Don’t attract interest in your services for the wrong reasons
RECENTLY I’VE WRITTEN about how your prices should be part of your business strategy and not your marketing strategy. I talked about Mark, the painter, who advertised a really low day rate but wasn’t able to carry out the volume of jobs he needed to make enough money (see Is Your Charge-Out Rate a Marketing or Business Strategy?).
A better strategy for Mark would have been to research the market and find ways to provide customers with savings elsewhere (Researching the Market is a Crucial Part of Every Business Strategy).
The same principle can be applied to contract bookkeepers charging less than the minimum wage. Although this may get you a lot of regular work early on in your business, you will soon learn that it’s unsustainable. And because it’s also really hard to increase your rates substantially, you’ll just find yourself back at square one if you do so anyway.
Check out the National Bookkeeping Rates of Pay to get indicative pricing for contract bookkeeping services.
Remember your entitlements
When you’re setting your prices, don’t forget to factor in your entitlements. As a full time employee of a business, you receive annual leave entitlements equating to four weeks’ salary, sick leave equating to ten days’ salary, public holiday pay, superannuation, and tax withheld on your behalf.
As a contract bookkeeper, you should earn the equivalent of a full year’s salary proportional to how many days or hours you work each week.
Contractor or employee?
As a contractor, your hourly rate will be higher than that of a full time employee, sometimes two times as high. If you have clients who don’t want to pay a higher hourly rate to hire you as an independent contractor, they might be better suited to employing casual staff instead.
If you’d prefer the life of an employee check out our Career Academy Success Program.
Increasing your rates
If you decide it’s time to increase your rates, you need to show how you provide value to your clients’ businesses, in order to discourage them from seeking the same services from another, cheaper bookkeeper. If there’s some extenuating circumstances, it may also be worthwhile explaining the reason for the increase — if your compliance costs have increased due to government regulatory changes, for example. (Note: Rising electricity, broadband or rent is best kept to yourself.)
You’ll learn ways to increase your rates without losing your clients by enrolling in Research the Market module of our Business StartUp training course as a standalone mini course. Visit our website for more information or to enrol.