How To Shift from Hourly to Value-Based Pricing: An Accountants Guide

December 6, 2022

How To Shift from Hourly to Value-Based Pricing: An Accountants Guide

Are you a freelancer or small business owner looking to move away from the traditional hourly billing model? If so, you should consider shifting to a value-based pricing model. Value-based pricing allows you to focus on the value you provide to your clients, rather than the work you put in. By moving away from the hourly model and focusing on the value you’re providing, you’ll be able to charge your clients more for the same services, allowing you to make more money in less time.

This article will discuss how to make the transition from hourly to value-based pricing and will provide you with the tools you need to make the switch.

What is value-based pricing?

Value-based pricing is the practice of setting your prices based on the value that your products or services provide to your customers, as opposed to focusing on the time and effort you put into creating them. A good way to think about it is, you’ll focus less on the time, and more on the deliverables and outcome. So, as an accountant, if you charge a client $50,000 but you save them $150,000, then it’s a good value.

In other words, value-based pricing is an alternative to the traditional hourly billing method. With hourly billing, you charge your clients a set rate for every hour that you work on a project. With value-based pricing, you charge your clients a set rate for the completion of a project, regardless of how long the project takes you to complete or how much work was involved for you.

How does value-based pricing work?

One of the best ways to determine what you should charge for your services is to determine the market value of your services. To do this, you’ll have to do a bit of research to determine what other businesses charge for similar services. You can find this information in online forums and online communities, as well as in industry-related publications. Once you’ve determined the value of your services, you can decide how much you want to charge.

It’s important to consider your overhead expenses and profit margin when setting your rates. Generally speaking, around 30-40% of the value you’re providing your customers is a good benchmark. So, if you’re saving your clients $5,000 in taxes then $2000 is a great value. If you were charging $50 per hour and the return took 8 hours, then you would only be making $400 for the same amount of work.

Other types of pricing

There are several types of pricing models to choose from. Two of the most common pricing models are time and materials, and fixed-price contracts. With time and materials pricing, you change your clients for your time as well as the cost of materials used in the project.

Fixed-price contracts are project-based arrangements where you agree with your client that you’ll complete a project for a set price. So, let’s say you agree to complete a project for $10,000. You’ll charge $10,000, regardless of how much the material cost. As such, if your quote is too low you could end up losing money on the job.

With value-based pricing, you determine the value of your services and set your rates accordingly. It’s important to keep in mind that different industries have different rates for different types of services. Make sure you’re accounting for this when determining your prices.

For example, a marketing agency might be able to generate $1,000,000 for a customer and could charge $400,000. Many clients would be happy to pay this. Now, an accountant could very well save a corporate client $1,000,000 but you’ll have a very hard time finding any clients if you charge that much.

Why switch to value-based pricing?

There are several benefits associated with switching to value-based pricing. One of the biggest benefits is that you’ll have more control over your pricing process. With an hourly billing model, you’ll have to keep track of your hours spent on each project. This can be challenging if you’re juggling multiple projects at once. With value-based pricing, you’ll only need to provide your clients with an estimate of the amount of time the project will take, which is much easier to manage.

Another major benefit is that you can make much more money. Now, you may not be able to set the same value-based rates as other industries, but you can still make significantly more money than you would if you were billing hourly. As such, many accountants are making the switch over to value-based pricing. Especially, accountants who work for corporations with larger budgets and complex taxes.

How value-based pricing can benefit your accounting business?

The biggest benefit of value-based pricing is that it allows you to charge more for the same amount of work. Since you’re charging for the value of your work rather than the time spent doing it, you can charge clients more for the same services.

You’ll also be able to focus on the value of your services. By focusing on the value of your work, you’ll be able to provide a better experience for your clients. You’ll also be able to attract better clients by providing a higher-value product.

How value-based pricing can benefit your clients?

Since you’ll be charging your clients based on the value that they’ve received from your services, they’ll be able to see the value in what you’re doing. You’ll be able to provide clients with an estimate of the amount of time it will take to complete a project, and they’ll know exactly what they’ll have to pay for the services.

To put it another way, if a project takes you 20 hours to complete, and the value of the project is $10,000, you’ll charge your client $10,000. However, if it takes you 100 hours to complete a project, your client will still only have to pay $10,000 for the same project. Now, in this situation, if you were billing hourly, then the customer might need to pay significantly more.

Is value-based pricing the future of the Accounting practice?

Value-based pricing has been used in the marketing industry for many years. It’s often referred to as tiered pricing. However, it’s only recently that we’ve seen value-based pricing enter the accounting industry.

There are many accounting firms that have already made the transition to value-based pricing, and many other accountants are on their way to making the transition. While there are still many firms that are hesitant to change their pricing structure, many other firms are actively working on making the shift.

How to manage value-based pricing vs hourly?

There are a few things you can do to manage value-based pricing vs hourly. The first thing you can do is create a price list for your services. This should include the value you provide for each service you offer. This will help you better understand what your services are worth and allow you to charge a premium price for the same services.

You should also ensure you’re providing a high-quality service. Clients are more likely to pay a premium price for your services if they’re getting a high-quality product. You can deliver a high-quality service by properly managing your time, properly managing your projects, and providing excellent customer service.

You should also be sure to include high-value case studies on your website so that your clients can see how much value you were able to other customers in the past. This establishes social proof of your value and can be the deciding factor for many new clients in the future.


Accounting services, like tax preparation, have traditionally been billed by the hour. However, more firms are moving towards value-based pricing. With value-based pricing, clients are charged based on the value of their projects, rather than the hours worked. This allows firms to charge a premium price for the same services, without putting in more hours.

It’s important to note that value-based pricing doesn’t work for every business. You need to be sure your clients are willing to pay a premium price for your services. But, if your position yourself and your services correctly, you should be able to make the transition and start earning more money for your services.


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