Bookkeeping Melbourne Rates – What is the cost? What is the value?
Bookkeeping Melbourne Rates: So you're wondering how much bookkeepers charge in Melbourne? As you search Google and jump from site-to-site you'll be hard pressed to find bookkeepers with prices on their websites. There is a reason for that.
Most bookkeepers don't put prices on their sites for a very good reason: Sticker shock.
“Sticker Shock: noun INFORMAL scaring away potentially great customers, shock or dismay experienced by the potential buyers of a particular product on discovering its high or increased price.”
$80 Per Hour For Bookkeeping, Are You Serious?!
Have you ever been judged by a prospective customer as ‘expensive' without having a chance to prove your value or connect with the person. It's a horrible feeling. So, generally we bookkeepers like to keep our rates under wraps until we meet for an Initial Consult.
Unfortunately, you only need to Google “bookkeeping rates” or “how much do bookkeepers charge?” to be misled. You might find yourself reading a page promoting $25-$40 per hour. No wonder business owners get Sticker Shock when they speak with a bookkeeper and get quoted $80 per hour.
But here's the thing. No bookkeeper charges $25 per hour. Perhaps a junior admin person who is a PAYG employee. Or possibly someone who's never done bookkeeping before.
If a bookkeeper quotes you $25 per hour, run!
How can I say that? Well, think about it like this.
To convert a contractor rate to the equivalent employee rate, all you need to do is divide it by 1.37. Or to convert an employee rate to an equivalent contractor rate, you multiply it by 1.37.
1.37 = 25% casual loading (ie accounting for the fact that contractors only get paid for worked hours with now annual or carers leave) and 9.5% for superannuation, which contractors may not receive.
$25 per hour as a contractor divided by 1.37 equals $18.25 per hour which is less than the National Minimum Wage in Australia.
Imagine you then had to subtract from that $18.25 all the costs a bookkeeper must bear to get qualified, stay certified, keep their skills update, learn and pay for software, pay staff, pay for professional memberships and all the other costs involved in running a business, or freelancing.
THAT my friend is NOT a very smart bookkeeper! They don't even know they're paid less than minimum wage. And their running their business at a very substantial loss! Trust me, you don't want that person guiding your business financial decision making.
$25 per hour as an employee x 1.37 is $34.25 per hour as a contractor. And for that rate you're getting a junior, my friend.
So what exactly is the going rate for bookkeeping in Australia? Let's take a look at the averages.
Bookkeeping Rates Industry Average in Australia
According to the Institute of Certified Bookkeepers, the average hourly rate of a bookkeeper in Australia is $65. Here's a list of rates you should expect to pay for bookkeeping completed by an Australian-based BAS Agent/bookkeeper.
- $65-$80 per hour for Bookkeeping
- $80-$100 per hour for Payroll Services
- $100-$120 per hour BAS preparation
- $80-$100 per hour for Setup and Rescue work
- $120-$150 per hour for Accounting Software Training
- $80-$120 per hour for Bookkeeping Support (ie reviewing your bookkeeping and fixing errors)
- $150-$250 per hour for Bookkeeping Consultation (regarding automation, software recommendations, budgeting and cashflow)
- $50-$65 per hour for a non-Registered BAS Agent / bookkeeper under supervision
Should you pay your accountant to do your bookkeeping?
The industry average is $65 per hour for bookkeeping in Australia, which is still very low compared to your accountant who has probably never told you his rates.
I started my career in an accounting firm, where I worked for over a decade. So I know first hand what rates accountants charge. Let's take a sneak peak.
Accountant Rates Industry Average in Australia
Many accounting firms are now offering bookkeeping services in-house and most often this work is sent offshore. Here's what you're paying your accountant, on average:
- $50-$80 per hour for Administration
- $80-$150 per hour for Bookkeeping completed by an Offshore Bookkeeper
- $150 per hour for an Accountant Junior Staff or Australian-based bookkeeper
- $250 per hour for an Accountant Senior Staff
- $450 per hour for an Accountant Partner
I probably don't need to convince you that you shouldn't get your accountant to do your bookkeeping, unless you love wasting money!
Quality Bookkeeping is an Investment not a Cost
Given that the industry average is $65 per hour, that means 50% of bookkeepers charge less than that, and 50% charge more. But the average cost of bookkeeping services doesn't tell you what results are gained, it is simply a number.
How can that be the metric used for determining if the bookkeeper is the right one for your small business?
Let's use buying a mobile phone as an example.
You would never say to someone who has no experience with mobile phones; just get the cheapest one, or get the one that is the middle priced one.
If you simply need an entry level phone, get that one.
If you need a high powered business phone, get a Samsung Galaxy Note, or an iPhone.
And if you aren't using all the functions of a high end phone, but still want a camera, etc. then you look at something in the mid range.
That is why context is so important. That is why showing someone a price as how to attract people to a phone, isn't usually how the phone makers try to sell their product.
Are you surprised that when you Google search Melbourne Bookkeeping Rates, the prices are somewhat elusive?
So what are the going bookkeeping rates in Melbourne?
It's only natural that capital cities will attract higher prices. I work as a mentor to many bookkeepers in Australia, and a bookkeeper in a country town very often charges a lot less per hour than someone in the city. It makes sense!
In the same way cafes in the city charge more for coffee and food. So Melbourne Bookkeeping Rates will be different from those in Traralgon, for instance.
Bookkeepers in cities have higher costs of living, higher wages, and higher rent (unless they are virtual bookkeepers like us). And we all know the cost of housing is significantly higher in capital cities, than in other areas.
In the past five years I've mentored and trained more than 500 bookkeepers, and many of the bookkeepers I've coached charge upwards of $70 per hour. Many of the highly competent ones charge $80 per hour or more.
It can become very confusing for business owners to know how much they should be paying.
Do higher bookkeeping rates equal a better quality bookkeeper?
Don't make the common mistakes that many business owners make.
Believing that higher cost equals better quality.
And that if you pay peanuts, you get monkeys!
Both of these statements CAN be true but they are not necessarily true in all cases.
I know this from personal experience because I'm a small business owner! I've had to hire my own bookkeeper and honestly I didn't have a great experience.
Firstly it was really hard to find someone who I could connect with. I want to Google to find my bookkeeper because I know TOO MANY bookkeepers in the industry so I had to find someone I didn't KNOW already.
Is the Bookkeeper fast, or slow?
Is the Bookkeeper able to streamline process, eliminating various manual tasks with templates and automation?
Are they able to see how your business is actually going with a Business health check? Or do they simply slot in and complete the task you have assigned them?
You want a bookkeeper that can see financial errors, and what caused them.
The bookkeeper needs to know how to fix the root cause.
This is simply good bookkeeping.
A great bookkeeper will be able to understand how to maximise what you are already doing in your business. And show you what are the money sinks and time sinks. Whether that is clients, suppliers, staff, etc.
Hourly rate with no other context is not helpful when hiring a bookkeeper
We've long heard of people giving a quote using this method, if they want the work: they pick a rate that isn't as high as the most expensive offer, because that is too much for potential clients to accept. And they pick a rate that isn't as low as the cheapest offer, because they don't want to undersell themselves.
While there is logic in that approach, it doesn't really tell you what value that Bookkeeper is going to add to your business, does it? They simply are mid-range in price. No other context. You don't know if they are good. You don't know if they are bad. Just that they are not the most expensive. Or the least expensive.
That is only what you know from that figure….
That is why the value that the Bookkeeper brings as an individual is just as important as a metric to decide whether or not to hire someone, as the hourly rate is. It is all of the information combined together that will help you get a realistic idea as to what the Bookkeeper, or Bookkeeping business, is going to bring to your company.
Well actually this is also the answer for the question of: bookkeeping rates per hour 2020 Australia as well…
Fixed Price Bookkeeping Packages ~ our answer to Bookkeeping Melbourne rates.
We gave up on using a bookkeeper hourly rate quite some time ago because we believe that hourly rate billing puts all the risk onto YOU the business owner. When a bookkeeper charges you by the hour there is no incentive for them to work quickly, in fact, there's an incentive to work slowly. That is why bookkeeping rates are something we stay away from.
All our bookkeeping, accounting and consulting is on fixed fee monthly packages. So you can plan ahead and know what to expect. This is good business practice.
You can see that Fixed Price Bookkeeping Packages help both you and I to even out our cashflow, and make sure things are getting done.
But what happens if you haven't worked with Off The Hook Bookkeeping yet, and you have an Overdue BAS Statement? If you have got one (or five…) then please read Overdue BAS Statement? No Stress! for more information about it.
Don't worry, we have helped many small business owners get back on top of their BAS Statement requirements.
If you are looking for a Melbourne Xero Bookkeeper then please read the Blog Post. Look no further 🙂
Thank you for reading our post. If you think we are the right Bookkeeping service for you, please get in touch.
If you are interested in engaging with our Bookkeeping services ~ please click here to get in contact.
Enjoy the Melbourne weather!