What is fixed-fee billing and why you should embrace it | 1

What is fixed-fee billing and why you should embrace it

Expert guide

So you’ve decided to take the plunge, do away with hourly pricing in arrears, and embrace the fixed-fee billing model. The chances are, you probably are doing this already to some extent. Whether you are quoting fees in advance or adjusting whatever is on the timesheet to a ‘reasonable’ fee, you are actually already a good way on the journey towards being a fixed-fee only practice.

To make this model really work for you, the first thing you need to do is figure out what services you currently offer and what you’re charging for each of them.

Originally by Becc Mihalic, adapted by Carl Reader for the UK, Ireland & South Africa

What is fixed-fee billing and why you should embrace it | 2

Let’s run through how you can do this within your services should be as simple as then use Practice Ignition’s sample services as a starting point before removing any services that you don’t offer and adding any extras that might not be included in the sample list.

Step 1: Calculate your average fees per service If you can export details from your accounting software then you may be able to complete this step pretty quickly. If possible, export a detailed list of transactions from your income accounts within your ledger. Sort these by description/service, and you

should then be able to total everything up before calculating the average price that you currently charge for each of your individual services.

Step 2: Set your minimum fees as a baseline per service Now you know your average fee per service type, and you can also filter the data to see your current minimum and maximum fees.

This information will enable you to set your minimum fees for your services going forward. This can have a transformative effect on your revenue. For example, upon services, follow the steps listed here. Simple!

Example Client Categorisation Tool

Small Client Medium Client Large Client

Bank Accounts 1-3 3-5 >5

Finance Leases 1-2 2-4 >4

Employees 1-5 5-10 >10

Table 1

The values and categories used in this table are just an example of the process that you can use to categorise your own clients and insert your own services and prices, which will undoubtedly differ from this template. The important thing is that you have a process in place to protect your minimum acceptable fee income per client.

What is fixed-fee billing and why you should embrace it | 3

Example Pricing Matrix

Service Small Client Medium Client Large Client

Corporation Tax Return £250 £350 £450

Annual Accounts >£1,000 >£2,000 >£3,000

Table 2

Carl Reader is chairman at multi-award winning firm d&t and Head of Accounting (EMEA) at Practice Ignition. Carl serves as Chair of the Practitioner Panel at ACCA, and is the author of BOSS IT. Carl is widely recognised as a thought leader in the accounting profession, speaking globally to accountancy audiences about a range of topics. He has been recognised as one of the leading voices on social media by ICAEW, is regularly featured in the accounting press, and was formerly a member of the Accountancy Age 35 under 35.

Hassle-free fixed fees Make your transition to fixed fees a breeze with Practice Ignition. Easily identify and segment your different services before importing your new pricing structure straight back into the platform for future use.

If you want more help on how to do this, either get in touch with your account manager or visit our help centre.

91%

87%

80%

of our customers spend less time creating proposals and chasing signatures and payments

were able to cancel other software subscriptions

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