For an accountant, the process of switching from an hourly billing model to a value-priced, fixed-fee billing arrangement may seem complex. However, it's important to note that clients tend to greatly prefer knowing the cost of services upfront, rather than being billed hourly. Because of this, the upheaval of transitioning between methods of billing may seem worth it to accountants who highly prioritize customer service and satisfaction.
In a recent article for Accounting Web, Jennifer Katrulya of accountant advisory firm BMRG put forward a three-step process for accountants considering fixed-fee billing models. According to Katrulya, members of the profession should determine labor costs, put technology—including accountant billing software
—into place and integrate contingencies into each pricing agreement that account for special circumstances.Letting the past inform the future
When it comes to putting together comprehensive value-priced, fixed-fee billing arrangements, accountants should look to the past in order to ensure accuracy in the future. This is the first and arguably the most important step in the process. Specifically, using time and billing records from old projects can give weight to your fee estimations for new proposals. This is important because the more accurate you can be, the less likely it is that your firm will end up selling itself short, or your clients will be unpleasantly surprised by additional fees. Firms that leverage electronic billing software
will likely find this task a lot less laborious and time-consuming, as they will be able to easily access and process the relevant information using their systems.
"If you can assess the time your firm incurred at each staff level for existing or prior clients, you'll know how to estimate your fees for any proposal," Katrulya writes
. "If you take the time to figure it out correctly, you'll be able to apply your findings to every proposal, give or take any unique requirements."
According to the author, accountants will need to analyze a number of different types of information, including:
- Ongoing third-party reporting requirements
- Accounts receivable processing type and complexity
- Data-gathering services
- Internal management reporting requirements
- Frequency and duration of client meetings
- Industry verticals
- Custom dashboard requirements
- Job costing and reimbursable expenses