Billing question for the bookkeepers out there

[Rebecka Melson]

I have always charged my clients by the hour, which is pretty standard, and as far as I'm concerned the easiest way to go. I came across this video of a conference where the speaker says it is more profitable for bookkeepers to charge by the transaction than by the hour. His method consists of charging $.50/transaction plus $100.00 "to pull it all together". So basically while your interviewing the client you ask them how many transactions they have and if they say 100 you would charge them $150.00/mo.

I have a few of issues with this:

1 - I have NEVER had a client accurately estimate their monthly transactions and I'm afraid of bidding a job based on their estimate and then having to either live with the consequences or go back and tell them I need to increase their rates

2 - I tend to get clients that have to be babysat (time-wasters) which includes time on the phone and emailing to gather information or I have some that are local that includes travel time and meetings (I have one who is a talker and can turn what should be a 30 minute meeting into 4 hours, which I bill for)

3 - Trying to keep count of transaction entered seems like it would take more time than it is worth. You can look up transaction totals in QuickBooks, but I don't know what "it" considers a transaction so therefore can't vouch for accuracy (or the accuracy of any sub who might be counting their transactions)

So, fellow bookkeepers, I know most of you charge by the hour as well... What is your take on this?

*The video is from Universal Accounting which offers a Professional Bookkeeping certification and this is how they train their students to do their billing.

[Vicky]

Rebecka,

Cannot really help you here, but I do not know who would know how many transactions they would have in a month, in advance, to be able to give them a reasonable estimate of the final invoice amount. All they could do is look back on the previous year and give an average transaction amount and work from there.

Just my 2c worth.

(I have one who is a talker and can turn what should be a 30 minute meeting into 4 hours, which I bill for)

good on you it may stop them next time.

[vainparadise]

Rebecka my clients are the same as you described and I can not even imagine charging them per transaction. I actually think in my situation it is more profitable to bill them hourly considering how much I have to hold their hands!

[Rebecka Melson]

Well, the way I understand it is you are actually billing the clients a set monthly amount, but the system for coming up with this amount is based on how many transactions they have.

I just don't see how feasible this is. I think you would wind up either under-billing or grossly over-billing to compensate. I just wondered if anybody else had heard of it or used another method besides billing by the hour.

To me you would still have to keep track of your monthly transactions (which would be a nightmare) and/or hourly time to make sure you were being profitable. It must work because this is how they are training their students to do their billing... I just don't see it.

[vainparadise]

When we initially hired our account years ago for my husbands business she I recall her asking how many transactions monthly and I gave her the how could I possibly know response. She then billed us houly!

[Office Goddess]

Billing by transaction sounds like a bookkeeping nightmare! I bill in 15 minute increments.

[KathyCrofoot.com]

I found some of the other videos interesting, though I doubt I'd take the course and pay the fee.

Billing by transaction? I have clients with 10+ pages of statements, sounds like a dream to me... too bad I'm paid by the hour.

[sfdbooks]

I charge by the hour as well. Most of my clients right now drop off a plastic shopping bag of receipts for me to wade through. They have no idea how many transactions they have each month! I think that's why they find my service so valuable, so they don't have to know things like that!!

[lanelt]

Wow, you're brave. I shudder when I see the plastic bags of receipts. LOL I hate to say it, but that's one reason I have subs now....any bags of receipts get sent off to them. I can't deal with them.

[sfdbooks]

Wow, you're brave. I shudder when I see the plastic bags of receipts. LOL I hate to say it, but that's one reason I have subs now....any bags of receipts get sent off to them. I can't deal with them.

It actually stemmed from them being my first few clients and so I did what ever they wanted. I am starting to learn that I need to do things the way I want so that I can be in control. I don't think I will ever get those few to change their ways, but that's ok. I will get new clients started out on the right foot!