Accounting Firm Pricing: Quoting a New Client

Accounting firm pricing starts with the client’s scope, then a fee the client can understand and accept. Gather the entity details and record quality before quoting. Carry the agreed fee basis into the engagement letter so the first invoice matches the agreement.

Quoting a New Client Before the Engagement Letter

Quote a new client by defining the work before choosing a price. A discovery call can identify the services, but incomplete records can change the cost after the call.

1. Ask which entities need work. Record each entity type, the services requested and the periods covered.
2. Gather the facts that affect effort. Ask about GST registration, reporting frequency, payroll, bookkeeping quality, prior-year lodgments and overdue returns.
3. List the scope by entity and service. Separate recurring compliance from clean-up, set-up work and advice.
4. Calculate the fee using the model that fits the work. Record assumptions, exclusions, GST treatment and the billing schedule.
5. Send a written quote and record the client’s acceptance. State if the quote is subject to agreeing the full engagement letter.
6. Issue the engagement letter with the same fee basis and scope. Obtain acceptance of the full terms before your practice starts work.

A company with current reconciled records needs a different quote from a trust group with several beneficiaries and two years of unlodged returns. Ask which beneficiary returns are included. Identify the trustee separately and inspect the overdue records before committing to a fixed clean-up fee. If records are missing, quote a bounded assessment first and price the remaining work after it.

Collect entity and trustee details through the client form before generating the letter. Tax Genie’s guided form collects the people and entities involved, then generates the engagement letter from the answers. You can compare that entity list with your quoted services so an extra trust or corporate trustee does not disappear from the scope. Set the fee yourself and review the letter before sending it. Use the engagement letter guide for the document’s wider contents.

For a bookkeeping package using Xero, examine a representative period of transactions and the receipts behind them. Count transactions consistently, including bank lines, invoices and adjustments according to your agreed definition. Cost the reconciliation frequency, payroll duties and reporting review separately. Poor receipts or unreconciled balances add work even when transaction volume is low.

Consider this invented service example, excluding GST. Monthly bookkeeping takes four hours at an assumed $90 hourly rate, so the expected hourly bill is $360. A recurring package is $400 per month, or $440 including GST, with room for ordinary variation. It covers up to 200 bank transaction lines, monthly reconciliations and one monthly reporting review. The client supplies usable receipts.

Payroll, historical clean-up, tax returns and software subscriptions are excluded from both quotes.

Under the hourly quote, six hours would cost $540 excluding GST. Under the package, work within the agreed scope remains $400 excluding GST. An added payroll service or sustained volume above the limit triggers a separate quote. These are fictional bookkeeping fees, not Xero subscription prices or market benchmarks.

Keep the quote’s status, owner and next action visible. A CRM for accountants can help you follow up an unanswered quote. After acceptance, use an onboarding checklist to assign the first job.

Fixed Fee Accounting or Hourly Rates

Fixed fee accounting fits defined recurring work, while hourly rates fit work whose size you cannot yet establish. A fixed fee promises a price for a scope. An hourly estimate predicts a bill and must be described as an estimate.

Decision	Fixed fee	Hourly billing
Client predictability	The agreed scope has a known fee	The final fee depends on time worked
Practice write-offs	The practice absorbs underestimation within scope	Time can be billed, subject to the agreement and any cap
Client trust	Clear exclusions prevent surprise extras	Progress updates explain why an estimate changes
Administration	Less routine time-based invoicing, but scope needs monitoring	Time records and bill explanations take work

Build an hourly charge-out rate from annual employment costs, overheads and your required profit, divided by realistic billable hours. Use billable hours after leave, training and administration. Check the resulting quote against the job’s risk and what the client actually receives.

A Worked Fixed Fee Example

This invented sole trader package covers four quarterly BAS and one annual tax return, using complete reconciled records. All figures are assumptions, not market rates.

Work	Estimated hours	Assumed rate	Calculated fee excluding GST
Four BAS at two hours each	8	$180 per hour	$1,440
Annual tax return	4	$180 per hour	$720
Final review and client queries	2	$180 per hour	$360
Total before risk allowance	14	$180 per hour	$2,520

A 15% risk allowance adds $378, giving $2,898 excluding GST. The practice rounds the annual fixed fee to $2,900 excluding GST, or $3,190 including GST. The allowance covers normal extra effort within scope. It does not turn overdue returns or an ATO review into included services.

Exclude payroll, prior-period corrections, bookkeeping and separate advice if the package does not cover them. Allocate the annual fee to agreed billing instalments without implying that each instalment buys unlimited work.

Hourly billing can fit an ATO review or audit response, uncertain catch-up work and one-off advice with an unclear extent. Give an estimate or an agreed first-stage cap. Tell the client when further work would exceed it and seek acceptance before continuing.

For fixed fee bookkeeping and accounting packages, set a measurable review trigger. For example, review the scope when monthly bank transaction lines exceed 200 for two consecutive periods. State that the trigger starts a discussion and written variation. It does not automatically authorise a higher invoice.

Value Based Pricing for Accountants

Value based pricing sets a fee around the outcome’s worth to the client, with service options the client can choose. Hours still help you test whether the work is profitable. They do not determine the client’s fee on their own.

Ask what the company client needs beyond meeting lodgment obligations. A director who wants earlier cash-flow decisions can value regular review meetings. A client who only needs an annual return has a narrower decision.

The following company example has three service options. It describes possible scopes, not quoted fees or promised financial gains.

Option	Included work	Client decision it supports
Compliance only	Annual accounts and company tax return from reconciled records	Meeting the agreed reporting obligations
Compliance with quarterly reviews	Compliance work plus four management-report reviews	Understanding results during the year
Advisory option	Quarterly reviews plus agreed advisory meetings and a cash-flow forecast	Planning hiring or spending against forecast cash

Specify meeting frequency, reports, forecast assumptions and response arrangements for each option. Name work that remains excluded, such as an audit or acquisition advice. A higher option must contain useful additional work, not a renamed compliance package.

There is no universal value-based pricing formula. Choose a fee through the client’s needs, the agreed outputs and the cost and risk of delivering them. Never price a routine return on an unsupported promise of tax savings.

Value pricing breaks down when the client cannot distinguish the options or only wants a small compliance job. A clear fixed fee can be easier to explain. Extra meetings also need a defined scope or they can consume the margin you intended to earn.

Charging for Onboarding and Out-Of-Scope Work

Charge separately for onboarding when it contains work beyond the recurring service. Prior-year clean-up, overdue lodgments and accounting file set-up need their own scope and acceptance. Routine internal administration can be included in your recurring fee if you explain that basis.

Separate known work from uncertain work. A set-up fee can cover a defined opening-balance check and file configuration. Unknown historical corrections can start with a paid assessment, followed by a quote for the identified repairs.

Write the fee basis so it can move unchanged into the engagement letter. An illustrative scope statement can say:

The annual fee covers four quarterly BAS and one sole trader annual tax return from complete reconciled records. Payroll, bookkeeping and prior-period corrections are excluded. Additional work requires a separate written quote and acceptance. If we agree hourly billing for that work, the rate is $180 per hour excluding GST, or $198 including GST. The annual fee is billed in four equal instalments, each payable within 14 days of invoice.

The rate and payment terms in that example are invented. Set your actual rate and terms before using it. Name the entities and periods covered in the surrounding quote.

APES 305 requires covered members in public practice to document and communicate engagement terms. Its fee guidance at paragraph 4.8 covers the basis and calculation of fees, plus agreed billing schedules. The contents are tailored to the engagement. Before-start communication and written acceptance are preferable practices under the standard, rather than a universal statutory signed-letter requirement. Read the APESB standard alongside the requirements that apply to your membership and work.

When scope changes, tell the client in writing what changed and why. Quote the extra work, describe its effect on timing and get acceptance before starting it. Keep the accepted variation with the engagement letter. An unpaid-fee dispute needs a separate decision about ending the engagement, not an unannounced increase.

Accounting Firm Fees and Your Code Duties

Your accounting firm fees must match what you tell the client about the service and its price. Section 30-10 of the Tax Agent Services Act requires registered tax and BAS agents to act honestly and with integrity. A quote that conceals predictable extra charges conflicts with that duty.

The Australian Consumer Law also prohibits misleading conduct and false representations. The ACCC’s guidance on misleading claims applies to claims about prices and services. Do not advertise a fixed fee that your practice regularly exceeds for the advertised scope. Explain the genuine conditions prominently, then honour the price for work meeting them.

Keep client quotes distinct from statements to regulators. The Determination’s specific false-statement obligation concerns statements to the TPB, ATO or other Australian government agencies. It is not a standalone client-quote rule. The honesty and integrity duty and consumer law still govern misleading fee representations.

Under section 45 of the 2024 Code Determination, give clients written information about the TPB register and complaints process. Include general information about your rights, responsibilities and obligations and the client’s obligations to you. Provide this information on engagement or re-engagement, or when you receive a relevant request. Attach it to the quote where appropriate.

Disclose current registration conditions and suspensions, including interim suspensions, when a client enquires about engaging or re-engaging you. Tell an existing client who has not been advised as soon as reasonably practicable after the event. The current Code Determination separates these current matters from historical prescribed events.

Disclose relevant historical prescribed events at an engagement or re-engagement inquiry. For an existing client not previously advised, the deadline is within 30 days of the event. The five-year lookback has an official historical boundary. Interim suspensions are excluded from the historical event category, but a current interim suspension must still be disclosed.

These obligations already apply to both practitioner size groups. Read section 45 and the application provisions in the linked Determination for the event categories and boundaries. Give the information in writing, prominently and clearly. A fee quote does not replace those disclosures.

Price Increase Letter for Existing Clients

Send a price increase letter before the new fee applies, following the notice and variation terms in the existing engagement letter. Review the fee at annual re-engagement so the client can decide before the next service period. Avoid changing the price midway through an accepted fixed scope.

This short fictional notice uses a percentage and elapsed time so you can adapt it to your agreement:

Your annual compliance fee will increase by 10% for the next service period, beginning 60 days after this notice. The increase covers higher staff costs for the same agreed services. The attached engagement letter sets out the new fee and billing instalments. If you disagree, contact us before the new service period starts to discuss a narrower scope or ending the engagement under the existing terms.

In your actual letter, state the effective date field and the new fee with its GST treatment. Use at least the notice period your agreement requires. The example’s 60 days is a practice choice, not a legal minimum. Allow time to discuss the change before work starts.

A changed fee basis, such as moving from hourly billing to a recurring fixed fee, can need a new engagement letter or signed variation. An annual reissue is a useful occasion to agree it. APES 305 does not require every unchanged engagement to receive a new signature every year.

A unilateral fee-increase clause can be an unfair term in a standard form small business contract. Current protections cover a business with fewer than 100 employees or annual turnover below $10 million, subject to the applicable contract rules. Proposing, using or relying on unfair terms can attract penalties. The ACCC’s contract guidance explains the commencement boundary and treatment of new, renewed or varied contracts.

Only a court can finally determine unfairness. Giving notice alone does not make a one-sided clause fair. Review the whole agreement, including the client’s ability to refuse the increase or leave without an unfair penalty. Before sending the notice, compare its fee, scope and effective date with the new engagement letter. They must agree, and the accepted quote and any variation must remain on the client file.