Fixed Fees for Accounting Firms
What works, what fails, and how to get it right.
This would easily be one of the most common topics we’re asked about, and honestly, one of the most misunderstood. Every few months someone raises the question of fixed fees versus hourly rates as though the profession hasn’t been debating it for twenty years. The reality is usually somewhere between what partners think they’re doing and what they’re actually doing.
Whenever I ask firms how they set a fixed fee, I usually get one of two answers. Either:
a) “We just added a bit to last year’s fee,” or
b) “We mentally estimated how long it’ll take and multiplied it by the charge rate.”
In other words: it’s an estimate dressed up as a fixed fee.
And that’s where the trouble begins. Because if it’s an estimate, it’s only “fixed” until the job takes longer, or the scope drifts, or the client asks for “just one more quick thing”. Most firms mean well with fixed fees, but the process is rarely as structured as they believe it is.
Why Firms Keep Turning to Fixed Fees
Clients like predictability. Practitioners like avoiding awkward fee conversations. Fixed fees sit neatly between the two, which is why they’ve become more common — especially in metro areas where competition is fierce, and even in regional centres like Toowoomba or Wagga where firms use fixed fees to compete with bigger city practices.
And to be fair, fixed fees can be effective. Some firms stabilise cash flow. Others improve client satisfaction. But for every success story, there’s a firm wondering why their margins are disappearing.
Most of the time it comes back to the same issues: underquoting, poor scoping, unrealistic assumptions, and a reluctance to revisit fees even when the job has clearly outgrown the original arrangement.
What We Actually See When Firms Set Fixed Fees
After working with hundreds of firms, this is the pattern:
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Most fixed fees aren’t reviewed often enough.
Some haven’t shifted meaningfully since 2019, despite rising wages and compliance complexity. -
A lot of firms stop recording time.
Which means they have no idea if the fee covers the actual cost of the work. -
Partners want to avoid uncomfortable conversations.
So the scope drifts quietly, and the firm absorbs it. -
Teams don’t know what’s “in” or “out.”
So they do everything… and then write half of it off.
Fixed fees themselves aren’t the issue. It’s how loosely they’re managed.
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How to Set Fixed Fees Properly
The firms who get this right usually follow a more disciplined approach — nothing flashy, just practical:
1. Start with actual historical time. Not memory. Not gut feel. Not “what we charged last year plus 5%.”
2. Record time even if clients never see it. This is non-negotiable. Without time data, you’re not running fixed fees — you’re running blind.
3. Scope properly and communicate scope creep immediately. Not at the end. Not on the final invoice. When it happens.
I’ve lost count of how many firms tell me, “We didn’t charge the extra work; it was just easier not to bring it up.”
Easier for whom?
4. Revisit fixed fees annually. At minimum. Ideally more often if the firm is growing or the regulatory environment shifts — and let’s be honest, it always is.
5. Be clear about what happens when the client grows. Many firms still charge a 2018 fee to a client whose business has doubled in size.
That’s not loyalty — that’s erosion.
Staffing & Delegation: The Hidden Fixed-Fee Trap
Fixed fees often fall apart when the work is completed by the wrong level of staff.
- If a senior completes work a junior could handle, the fee quickly becomes unviable.
- If partners hold on to “favourite clients”, capacity collapses.
- If delegation isn’t consistent, fixed fees turn into write-off machines.
Regional firms often feel this more acutely because staff pools are smaller. A Gold Coast firm, for example, may have stronger recruitment options than a Dubbo practice — yet both may charge similar fixed fees. That mismatch shows up immediately in recovered rates.
Want to know more? Book a 15-minute call with Michelle Knights and discover how she can help your practice.
Common Pitfalls We See Every Year
No clear scope.
Everyone assumes they’re on the same page until the invoice goes out.Confusing “estimate” with “fixed fee.”
One is an informed prediction. The other is a contractual commitment.Fear of renegotiation.
Especially in regional centres where relationships are personal.Assuming fixed fees eliminate write-offs.
They don’t. Without time data, firms can’t see where margins vanish.Using last year’s fee plus CPI.
CPI is not a pricing strategy.
The Part Most Firms Forget: Fixed Fees vs Fee Collection
Setting a fee is one thing, collecting it is another. Monthly billing only works if:
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the work matches the fee
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scope is controlled
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clients aren’t allowed to drift outside boundaries
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the firm actually enforces payment terms
Some firms discover too late that they’re great at signing fixed-fee arrangements… and terrible at enforcing them.
A More Practical Way to Think About Fixed Fees
Fixed fees aren’t the villain. Poorly managed fixed fees are.
For firms with strong communication, clear scoping, disciplined delegation and regular review processes, fixed fees can work extremely well. They create predictability for clients, smoother workflows for staff, and greater certainty around cash flow.
But fixed fees expose weaknesses quickly.
Firms that avoid conversations about money, struggle to enforce boundaries, or fail to delegate consistently often find that fixed fees quietly erode profitability. What looks like stability on the surface can mask declining recovered rates, partner overwork, and growing write-offs behind the scenes.
This is why fixed fees aren’t a “set and forget” pricing model. They require active management — regular review of scope, staffing mix, client behaviour and pricing assumptions. When those disciplines are missing, the model fails not because it’s flawed, but because it’s unmanaged.
As with most things in practice management, the structure itself is rarely the problem. The execution is.
Useful Products for Your Practice
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Frequently Asked Questions
Usually, by taking last year’s fee and “rounding it up a bit,” or by estimating hours and hoping it balances out. Very few start with proper data.
Yes. Firms who stop recording time lose visibility over cost, margin, scope creep, and write-offs. Time data protects profitability.
Unmanaged scope creep — the quiet extra work that no one charges for because the conversation feels awkward.
At least annually. More often if your team structure or compliance demands change.
They can, but only if they’re backed by good scoping, delegation, and realisation. Buyers want predictability, not guesswork disguised as pricing.
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