The Magic 3.5%

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If only charging the right price for was as simple as playing a video game, right?

So when it comes to pricing accurate and fair accountancy fees for clients it sure as hell ain’t simple for us either.

But the good news for you is that our prices have been so methodically formulated after months of blood, sweat and pixels that we believe they are the most accurate and fair prices in the UK.

We have used a number of markers to ensure that our pricing database is pure.

And one of these markers is the magic 3.5%.

The magic 3.5% is based on a standardised industry benchmark that suggests any business owner should be aiming to invest between 2% and 5% of their turnover on their accounting and finance function at a bare minimum.

Anything less is cutting corners.

We’ve pitched right in the middle of this at 3.5% to get the best of both worlds.

That does not mean we think 2% is too low or that 5% is too high but simply that we believe in averages and that no two businesses are the same.

Although quite an old-fashioned rule of thumb if a given business was to follow the 33% profit-staff-overheads mantra then (of the 33% of turnover being used for overheads) for your accounting and finance function to only be circa 10% of total overheads is an absolute no brainer.

Don’t worry about the maths - we’ve done it for you.

We bet you spend more money on marketing right?

But how can you truly know what to accurately spend on marketing if you do not have a live accounting and finance function in place?

And by live accounting and finance function we are talking the full works - not just someone who does your annual accounts once per year or the bookkeeping now and then.

No.

We are talking about your outsourced financial workforce; the lifeblood of your business that goes Up, Down, Left, Right, A, B, Start whenever you need them too or without being asked.

This is what the 3.5% covers.

Except we’ve taking this marker even further - perhaps further than any other accounting practice ever before.

It is fair to assume that a blanket percentage cannot be applied to every business of different sizes.

For instance, businesses that fall into the £30K turnover band cannot expect to obtain a full accounting and finance function for a mere 3.5%.

Furthermore, businesses that are approaching the audit threshold of £10M should not have to pay a whopping 3.5% on their accountancy fees.

Thus, our prices have been tuned to reflect each turnover banding whilst maintaining an average of 3.5% from top to bottom.

The main reason behind this is because of the opportunity for economies of scale and the fact that volumes of bookkeeping transactions are top heavy for smaller businesses

In other words, some jobs have a base level of effort and as a direct consequence this must be reflected across the turnover bands.

It is for this reason that we charge for bookkeeping based on the number of transactions - not time.

Additionally, we expect payroll costs to increase as turnover increases but payroll costs are based on the number of employees.

Thus, we took the average UK salary (£30K) and (using the 33% profit-staff-overheads rule) we applied this to our turnover bandings so that we could work out the average number of full-time employees as a guide and maintain an average investment of 3.5% across the board.

That one was a particular gamechanger.

The most important thing to understand here is that we are striving for the most transparent prices you can possibly pay at our practice for all bookkeeping, accounting and tax services.

So much so that if you really wanted to know the mechanics behind a price we can explain it in clear terms without confusion.

We don’t care what other accountants charge.

Some will be cheaper but that means they are probably cutting corners somewhere.

And if you cut corners to go with the cheapest accountants then that’s a double whammy, right?

But because we have tracked all of our services across a range of turnover bands using advanced mathematics (e.g, linear progression) to ensure that the percentage of turnover always maintains at an average of 3.5% as per the standard industry benchmark - within 0.001% error!!! - for all of our clients it means that by investing in Sky Life Accountancy you will always win and never lose.

Never scrimp on your shoes or your bed.

Because when you’re not in one you’re in the other.

Never scrimp on fast-track tickets at theme parks or airports

Because you might miss out on fun or your flight.

And never scrimp on your accountant.

We will help you to make more money, keep track of it and keep more of it.

And whilst money won’t make you happy, the certainty it can give you by making the right level of investment will.

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