Quoting for your business services: how much should you charge?

One of the most difficult aspects of being a freelance professional or a small business owner is quoting for your services. If you price yourself too cheap, you’ll be denying yourself well-deserved cash; nevertheless, if you price yourself too high, you risk scaring away consumers.

There are, thankfully, techniques to come up with fair quotations for your services that strike a balance between profit and affordability.

Accountants and independent financial advisers (IFAs) spend their days assisting consumers with money management and maximisation. Many people and small businesses would be at risk of getting complex issues like tax, invoicing, investments, and pensions utterly incorrect if they didn’t have their skilled guidance and dependable services.

Ironically, understanding the financial side of being a self-employed accountant or IFA – notably how to quote for your services – is one of the most difficult aspects of the job.

We’ve put up a complete guide to quoting for your accounting or financial planning services. Here’s all you need to know about pricing competitively and deciding whether to charge flat fees or percentage-based prices.

Investigate your rivals.

Your first step should be to learn how much other specialists who provide similar services charge. You may find it difficult to get clients or make a profit if you set your charges well above or below the norm. Begin by looking at what other consultants in your region charge and aiming for a similar sum.

When conducting research, be as specific as possible. Looking at rates charged by IFAs with decades of experience will be entirely deceptive if you’re a relatively new independent financial adviser who has recently qualified.

Accountants and advisers that provide specialised or niche services, such as investing in alternative asset classes or advising on offshore tax concerns, are subject to the same rules. Customers will not be willing to spend the same amount for services that are comparably straightforward, such as bookkeeping or invoicing management.

However, if you provide advise or services that require additional qualifications or knowledge, don’t be afraid to charge what you’re worth.

If the information isn’t readily available on other advisers’ websites, ask friends and family about their experiences or visit forums to learn more about usual prices. 

Recognise the rules and regulations.

IFAs are no longer authorised to be paid through commission after the adoption of new laws under the 2021 Retail Distribution Review. Instead of indirectly passing on the expense of commission, they must charge their clients directly.

However, you are not required to advertise your prices up front, which is beneficial if you wish to charge per case.

There are no precise guidelines for accountants when it comes to how clients pay you or whether or not you display your prices. You might present a fee menu for routine work if you offer established services, such as end-of-year tax return filing. However, you may find it easier to charge per-hour or to determine accountant cost UK after speaking with each individual client.

Determine whether you’ll bill by the hour or by the service.

As an accountant or financial consultant, you’ll most certainly have a variety of methods for quoting various services. For one-time or annual consultations, for example, charging per hour makes logical because your consumers will be paying for your time and advise.

However, if you’re actively working for them, such as maintaining an investment portfolio or handling their invoices, charging a fee based on your work rather than time will be easier.

Assume you’re an accountant that oversees all aspects of your clients’ financial operations, from invoicing to taxation to payroll. It will be more effective to bill them for the services you give once a month rather than having to keep track of the hours you’ve spent on particular accounts.

Further Reading: Nine reasons to switch your accountant

Decide whether to use percentages or flat fees.

When pricing for per-service work, you’ll want to think about whether a percentage-based approach or flat costs are better for your project. Depending on the types of services you provide, a combination of the two will be required for many advisers.

Assume you’re a financial adviser managing a client’s portfolio, which necessitates you putting your knowledge to work and spending time watching and analysing market performance.

Because your work will be done on an ongoing basis throughout the year rather than during specific charged hours, it’s common to charge a percentage of the assets under management.

Financial advisers typically charge 2.4 percent of the value of your assets or investment money, according to the Financial Conduct Authority (FCA). It’s also common to charge 0.8 percent for continuous guidance, such as rapid phone and email advice, that doesn’t justify hourly fees on its own.

Advisers may also charge a lesser proportion for high-net-worth clients, as a reduced fee rate can still provide a solid income.

Recognise when it’s appropriate to negotiate fees.

It’s worth rethinking your fees if you’re lucky enough to land clients who operate large enterprises or have multi-million-pound assets or investment funds. You’ll be able to offer them more appealing rates and maybe provide additional services while still earning a good income if you use economies of scale.

Assume you’re an accountant who charges £100 per month for payroll services for a group of ten employees. If a client has 1,000 employees, your initial reaction could be to double the price by 100, resulting in a £120,000 annual fee for only one area of accounting.

Lowering your charges will help you land a lucrative contract while still allowing you to earn a good living without pricing yourself out of the market.

In a similar position, an IFA may find themself. If a client asks you to manage a £1 million investment portfolio, your standard management fee of 3% may become prohibitively high. Even if you lower it to 1.5 percent, you’ll still make £15,000 a year from a lucrative client.