How Much to Charge for Bookkeeping: Pricing From Your Own Hours
To work out how much to charge for bookkeeping, start with the hourly floor: the income you want to keep, grossed up for tax and business costs, divided by the hours a year a client will actually pay for. Then price each client from the work their books take: transactions times your minutes per transaction, accounts times your minutes per reconciliation, plus month-end close and client contact, times your rate. In the illustrative example below, the floor is $83.05 an hour, and a client with 250 transactions and 4 accounts a month comes to a $800 monthly retainer. Every rate and minute here is the example’s, not a claim about what bookkeepers charge.
The bookkeeping pricing formula
- Revenue needed a year = income you want to keep / (1 - tax set-aside share) + business costs
- Billable hours a year = working weeks x hours a week x share of those hours you can bill
- Hourly floor = revenue needed / billable hours
- Monthly retainer = (transactions x minutes each + accounts x minutes each) / 60 + close hours + client contact hours, times your rate, rounded up
The floor is the least that pays your year, not a price. Charging less than it means the year does not work, however busy it feels.
Step 1: the hourly floor
Say you want to keep $70,000 a year, set aside 25% of profit for tax (your own share; the tax itself depends on your return), and spend $6,000 a year on software, insurance, education and equipment. You work 46 weeks of 40 hours, and 65% of those hours go to client work; the rest is sales, admin and learning.
| Step | Amount |
|---|---|
| Income to keep (illustrative) | $70,000 |
| Profit needed before a 25% tax set-aside: $70,000 / (1 - 25%) | $93,333.33 |
| Plus business costs | $6,000 |
| Revenue needed a year | $99,333.33 |
| Billable hours: 46 weeks x 40 hours x 65% | 1,196 |
| Hourly floor rate | $83.05 |
Dividing $70,000 by every hour of a 40-hour, 46-week year gives $38.04, which is what the job feels like it pays. The floor is 2.2 times that, because the tax set-aside, the costs and the unbilled hours all land on the hours a client pays for. The billable share moves it a long way:
| Share of hours billed | Billable hours a year | Hourly floor |
|---|---|---|
| 50% | 920 | $107.97 |
| 65% | 1,196 | $83.05 |
| 80% | 1,472 | $67.48 |
At 65% billable the floor is $83.05; if only half your hours are billed it rises to $107.97. Track a month of your own time before trusting any share, including this one. The freelance hourly rate calculator walks through each correction on its own, and if you are comparing this to a salaried bookkeeping job, the W-2 to 1099 rate calculator adds the benefits and the employer’s share of payroll tax.
Step 2: a monthly retainer built from the work
A flat monthly fee is easier to sell than an hourly bill, but it has to be built from the client’s actual volume. Take an illustrative client with 250 transactions a month across 4 bank, card and loan accounts. Your measured times are 1 minute to code and review each transaction and 30 minutes to reconcile each account. Your rate is $85, at or above the floor.
| Monthly work | Hours |
|---|---|
| 250 transactions x 1 minute to code and review | 4.17 |
| 4 accounts x 30 minutes to reconcile | 2.00 |
| Month-end close and reports | 2.00 |
| Client emails, questions and calls | 1.00 |
| Hours a month | 9.17 |
| x $85 an hour | $779.17 |
| Retainer, rounded up to the next $25 | $800 |
That works out to $3.20 a transaction and $87.27 an hour once rounded, or $9,600 a year. The minutes are the input to get right: a client with missing receipts, a long chart of accounts or inventory takes more of them, so price that client on their own minutes, not on a figure from another client.
Step 3: catch-up and cleanup work as a fixed price
A client who is months behind is a project, not a retainer. Say the books are 9 months behind, with 200 transactions a month across 4 accounts. Cleanup is slower than monthly work, so the example uses 1.5 minutes a transaction and 45 minutes per account per month.
- Transactions: 9 x 200 x 1.5 minutes = 45 hours
- Reconciliations: 9 x 4 x 45 minutes = 27 hours
- Discovery, setup and handover: 4 hours
- Total 76 hours, plus a 20% buffer = 91.2 hours
At $85 an hour the fixed price is $7,752.00, with a 50% deposit of $3,876.00 up front. A fixed price puts the risk of missing statements and wrong opening balances on you; the buffer is what pays for that risk, so set it from what you saw in this client’s records. Tax filings for the missed periods are not in this price.
The insight: the hours a client takes, not the hours you quoted
A retainer is priced on the hours you expect. What it pays depends on the hours you actually spend, and the two drift apart month by month. Say the $800 client above really took 12.5 hours this month, 3.33 more than the 9.17 you priced, counting every email. The fee also loses a 3% card-processing fee and $45 of apps you pay for on the client’s behalf.
- Fee after processing and software: $731.00
- Earned an hour: $731.00 / 12.5 hours = $58.48
That is $26.52 an hour under your $85 rate, and $24.57 under the $83.05 floor. The retainer looked right when it was quoted and is below the floor in practice. There are two fixes. The fee that would pay $85 an hour for this client’s real hours is $1,141.75; or, at the current fee, the work has to fit into 8.6 hours. Running this for every client once a quarter, on three months of tracked hours rather than one, is how a retainer list stays above the floor.
When the fix is a price increase, the arithmetic is kinder than it feels. Say 12 clients pay $650 a month and you raise it to $800, an increase of 23.1%. Even if 2 clients leave, revenue goes from $7,800 to $8,000 a month, $200 more, and at 9 hours each you get 18 hours a month back. Losing 2.25 clients is the break-even; fewer than that and the raise pays more for less work. How many clients would actually leave is your own guess, not a measured figure.
How these were calculated
The hourly floor is income to keep / (1 - tax set-aside share) + business costs, divided by weeks x hours a week x billable share. The retainer is transactions x minutes plus accounts x minutes, over 60, plus close and contact hours, times the rate, rounded up to the next $25. The catch-up price is months x (transactions x minutes + accounts x minutes) / 60 plus setup hours, times (1 + buffer), times the rate. Client profitability is fee x (1 - processing fee) - software, divided by hours spent; the fee that pays the target is (rate x hours + software) / (1 - processing fee). The price-increase break-even is clients - (clients x old fee) / new fee.
Every figure on this page was computed twice, once by the code behind the calculator pack below and once by a separate implementation written from the formulas, and the two agree to the cent. The income, tax share, costs, weeks, hours, minutes, fees and client counts are illustrative, not market rates or typical figures for any practice. No official figures are used. The tax set-aside is a share you choose, not a computed tax. None of this is financial, legal or tax advice.
If you want to run this on your own practice, with the hourly floor, a retainer from transactions and accounts, catch-up pricing, payroll and sales-tax add-ons, client profitability, capacity and a price increase, the pack below does it in linked spreadsheets with every formula visible.