Fixed-fee billing and why you should embrace it

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 are probably 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 already 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.  

Let’s run through how you can do this within your services. If you use a platform like Practice Ignition then you can use their 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.

Table 1

Table 2

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.

Hassle-free fixed fees  

You can 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.

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.