task often by the hour
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or a unit of the hour for example in 15
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minute blocks
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now traditionally the small to medium
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business sector in the uk
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this has been the most common method of
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pricing
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however there has been a trend in the
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last decade or so
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towards both fixed fee and value-based
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pricing
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which we will cover next now let's begin
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with the cons of
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time-based billing uncertainty due to
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the fact that you cannot be given
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always an accurate estimate of time you
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could end up with a higher than
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an anticipated bill time inflation
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regrettably there are accountants and
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tax advisors who will artificially
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inflate the amount of time it has taken
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them to do
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a particular task and benchmarking
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it's difficult to compare to other light
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for light services
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when you are paying based on time now in
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my opinion it's essential that you work
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with an accountant
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and tax provider that you completely
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trust
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if you are to be charged based on time
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now some of the advantages of time-based
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bidding
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include relevance you pay for a specific
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service that you need so for example
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if you only need a hundred minutes of
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call time you will in theory only pay
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for what you need
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uh i can't really actually think of any
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other pros
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now don't get me wrong some elements of
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accounting advisory and tax services
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need to be based on time however in my
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opinion
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the cons do outweigh the pros let me
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know if you agree or disagree with my
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pros and cons
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comment below what has been your
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experience
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with time-based billing
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value pricing is a tailor-made solution
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for your accounting and tax needs
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now this will take the form of a fact
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find of you and your business
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and a tailored specific solution and fee
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to fit your requirements
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so for us as a provider a fat find is
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normally a 20 minute call with you at
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your convenience
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to establish exactly where your business
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is currently at
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where you would like it to be and what
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you would need from us
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to make that happen the aim is to create
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the right solution for you
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at a particular phase of your business
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journey
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now some of the advantages of
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value-based billing
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include flexibility value pricing allows
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you to expand or contract your service
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in accordance with your requirements at
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any point in time without being tied
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into a contract
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transparency as long as your provider
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gives you a written proposal
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using logical factors and a roadmap of
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possible future services and
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fees you can make informed decisions
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well in advance of engaging
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in that service and of course value as
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the title suggests
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the focus is on the value it provides
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you and your business
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for example let's go back to our phone
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contract analogy
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so you had a phone contract at 20 pounds
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per month
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that gives you 300 minutes but you only
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need 100
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so you're paying for 200 minutes you
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don't actually use
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value pricing cuts to wastage and allows
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you to pay for services you actually
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need or simply
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bank the savings now let's talk about
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the cons
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of value-based billings
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i can't really actually think of any so
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let me know if you agree or disagree
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with my views on value pricing
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don't worry there will be a future video
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on value pricing just hit that subscribe
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button
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and make sure you get notified when we
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do release it
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if you were in the market to buy a new
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car there's no doubt you'll go to at
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least a couple
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if not more dealers and obtain quotes to
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make sure
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you're getting the most for your money
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now it's absolutely natural for you
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to want to obtain some barometer or
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basis of accounting and tax fees
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to make sure you're not paying over the
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odds
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if you're unsure where to start or want
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to get a comparison quote
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click the link below and head on to our
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website where you can get a free
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no obligation quote or you can book a 20
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minute discovery call
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with me personally where i will conduct
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a fac find with you
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so let's recap we've got the three
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different methods of pricing for
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accounting services
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firstly is fixed fees this is an
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off-the-shelf solution for contractors
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freelancers small to medium enterprises
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then there's time-based billing well
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this is a unit of our base pricing
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which can be more specific but
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potentially more expensive in the wrong
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run
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and finally you've got value pricing
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which is tailor-made a specific solution
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to you and cuts out the wastage and
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passes on all the savings and benefits
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obviously no two businesses are the same
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and there is no one-size-fits-all but i
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really hope this video
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has helped you in understanding how
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accountants
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price up their services and to help you
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make an informed decision
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in knowing your numbers towards success
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this is tony daniel of the accounting
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and
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tax academy and until next time i'll see
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you soon
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you
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