Episode 90: Pricing for Profitability: How to Make Sure Every Client is Worth It

Nov 6

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Conquering Workflows & Systems for Bookkeepers & Accountants podcast with Alyssa Lang, founder of Workflow Queen and Magnetic Bookkeeping & Consulting. Episode topic: Pricing for Profitability: How to Make Sure Every Client is Worth It

In this solo episode, Alyssa Lang dives into pricing strategies that ensure every client contributes to your firm’s profitability. She covers common pricing mistakes, guides listeners on calculating true client costs, and explains the benefits of shifting to value-based pricing for sustainable growth.

In this episode you’ll hear:

Why common pricing mistakes can destroy your profit margins—and how to avoid them
How to calculate the true cost of each client and ensure they’re worth your time
What value-based pricing is and why it often beats hourly rates for firm owners
How to set a target profit margin that supports sustainable growth
When it’s time to raise your rates—and how to communicate it confidently

Resources mentioned in this episode:

💻 Breakthrough for Bookkeepers & Accountants

💻 Client Profitability Tracker for Bookkeepers & Accountants

💻 Ambitious Bookkeeper’s Pricing for Profit resource

🎙️ How Breakthrough Transformed a Bookkeeper into a Thriving Firm Owner with Megan Andersen

🎙️ The Art of Pricing: Insights on Creating Value and Confidence in Your Pricing with Helena Donald

Listen to the Full Episode here 👇🏼

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Let’s dive into a topic that can make a huge difference in your bookkeeping or accounting firm: Pricing for Profitability. If you’re working nonstop and still feel like your income isn’t where it should be, this is where you need to start! This post, inspired by our latest podcast episode, will guide you through avoiding the biggest pricing pitfalls, figuring out the true cost of each client, and switching to a pricing model that lets you grow without working more hours.

And if you’re ready for even more support, check out Breakthrough for Bookkeepers & Accountants—it’s packed with tips and resources to help you build a business that serves your life (and not the other way around). For a quick and easy way to calculate your profitability on each client, grab our Client Profitability Tracker and see where you stand in just a few clicks.

Why Pricing Mistakes Can Sink Your Profit Margins

Let’s start with some pricing mistakes that can really eat into your bottom line. The truth is, even small pricing errors add up over time, and that lost income could be hurting your business more than you realize.

Here are three common mistakes I see way too often:

Overlooking Hidden Costs
So often, people think only about the obvious costs, like software, when setting rates. But don’t forget to add in all the “invisible” costs—client communication time, admin work, even those five-minute check-ins. Ignoring these can mean you’re charging way less than you should!
Discounting to Please Clients
Sound familiar? It’s super tempting to lower rates to keep clients happy, especially if you like them. But that’s a slippery slope. If you find yourself constantly offering discounts, consider rethinking how you explain your value. Sometimes, just helping clients see what they’re actually getting from you can make all the difference.
Not Reviewing Your Prices Regularly
Prices shouldn’t stay static. Take some time each quarter or year to review rates and make sure they’re keeping up with inflation, growing team costs, or just the increased value you’re bringing. We review prices quarterly and adjust yearly if needed—this way, we stay profitable while keeping things reasonable for clients.

If you want a deeper look at pricing strategies, check out Ambitious Bookkeeper’s Pricing for Profit guide. It’s a fantastic resource for setting and adjusting rates to support growth without burning out!

Calculating the Real Cost of Each Client

Okay, now that we’ve tackled some common mistakes, let’s talk about how to accurately calculate what each client is costing you.

This step makes sure you’re covering your costs and making a profit.

Get Clear on Your Direct Costs
Start with the basics: take what you charge your client each month and subtract all the direct costs (think software and labor). For instance, if you charge $500 a month but spend $300 on direct costs, you’re netting $200—or a 40% profit margin.
Set a Profit Margin that Helps You Grow
Aim for a profit margin that supports your business beyond just covering costs. A 50-70% profit margin is a good target, allowing you to scale and hire more team members when you’re ready.
Factor in Non-Billable Time
Don’t forget about those non-billable tasks like emails, client meetings, and internal discussions. These add up, so make sure to factor them in for a true view of each client’s impact on your profitability.

💻 Client Profitability Tracker: Need help? Our tracker makes it easy to plug in numbers and see if each client meets your target profit margin. It’s an eye-opener!

Why Value-Based Pricing Often Beats Hourly Rates

If you’re still charging by the hour, it might be time to think about switching to value-based pricing.

Here’s why this approach can be a game-changer:

You’re Charging for Expertise, Not Just Hours
With value-based pricing, you’re charging for the results and expertise you bring, not just the hours you clock. This usually means higher income and fewer hours spent on tracking time!
Clients Love Predictability
Clients appreciate knowing what they’ll pay each month. It simplifies their budgeting and means no surprises on their bill.
A Growth-Friendly Model
Moving from hourly to value-based pricing makes it easier to scale. When a new client comes along, you can quote a fixed rate that aligns with their needs—and your expertise.

🎙️ Want to learn more? Listen to our podcast episode, How Breakthrough Transformed a Bookkeeper into a Thriving Firm Owner with Megan Andersen. Megan talks about her transition from hourly to value-based pricing, and how it led to amazing growth in her firm!

Setting a Profit Margin that Supports Growth

A healthy profit margin lets you expand your business, hire team members, and improve services without constantly stressing about cash flow.

Here’s how to set and stick to a target:

Start by Checking Where You Are Now
Take stock of your current margins. Many firm owners who do this are shocked to realize they’re making less than they thought.
Pick a Target You Can Work Towards
Whether it’s 50% or 70%, having a profit margin target helps you stay focused. Then, adjust pricing gradually to meet that goal without overwhelming clients.
Gradual Rate Adjustments
If you’re far from your ideal margin, take it step-by-step. Try raising rates 10% per quarter, rather than a big jump all at once. This way, clients adjust and see the continued value you provide.

When It’s Time to Raise Your Rates (and How to Do It Confidently)

At some point, every business owner has to raise rates.

Here’s how to make it a smooth process:

Review Annually
A yearly review lets you stay ahead of inflation and other rising costs. This way, rate adjustments become a regular, expected part of working together.
Highlight the Value You Bring
When communicating an increase, focus on the benefits you bring to your clients. Show them how your work saves them time, stays within compliance, or supports growth.
Sweeten the Deal with Added Value
Consider adding extra benefits, like a quarterly review or consulting call, to make rate increases more appealing. Clients feel they’re getting more value, which makes a new rate easier to accept.

For anyone needing a confidence boost, tune into The Art of Pricing: Insights on Creating Value and Confidence in Your Pricing with Helena Donald. Helena shares fantastic insights on pricing confidence that can make those conversations with clients much easier!

You Got This!

Getting your pricing right is one of the best ways to build a profitable, sustainable bookkeeping or accounting business. By avoiding common mistakes, calculating client costs accurately, and moving to a value-based model, you’re setting yourself up for growth and financial freedom!

💻 Ready to get started? Try our Client Profitability Tracker to make sure your pricing is working for you. And if you’re ready to dive deeper, our Breakthrough for Bookkeepers & Accountants program has all the strategies you need for a successful, sustainable firm.

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