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Fixed-Rate vs. Hourly Rate Billing Models for Bookkeeping Services

Posted on 05/02/2024

Like many other service sectors, the bookkeeping industry offers a variety of billing models to meet the demands of different types of businesses. The two most common models are hourly rate structures and fixed-rate, sometimes known as flat-rate. Comprehending the subtleties, advantages, and possible disadvantages of each can assist enterprises in arriving at well-informed selections.

Comprehending Fixed-Rate Accounting:

What’s that?

Fixed-rate bookkeeping includes a fixed charge for a predetermined scope of work, usually paid once a month. No matter how many hours the bookkeeper works, the price doesn’t change.


Budgeting is made easier for businesses because they can forecast their bookkeeping costs.

Unambiguous Expectations: The predetermined scope of work guarantees that all stakeholders are aware of the deliverables.

No Hourly Surveillance: Companies are not required to keep an eye on the hours that the bookkeeper logs.


Rigidity: Extra fees may apply for any work that goes beyond the established parameters.
Potentially Higher Costs: The company still has to pay the agreed-upon charge even if the bookkeeper works efficiently and finishes duties in fewer hours.

Knowing How to Book Hourly Rates

What’s that?:

Businesses are billed according to the actual number of hours the bookkeeper works, as the name implies.


  • Flexibility: Perfect for companies whose bookkeeping requirements change periodically.
  • Pay for Real Work: Companies only cover the bookkeeper’s actual labour hours.
  • Scalability: The company can change the number of hours worked without having to renegotiate a contract as it expands.


  • Budgeting Challenges: It might be difficult to forecast prices because monthly expenses can change.
  • Monitoring Overhead: Supervisory tools, like time-tracking software, may be required to guarantee proper hourly billing.

Things to Take Into Account While Selecting a Billing Model

  • Type of Business: Fixed rates may be preferred by stable firms with regular bookkeeping requirements. On the other hand, hourly prices can be preferred by people whose monthly requirements change.
  • Length of Engagement: Hourly billing may be better suited for temporary or project-specific work. Fixed-rate structures may provide stability for long-term relationships.
  • Veracity and Knownness: Hourly rates can be a safer option to begin with if you’re dealing with a rookie bookkeeper or are unclear about the extent of the task. It may be advantageous to switch to a fixed-rate arrangement as familiarity and trust grow.
  • Number of Transactions: To guarantee constant processing, a fixed-rate architecture may be more appropriate for huge transaction volumes. It can be appropriate to handle lower or varying quantities on an hourly basis.

The choice between hourly and fixed-rate billing in bookkeeping has a big impact on the nature of the working relationship with the bookkeeper as well as financial planning. Businesses can create a billing system that optimizes effectiveness, value, and financial transparency by analyzing the advantages and disadvantages and matching them to demands unique to their industry.

Getting Your Hourly Rates Negotiated

Rate negotiating can be a difficult task for clients and bookkeepers alike. It takes tact, investigation, and a thorough grasp of one’s demands and value propositions to strike a balance between just recompense and value for the money. The goal of this guidance is to streamline the negotiating process so that everyone is happy with the result.

Recognizing the Market

Average Rates of Research:

  • To start, find out what the average hourly rates in your area and sector are. Sites like Payscale, Glassdoor, and industry-specific discussion boards can provide information.
  • Benefit: By calculating the average, you can determine whether a suggested rate is higher or lower than the going rate in the market.

Think about expertise and experience:

  • Prices may differ according to the bookkeeper’s specialization, credentials, and experience.
  • Benefit: Making the distinction between rates for entry-level and expert work, makes it possible to negotiate more intelligently.

Make the scope and expectations clear.

Describe the position:

  • Give a clear description of the duties, obligations, and goals. Does the bookkeeper offer financial forecasts and analysis in addition to data entry?
  • Benefit: Comparing prices for comparable services is ensured by a well-defined scope, which also helps to avoid misunderstandings.

Calculate the Length of the Engagement:

  • Is this a long-term partnership or a short-term project? The anticipated duration may affect the rates.
  • Benefit: Because longer-term commitments bring consistency, they may allow for better rates.

Be Open and Honest About Financial Restraints

Sincerity is Essential:

  • Be honest if you have a set spending limit in mind. This can pave the way for an open dialogue about what can be accomplished within that spending limit.
  • Benefit: It can avoid protracted talks that might not end and save time for both sides.

Proposition of Value and Differentiators

Emphasize specialized knowledge or services:

  • If you work as a bookkeeper, highlight any special abilities, resources, or offerings you have to offer. If you’re a company, emphasize things like the possibility of enduring cooperation or room for expansion.
  • Benefit: Specialty offerings might provide power during negotiations or serve as justification for increased fees.

Willingness to Consider Different Plans

Package Deals or Blended Rates:

  • For specific jobs, think about combining hourly rates bookkeeping with set costs or offer/package offers that cover a variety of services.
  • Benefit: These kinds of agreements can be flexible, allowing for fair pay while still satisfying financial requirements.

Continue to be respectful and professional

Cordial Discussions:

  • Treat talks as a cooperative endeavour rather than a combative one. Recognize the limitations and viewpoints of the other party.
  • Benefit: An amicable agreement is more likely to be reached in a pleasant negotiation environment, which promotes a positive working relationship.

Understanding value, building rapport, and creating a cooperative relationship are all important aspects of hourly rate negotiation. Bookkeepers and businesses may negotiate these discussions with ease and arrive at pricing that is commensurate with the value and expertise provided if they conduct research, are transparent, and treat each other with respect.

Hourly rates and yearly compensation for bookkeepers around the country

Over $45,000 is the average yearly salary across the country for a full-time bookkeeper. Indeed, the BLS’s most recent 2023 statistics state that “the median annual wage for bookkeeping, accounting, and auditing clerks was $45,560,” which translates to an hourly average of almost $21.90! Even overhead costs like payroll taxes, sick leave, vacation and vacation time, office space, health insurance, and downtime are not included at that rate. Furthermore, you are still required to pay them, whether they are working or not. When you contract with us to handle your bookkeeping, you avoid all of these expenses.

State-specific differences exist in hourly rates, in addition to variations based on experience, company size, cost of living, and nature of employment. In the US, a bookkeeper’s average hourly wage varies from $11.92 in Puerto Rico to $28.91 in Washington, DC.

Our Bookkeeping Experts are here to help.

Topics: Bookkeeping Services




About the Author:

Pramod has over 11 years of experience relating to finance and accounts in diversified industries. He is an expert in resource and process optimization resulting in greater operational efficiencies.

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