I recently had a client meeting where I have been telling the client he is under billing for services, especially when he needs to utilize outside specialists.

I gave him a basic formula to follow, it is far from perfect, but should set him up to get a better handle on the billing for his business.  I am aware of CPA firms which follow the same principles.

For each employee the billing rate would be 1/3 to the employee (their hourly); 1/3 for office expenses, and a final 1/3 for profit; otherwise, why have them if not impacting the bottom line positively.

If they follow this formula and the make enough to cover total overhead, there will be profit and they can start digging their way out of the hole they are in.

I am not a huge fan of the pure hourly approach, I prefer value billing and not counting the minutes.  But in this circumstance, I felt that they would appreciate guidelines to assist in billing.

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