“It depends”: a detailed guide to how accountants come up with their prices
Have you ever asked an accountant “how much will this cost?” and gotten back a shrug and an “it depends,”? Understanding fees can be one of the most confusing parts of picking an accountant, and that confusion can make it hard to trust that you’re getting a fair deal. We don’t think the way that accountants price their work should be a mystery. In this guide, we’re breaking down exactly how accountants set their fees: the factors that drive costs up or down, the most common pricing models (and who each one works best for), how to compare quotes from different firms without feeling too confused, and how we price our own services at Bright Line. By the end, you’ll have everything you need to ask better questions, spot red flags, and find a pricing approach that actually fits your business and its’ needs.
Factors that impact pricing
When you ask an accountant to quote a fee for their services, the most likely response is going to be “it depends”. Although doing your bookkeeping or filing your taxes may sound straightforward enough, there are several factors that can change the complexity of the work involved. The table below lists some of the most common factors that can impact the pricing of accounting services.
| Factor | What it means | Why it impacts price |
|---|---|---|
| Annual revenue / # of employees | Pretty straightforward – the amount of annual sales that your business earns or the number of full-time, part-time, or casual employees on your payroll. | As a business grows & scales, there are inherent increases in complexity. A business earning $50 million likely has more operating complexity than a business earning $500,000. These operating complexities generally mean more accounting complexity, increasing the amount of time & effort required by your accountant. |
| # of bank / credit card transactions | The volume of transactions across all of your payment accounts. | More transactions from your bank/credit card accounts = more transactions for your accountant to categorize. Higher volume of transactions means more time spent on your accounting. |
| Inventory | Your business purchases or manufactures inventory for resale. | Inventory is tricky, especially when you manufacture it yourself. Setting up an inventory tracking system, managing how raw materials are refined into finished goods, and tracking things like shrinkage or spoilage can take an incredible amount of extra time over & above what typical bookkeeping requires. Many businesses that operate with inventory, especially manufactured inventory, need an accountant who specializes in this field to ensure accuracy. |
| Project accounting | You track revenue & expense by job, project, funding source, customer, etc. | Tracking revenue from a job/project is often pretty straightforward. However, expenses are a whole other story. Some are job-specific and easily identified as such, but overhead costs need to be allocated, and there is no one way to do that. Ensuring all costs have a specific project assigned is almost like having to categorize each cost twice, which effectively doubles the amount of work required. |
| Frequency of touchpoints | How often you want a meeting with your accountant for advisory services (i.e. tax planning meetings, financial review meetings, etc.) | These touchpoints are where the magic normally happens. As a business owner, you are getting an expert's opinion on your finances, advice on improving financial health, and answers to all of your questions. You are getting the one-on-one benefit of your accountant's knowledge & experience, and the more you meet with them, the more the price of their service will generally be. |
| Deadlines & urgency | How quickly you need your work completed after providing all information. | Some clients need a really quick turnaround on their monthly financial reports. Some clients just want to make sure they have them within the following month at some point. When you run a services business, your team's capacity to deliver work is your most scarce resource. Having your work prioritized to meet a tight deadline often means needing additional capacity or having to bump other clients, which is why accountants will often charge higher rates if there is a tight turnaround required. |
| Quality of records | What shape your accounting records are in & whether you have all of the relevant supporting documentation. | External or fractional accounting providers often don't have the same level of access as an internal employee. Some firms work to get software access as part of their onboarding, but there are always reasons why they aren't as plugged in as an internal employee. If they don't have access to all relevant information, and it isn't being provided in a timely manner, this may result in a lot more effort to complete the work, thus increasing the fee you are charged. |
Common pricing models
Hourly billing
This is the model that most people are familiar with, as it has been the standard in our industry for decades. The amount that your accountant bills you is based on the amount of time it takes them, multiplied by their hourly rate. Under this model, accountants often feel comfortable knowing they can send an invoice for the time they spend working for you, so there is often not a discussion around scope – they just do work as you ask them and send the bill once it is completed. You may be creating scope creep through each email, phone call, or meeting without knowing it.
Accountants set their hourly rate based on a combination of their specific knowledge, experience, & training, market rates, the type of firm that they work in, and desired margin or profit. For example, let’s say a junior bookkeeper earns $50,000 a year in salary. If we gross this up by 15% to account for payroll taxes and benefits, that is about $57,500 in total payroll costs for that bookkeeper. Let’s say they are expected to have 1500 billable hours in a year, which means each billable hour costs the firm $38.33 (salary divided by billable hours). If the firm is targeting a 60% gross margin (for every $1 of revenue, they keep $0.6 after costs for things like taxes, overhead expenses, and profit), that means they would need to bill out the junior bookkeeper at a rate of at least $95.83 per hour ($38.33 cost per hour divided by 40%).
Normal billable hour rates for a junior accountant might be between $80 - $140 per hour, while a senior accountant could bill out at $150–$250 per hour, and a CFO or specialized CPA could bill out at $300 - $500+ for that same hour of work, even within the same firm.[C2.1]
Often, accounting firms using this pricing model will still try to give you an expected range of fees to complete the work. However, the final bill will be based on the amount of time spent on the project, and there are several things that may happen to increase the amount of time spent on your work. For example, maybe your accountant had never dealt with an issue before and needed to do extra research. Maybe they were training a junior accountant, and they spent time teaching or correcting the work. Maybe you are a new client, and there were some inefficiencies in performing the work as they weren't used to your business or accounting systems. Although some issues, like unexpected cleanup or technical issues that need to be resolved, will result in a price increase, some things come up that are often not considered fair to bill clients. This is particularly true for training/coaching junior staff or known inefficiencies caused by staff while doing the work. In fact, it is very rare that hourly billing results in 100% of time spent on the work being billed back to the client.
Most accountants using this pricing method track a metric called recovery or realization. This is the percentage of billable time that they invoice to you at the end of a project. Many firms target a recovery rate of 80% - 95%, however, they may be OK with a much lower rate on new work as they consider it an investment in the ongoing client relationship. They would just seek to get to their target rate of recovery in future years. For example, if an accountant’s team spent $10,000 of time (based on each staff member’s billable hourly rate) on your work, but your invoice is only for $7,500, then the accountant had a 75% recovery or realization.
Pros
You pay for exactly what you get.
You don't get billed unless you make a request.
Accountants can easily justify their invoices.
Cons
Often considered a “black hole". It is difficult to know what your invoice is going to look like until the work is almost completed.
Can cause anxiety for the client as every interaction can increase the bill. Will often result in surprise invoices.
No incentive for the accountant to become more efficient or innovative.
Often very little in the way of proactive or advisory services provided, as typically the accountant only does the work requested of them.
Who does it work for?
Small businesses who only need infrequent work from their accountant.
Owners who are OK with flexible costs.
Who doesn’t it work for?
Businesses that need regular support from their accountant.
Owners who value regular communication & touchpoints with their accountant.
Owners who expect proactive advice & services.
Fixed fee
The fixed fee model in accounting is quickly becoming the preferred pricing methodology for more modern firms. It involves quoting a set dollar amount for the work, which generally doesn't change. This is different than a retainer, which accountants may take as an upfront deposit before starting a large project or working for a new client to be applied against the final invoice. Clients often like the fixed fee model because there are no surprise invoices – they know exactly what they pay for accounting services.
Under this pricing model, the onus is on the accountant to properly scope the work and ensure they are charging enough to make a profit. This will often mean a longer sales process, as the accountant needs to ensure they fully understand what work will be required before they provide a fee quote. Accountants using this model can also track recovery or realization as an internal performance metric, but they may also look at something like gross margin % as well. If their realization or gross margin on your fixed fee work is too low, don’t be surprised if they reach out to talk about a price increase moving forward.
When you require work that is out of scope, either on an ongoing basis or just a one-time project, there needs to be another discussion around scope where the accountant can get a sense of what work will be required. Often, a fixed fee model is still based on time, if only loosely. Accountants operating under this pricing model can often reliably predict the amount of time they will spend on a project based on experience and historical project data. They will then multiply that expectation by the required billable hourly rate of each staff member involved to arrive at the fixed fee.
Pros
You know the price upfront; reduces billing surprises.
It is easier to compare prices between accounting firms.
Scope is clearly defined; you know exactly what services & standards to hold your accountant to.
You're not billed for every interaction with your accountant.
Cons
Scope is clearly defined; there can sometimes be friction when making additional requests, as there needs to be a discussion around change in scope, new projects, or extra billing.
Some firms may build in a buffer to the fixed fee to protect from underpricing.
Who does it work for?
Businesses with predictable needs.
Owners who budget or prefer known costs.
Businesses with clearly defined projects – regular, recurring work (bookkeeping, annual tax compliance, etc.)
Who doesn’t it work for?
Rapidly changing or evolving businesses.
Businesses with messy records who need some cleanup work done.
Owners who need flexible & time sensitive support.
Value pricing
Value pricing is like the fixed fee model in that the accountant will scope the work in advance before providing a fixed fee for the services to be provided. The difference is that, while the fixed fee model still considers cost of doing the work (time spent), value pricing is based on the perceived value to the client. Take art for example. The price of art is not based on the cost of the paint & other materials used, nor is it based on the number of hours the artist spent creating the piece. The price of art is based on what someone is willing to pay for it. Those who value art, and enjoy the style & themes of the particular piece would be willing to pay more than those who don't really care for art.
Oftentimes, this pricing model is used by specialists with a niche area of focus, or by firms that cater to a specific client niche. For example, most accounting firms offer tax planning services to their clients. However, firms that only do tax planning work for incorporated beekeepers in the province of Ontario will often use the value pricing model to capture their deep expertise in working with their specific client type. Accountants using this model do not typically track recovery or realization as a metric but will instead look at overall firm gross/profit margin and what their monthly recurring revenue is as performance metrics.
This pricing model works well for advisory, consulting, and other types of strategic services, as clients value the outcomes more than transactional work. It also allows for more time spent thinking critically about the situation to achieve better results, as the outcomes are often quantifiable through taxes saved, money earned, or risk avoided.
Pros
Pricing is connected to the importance & impact of the work being performed.
Often results in more proactive & valuable advisory services, as the accountant isn't as worried about time budgets or watching the clock.
Fees are aligned with the outcome of the accountant's work.
Cons
Pricing can feel arbitrary for clients.
It is harder to compare quotes between accounting firms.
Value isn't easy to measure; it is inherently subjective.
Who does it work for?
Owners who need proactive strategic advice.
Owners who need tax planning work with a meaningful amount of tax savings.
Businesses that are complex and are more focused on the outcomes rather than the tasks completed.
Who doesn’t it work for?
Businesses looking for simple compliance work only (annual tax returns, monthly bookkeeping, quarterly GST/HST filings).
Owners who are price sensitive and for whom cost is a significant factor in their decision-making process.
Subscription pricing
There are many accounting firms out there that use a combination of the above pricing methods (including Bright Line; more on that below). Subscription pricing is just one of these combinations. It is a combination of the fixed fee and value pricing methods.
Under the fixed fee model, accountants will likely quote their fee based on expected costs to complete the work. Under the subscription fee model, they will also include other things in the fixed fee, such as faster communication times, quicker completion of work, regular touchpoints, and other premium features. Some accounting firms may even treat the subscription fee as an all-inclusive fee, meaning they will do any & all work that is required of them without extra billing.
Like value pricing, accountants using this model do not typically track recovery or realization as a metric but will instead look at overall firm gross/profit margin and what their monthly recurring revenue is as performance metrics.
Pros
Often results in more proactive & valuable advisory services, as the accountant isn't as worried about time budgets or watching the clock.
You know the price upfront; reduces billing surprises.
You're not billed for every interaction with your accountant.
Normally considered a premium service; the level of client service will be much higher than with other accounting providers.
Cons
It is harder to compare quotes between accounting firms.
Pricing can feel arbitrary for clients.
Cost is often much higher than other accounting services.
Who does it work for?
Owners who need proactive strategic advice.
Growing or mature businesses that need a higher level of support from their accounting partner.
Businesses that need frequent involvement from their accountants in both day-to-day operations & high-level strategic conversations.
Who doesn’t it work for?
Businesses looking for simple compliance work only (annual tax returns, monthly bookkeeping, quarterly GST/HST filings).
Owners who are price sensitive and for whom cost is a significant factor in their decision-making process.
How to accurately compare accounting quotes
Comparing quotes between accounting firms isn't easy. Even seemingly simple services, such as bookkeeping, can be totally different from one firm to another due to what is included or excluded from the scope of work. It can be easy to compare quotes based on price alone, but often there are so many differences in how firms deliver accounting services. To compare apples to apples, you need to fully understand the following about what your accountant is providing:
What exactly is included – bookkeeping at one firm won’t be the same as bookkeeping at another firm. One may include HST filings, payroll, and monthly cash flow reports, while another may just be basic data entry into your accounting summary. If your accountant doesn't have this clearly broken out in a proposal, be sure to ask them if they can walk you through exactly what is included in their fees, and what is billed separately. You can only start to compare quotes when you fully understand everything that is included.
What is excluded – just as important as knowing what is included in your accountant's fee, is knowing what is extra-billed. Common extra-billing items include responding to CRA audit/review letters, tax planning or advisory meetings, shareholder compensation planning, business purchase/sale support, or budgeting & cash flow forecasting. Understand what is provided at an extra fee, and what is outside the capabilities of your current accountant. Comparing quotes isn't possible until you understand both what is included, and what your accountant isn't able to provide.
How often do you meet with your accountant – meetings are often the most valuable part of your accounting relationship. It's your opportunity to draw on your accountant's knowledge & experience to answer your questions and provide valuable business advice. You’ll want to know how many meetings are included in your fee, or how much these meetings cost if they are not included.
Who is working on your file – accountants vary in roles, skills, and experience, and not all of them cost the same amount of money. A junior bookkeeper will cost much less than an experienced CFO. Understanding who is working on your file and in what capacity helps you to know what level of qualified professional you are benefiting from.
How quickly can you expect a response – the base expectation that business owners have of their accountant is that they can competently perform accounting & tax functions. They expect that their accountant is preparing accurate tax filings and doing bookkeeping correctly. If having a communicative & responsive accountant is important for you, it is important to understand whether the accountant with the lowest quote that you're considering will be able to meet your communication expectations.
Who pays for accounting software – accounting software, payroll/HR software, receipt management software, bill pay software. All these things are billed on a subscription basis, and they can add up quickly. Most accounting firms get steep discounts on these platforms, and either eat the cost or pass along the deeply discounted rate to their clients. Depending on your exact accounting tech stack, the cost of this software could be a few hundred dollars a month, so you need to understand whether quoted fees include these costs, or whether you'll be paying for them yourself without the accountant's discounted rate.
When you're comparing accounting services quotes, be sure that you fully understand all the above for each quote. In addition to the above, be on the lookout for the following red flags:
The scope is vague – something like “unlimited support" sounds great, but without defining the specific parameters of what this means, it will often result in frustration when you are get an extra bill for that first out of scope project.
The price is much lower than other quotes – some firms are efficient and can provide simple services at a lower rate. However, if one quote is much lower than the others, it could mean they are not including an essential service (such as year-end income tax or sales tax filings), they are intentionally pricing low to win work, or there is limited support or meetings included.
The price is higher, but additional value isn't clearly articulated – paying higher fees may be worth it if you are getting extra value. What that value looks like will depend on your business and the level of support you require. Just make sure the extra value is clearly articulated, otherwise you may be overpaying. Make sure to ask what outcomes or support can be expected.
Fees aren't clearly outlined – some work can be scoped & quoted at a fixed fee. However, firms should disclose how they arrived at their quote, how their pricing works, and when extra fees are applied.
Quoted fees were provided without any scoping – most accounting work can only be quoted once there is an understanding of what the work will involve. If the accountant doesn’t ask any kind of scoping questions, ask for any information about your business, or have a discovery call before providing their quote, it is likely that they are going to surprise you with extra fees after the work has been started.
There is no proposal or engagement letter – these documents clearly outline scope of work, roles & responsibilities, and important engagement terms such as how billing & payment works, who owns accounting information, etc. It is important that you don't move ahead with any work or payments before you have a signed engagement letter.
The firm promises results that are too good to be true – claims such as “with us, you'll never have a CRA audit" or “we guarantee tax savings of $X thousand dollars" sound great, but that isn't how the tax system works. These claims are often nonsense and should be taken with a grain of salt.
Bright Line pricing model
Our pricing model is a combination of the ones outlined in this article:
Our core services are normally recurring in nature – monthly bookkeeping, quarterly financial review meetings, and regular HST filings. Our service packages for this work follow a subscription model, where we package them together and include things like faster month-end close times, more experienced staff members on your account, and more touchpoints as part of the different subscription tiers.
As our clients evolve & change, there is often project work required that is outside of the monthly recurring scope. For example, you are looking to buy a building for your business to operate out of, and you want to set up a real estate holding company and a family trust to hold shares and allow for flow of cash between the two companies. For this type of work, we will talk about the scope up front and use the fixed fee model.
In some rare cases, we need to employ an hourly billing model. It isn’t our favourite model, as we don’t like clients being surprised by our invoices, but some work is just inherently difficult to scope. For example, advising clients on the purchase or sale of a business – these deals can go fast, or drag on for months. We may need to be heavily involved due to unintended tax consequences of some of the negotiated deal points, or we may have almost no involvement until the transaction is almost closed. For that reason, these types of work are often billed at an hourly rate instead of a fixed fee. However, we do our best to provide a range of fees and keep clients up to date on the amount as we progress through the work.
We believe that pricing shouldn’t be the part of hiring an accountant that leaves you with more questions than answers. If you want to see how everything in this guide applies to your business specifically, you can use our online pricing estimator tool. We’ve built this to give prospective clients a clear sense of what their monthly investment with our firm would look like prior to talking to our sales team. If you use the tool and are ready to move forward, we’ll walk you through exactly how we’d scope and price your engagement – no surprises, no sales pressure