Pricing Your Work: Key Considerations for Legal Bookkeepers

This week we're gonna discuss pricing your work. It's a question that often comes up in the Law Lab. How do I price a cleanup job? How do I price my bookkeeping or accounting work? So you have to look at it in several pieces. The first is overhead. What is your overhead? What are your fixed costs? So think in terms of like your office space, your software, any variable costs. If you're traveling to the client, and I hope you're not in today's world, but if you are, travel expenses. Ensure that you have a good handle on what it costs to run your business before you set any prices. You need to know what it costs, right? Just like our clients. Next, you wanna think about how long it's gonna take you to complete the work. Now, I know we always think about it as time, but it'll vary per size of the job or the complexity of the project. And it's important to get a good general idea of how long it's gonna take you to do the work. Still a factor no matter what way you look at it. Think about your hourly rate, what you'd like to charge. You should also consider your experience level and your expertise. So if you're a small firm owner just starting out, you might want to consider charging less than someone who's been in the business for a long time that's got a lot of experience. You don't want to underprice your services. However, we all start out that way, and it's sometimes, um, you actually learn as you go. So a low price may actually get your foot in the door. And I can honestly tell you that's how I started, and most of the people I talk to, my colleagues, have all started the same way. We all started probably way too— less expensive, but we did learn as we grew. So the size of the client and the company is also an important factor in considering when you're doing your pricing for your bookkeeping services. So the bigger the firm, the more complexity, and the more complexity, you charge more. So if you're working with a large company, they may have more complex needs and require more work from you. In that case, you want to definitely charge a higher price. If the work is specialized, like doing legal accounting, we have to know a lot more things than your typical generic bookkeeper. So that's another factor. But if you're working with a small company that has simpler needs, which is a great way to start, they might require less work and you might have more interaction with the firm owner. That firm owner may actually help you learn how to do this work. And in that case, you don't want to charge as much. I still have my first law firm client from way back in the day, and he's still my client. He's undercharged right now still. I probably should bring him up to market, but he has a special place in my heart, so he's always going to have that spot. But the type of bookkeeping services that you do offer are going to affect the pricing as well. So when you're thinking of your offerings, if you're digging out from a mountainous pile of trust accounting that is messed up, you have to factor that in. Are you producing financial statements for the client and taking that time to review and complete the work each month? And is there a hard deadline or timeline for that? You want to factor that in. So the more they want to talk to you, the more you have to factor in that time that it takes. So you want to think about maybe some of those advisory services, some of the strategic planning. So again, you shouldn't just consider time, but you should also consider the value that you're providing your clients. I think that that's something that gets missed. We're so easily capable of doing the work that we don't place the same value on it that our client would. Our clients don't want to do this work. So the other question I get asked as we go through this topic is whether we should do the work hourly or should we do it project-based. I'm a firm believer in setting the price, figuring out what it should be, and using that pricing. When I switched from being an hourly type of firm to being a firm that works specifically with fixed fees, I went through my records. It was the same time that I managed to move everybody out of desktop and put them in online. And what I did was I took my most expensive month. So the biggest month, usually like a February where you're doing the most work for the year, multiplied it by 12, added a little bit to it. And moved my clients from desktop to online and offered free training, which there wasn't much training because they don't— they're not in the product a lot. So that's how I did it and it worked out really well. You also can focus on value pricing, but when it comes to cleaning up trust, that's a difficult one because that's one that you just don't know how big the project's going to be. If you can find that line in the sand where it last balanced and you have that date, even if it's 2 2015, you have to go back and really detangle it from the last time it was reconciled. But you can kind of gauge, typically if you have to go all the way back to the beginning, you can kind of gauge, well, there wasn't that much happening in the beginning. And really, I would take the bigger months at the end of the project and figure out what is it going to cost me to do an entire year. But if you're doing cleanup work, one of the mistakes I made, and I never actually considered it, but I want you to think about it, is if you're doing cleanup work, don't charge less for a year than you would have charged for every per month times 12. So I had this happen one time. I gave the client a price. I'm not sure how I came up with that pricing. And also you have to kind of look at how many bank accounts, you know, how difficult is the trust, how many matters. But I don't remember exactly how I came on that price. But I do know that If you did the math and took that price and divided it by 12, it was like $185 a month. And then when I went ahead and gave the client the monthly price, because he was asking for a monthly fee, he wanted to keep current and active, and I came up with $375 a month. He looked at me and said, "Why should I pay you $375 when I can get it for $184 or $185 per month if I wait till the end of the year?" Mm-hmm. Of course, that opens up a whole other conversation about why you should really have a good handle on your numbers and your figures and your finances and be able to strategically plan and all of that. But he made a good point to me that it shouldn't be less to do the cleanup than it would to monthly charge them. So if you're really struggling and you're just starting out and you're trying to figure out what do I charge, maybe look at it from that perspective of what it would— what do you think you should get for it for the month? And remember that you always can increase it and you'll find your level. And finding your level, sometimes it can be difficult. You'll win some and you lose some. So, you really don't want to win every single client that you put an offering out for. If you're doing that, you're probably too low in your pricing. You should only really in the real world get half the people who come to you and ask for a price. Only half should be taking you up on that offer. If you're, like I said, if you're charging too low of a price, you're going to get them all, and they're probably not good quality clients either. So remember that part too. I hope this video is helpful. If you want to learn more about this kind of thing, you can join our mastermind group, the Accountant's Law Lab. Of course, you can subscribe here and continue to follow us for more wonderful information. This is really specific to legal billing, but it's kind of a wide, broad topic because this can be taken out— the tips in this video can be taken out and used for any industry. But there's a lot more detail that's— Yeah. Included in what you really need to look at with pricing. It's truly an art form. Don't beat yourself up if you guessed wrong, and remember that sometimes you guess right, and it all balances out. We'll see you all next week. Bye now. Bye.