Get Trent McLaren's tips for how to build and implement a fixed fee pricing plan at your accounting or bookkeeping practice.

1. How to Successfully
Build & Implement a
Fixed Fee Pricing Plan
at Your Practice

2. Your Hosts
Trent McLaren
Head of Accounting & Sales
Development (Global)
Practice Ignition
Matt Bunston
Country Manager, Australia
Hubdoc

3. Poll: How many monthly
bookkeeping clients do you
have?

4. Today’s Agenda
● Introducing the cloud accounting / bookkeeping business model
● How to bundle recurring and nonrecurring services
● Determining a time / cost baseline of each service + pricing
● How to have the “value” conversation with clients
● How you can increase profitability with fixed fees

5. The Inspiration Behind this Webinar
Background:
● Self funded + bootstrapped by Guy Pearson (now non-exec chairman plus
founder and CEO of Practice Ignition)
● 100% cloud from day one
● Adopted a fixed fee billing model after studying startup software companies
Growth:
● 7 years old (2010 start date)
● From 1 employee to 20 by year 4
● From 1 to 3 offices by year 4
● From $0 to $2mm in annual recurring revenue in the first 5 years
● From only serving clients in Australia to serving clients in 8 countries
● Highlight includes helping clients raise $100m in funding
Niche:
● High growth companies
● High Net Worth Individuals
● 100% cloud businesses

6. What is the Cloud
Accounting / Bookkeeping
Business Model?

7. Key Components of a Cloud Business Model
Value Costs Invoicing / Payments
Ex. delivering outsourced
accounting
Ex. staff wages, rent,
internet, subscriptions
How frequently you
invoice / collect
payment

8. The Traditional Model: Compliance Services
Example

9. The Traditional Model: Bookkeeping
Services Example

10. Why Hourly & Cloud Software Don’t Work

11. The Cloud Model = Monthly Value

12. Moving Away from Hourly Billing is
Better for You and Your Clients
Fixed fee billing provides:
For Your Clients
● Better service for the same cost
● Confidence in their trusted
advisor (as recurring services
are delivered at a higher
standard)
For You
● Deliver a more efficient service
with higher profits
● More opportunities for
value-priced projects
● No longer concerned with time
for billing & efficiency is
prioritized

13. The Cloud Business Model with Fixed Fees
Value
Deliver value to your clients
on a monthly basis.
Costs
Try to align all your costs to a
monthly basis
Invoicing / Payments
Get paid upfront. Fixed fee
pricing is an exchange of risk.

14. Poll: How would you
describe your current
pricing model?

15. How to Bundle Monthly
Service Packages

16. What is a cohort analysis?
Cohort = A group whose members share one or
more similar characteristics

17. Cohort Analysis
Break down the commonalities
What do you do for 90% of each cohort?
● The basics: financial statements, tax returns, etc.
● Additional variables delivered on a regular basis: sales tax, returns,
payroll, management meetings
● What software is used within each cohort?

18. Monthly Clients Quarterly Clients Annual Clients
Core Services ● Bookkeeping
● Training and support
● Update and deliver
training manuals
● Monthly debtor report
● Bookkeeping
● Sales Tax
● Quarterly Review
meetings
● Training and
support
● Annual accounts
● Tax returns
● Training and
support
Software to deliver
the core services
● QBO
● Hubdoc
● Dropbox
● QBO
● Hubdoc
● Tax software
● QBO
● Tax software
● Dropbox
● Hubdoc
Add-on services ● Payroll
● VCFO
● AP/AR
● T4/Group certs/W2
● Tax planning
● VCFO
● Software setup and
training.
● Business Advisory
● Risk Management

19. How Do You Align All Cohorts to a Monthly
Package?
● What additional services can be delivered to quarterly/annual clients?
or how do we get them to pay monthly?
● Billing frequency is separate to delivery frequency

20. Use the Cohort
to Calculate a
Baseline Price

21. Time (hrs) Rate (p/h) Role type
Admin 0.1 80 Admin
ASIC/SEC/Companies 0.1 80 Admin
Preparation of Financials 4 200 Senior
Review/Audit of financials 4 250 Partner
Preparation/lodgement of
Tax return
1.25 150 Intermediate
Accounting Support 2 80 Grad
Filing fee 1 350 Fixed 1
Accounting software 12 50 Fixed 2
Example Plan – Annual Compliance Package

22. Don’t Sweat the Small Stuff
Don’t worry about overages and underages on each and every client

23. The Law of Averages
Counter the over/unders by:
● Regularly reviewing your service bundles
● Develop a standard tech stack and workflow
● Constantly optimize your systems as your team gains experience while
charging the same / more
● Remove the outliers (but ensure you charge appropriately for them)
● Profits will increase per service in the long run

24. Example Plan – Annual Compliance Package
Time (hrs) Rate (p/h) Cost p.a. Monthly $ Time/Monthly Role type
Admin 0.1 80 8 Time 0.67 0.008333333333 Admin
ASIC/SEC/Companies 0.1 80 8 Time 0.67 0.008333333333 Admin
Preparation of Financials 4 200 800 Time 66.67 0.333333333 Senior
Review/Audit of financials 4 250 1000 Time 83.33 0.333333333 Partner
Preparation/lodgement of
Tax return 1.25 150 187.5 Time 15.63 0.1041666667 Intermediate
Accounting Support 2 80 160 Time 13.33 Grad
Filing fee 1 350 350 Fixed 29.17 Fixed 1
Accounting software 12 50 600 Fixed 50 Fixed 2
Total: $3,113.50 $259.46
Margin 30% 30%
Marketable price $4,050 $340

25. Considerations for Variables in Recurring Services
Bookkeeping and payroll are examples of services where variables dictate
the cost:
● Payroll pricing determined by number of employees
● Bookkeeping pricing determined by number of transactions

26. Considerations for Variables in Recurring Services
● Consider a tiered approach to packaging your services
○ Payroll: monthly payroll for up to 10 employees per month.
○ Bookkeeping: Reconciling up to 150 transactions per month
● How you arrive at these numbers is determined by the type of clients
you service.
● Once you’ve determined the tier “ceiling”, ensure you also price out
add-ons for transaction/employee count overages.

27. Seachange Accountants and Advisors:

28. Cost + Margin to
Scale Service Bundles

29. Review Cost and Margin as You Grow
July August September October November
Product Cost $79.17 $79.17 $79.17 $79.17 $79.17
Time Cost $180.29 $180.29 $180.29 $165 $165
Number of Clients 100 105 110 121 142
Growth Rate 5% 5% 5% 5%
Price $340 $340 $340 $340 $340
Revenue $34,000 $35,700 $37,400 $41,140 $48,280
Total Cost $25,946 $27,243 $28,541 $29,545 $34,672
Margin 23.69% 23.69% 23.69% 28.19% 28.19%

30. Review Cost and Margin as You Grow
● Make sure you’re focusing on efficiency here:
○ As you add more clients your costs decrease
○ As you improve your processes your time cost comes down
● Review costs regularly
● Change prices annually
● Add additional value when you increase your fees

31. The Role of Value
Pricing

32. The “Hug” Rule
Have you ever been hugged by a client for
completing compliance work? Chances are slim.
● Clients (typically) don’t see value in
compliance work – it’s just something they
have to do as a business owner
● Compliance work is your opportunity to
Build trust and over-deliver
(apps will help you do this)
● If you do this, the opportunity for high
value project work is tremendous

33. The “Hug” Rule
● Value pricing is ideal for project work that arises from the amazing work
you do when delivering your fixed fee recurring services
● In this case, project work refers to any service (typically, non-recurring)
that can lead to a positive change in the direction of your clients’
business – i.e. the types of services you deserve a hug for!

34. How to Have the
Value Conversation

35. Communicating Before the Change
Announce in advance
Send a client email 90 days in advance explaining
why you are changing your pricing model
Some examples:
● Allows the firm and your business to go to the cloud and move towards
real-time financials
● Maintains a profitable and cash-flow positive relationship (we can
continue to be your advisor)
● No surprise bills, ever

36. Keep Communicating While You’re
Determining Prices
Share your plans and work together with your client
to figure out which one makes sense to them
● Part of the move to fixed fees is being transparent and openly sharing
pricing
● You will reduce fees for some clients
(Remember: don’t sweat the small stuff as you shift your focus to scale
and efficiency)
● Ask them if they have any queries

37. Communication After the Transition
● Get your fees approved in writing with an engagement letter
● Set regular reviews with your client (for upsell opportunities and to
minimize scope creep)
● Re-engage annually with a new engagement letter

38. Scaling Up + Becoming
More Profitable

39. The key metric is MRR (Monthly Recurring Revenue).

40. Traditional Growth Model
● No incentive to grow (as your costs grow with you)
● No incentive to become more efficient
● Profit margin is typically static

41. Traditional Growth Model
Existing
client’s new
business
Lost client
Referral
Tax season

42. MRR Growth Model
● Incentive to grow (as your costs will eventually plateau)
● Huge incentive to become more efficient
● Profit margin can grow

43. MRR Growth Model
Projects should
fund your
growth activities
Profit (40%
can be
achieved)

44. MRR Growth
As you streamline, you focus on efficiency and driving
cost of doing the every day down, constantly boosting
profits over time.

45. Poll: What accounting
software do you support?

46. Your Three Takeaways
1. Align the three components of the cloud business model
(Value/Costs/Invoicing & Payments) by focusing on monthly delivery.
2. Don’t sweat the small stuff and just get started.
3. Constantly review your prices, your processes and your tech stack.
Remember: we are here to help!

47. VIP Account for You
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Accountants & Bookkeepers
Simply sign up at
HTTPS://APP.HUBDOC.COM/SIGNUP
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adding your clients
Supercharge your practice!

48. Getting Started on PI
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custom training plan)
2.
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49. Thank You + Q&A
Reach out to @Hubdoc or @ignitionapp on Twitter!