Fixed fee vs hourly vs monthly package: how accountants price small business work

For most small businesses with a stable structure, a fixed fee for a clearly defined scope gives the most predictable cost, while hourly billing suits irregular or one-off work where the effort is genuinely unknown, and a monthly package suits owners who want bookkeeping, BAS and year-end work bundled with access to advice. None is automatically cheaper. The model only works in your favour if the scope, the assumptions about your records and the rules for extra work are written down.

This guide is part of the small business accountant fees overview. Figures are illustrative.

The three models compared

Model	How it works	Cheaper when	Risk to you	Risk to the firm
Fixed annual fee	One price for a list of returns and statements	Your books are tidy and the business is stable	Extra items billed separately; scope disputes	Messy books eat its margin
Hourly billing	Time recorded in units by staff level	The job is small, one-off or truly uncertain	No ceiling unless you ask for one	Little; cost passes to you
Monthly package	Fixed monthly payment covering a bundle of services	You use most of what the bundle includes	Paying for unused services; lock-in terms	Heavy users of advice
Value or project pricing	Price set for an outcome, such as a restructure	Defined projects with a clear deliverable	Hard to compare between firms	Underestimating the work

Fixed fees: what makes them work

A fixed fee is a promise about a defined amount of work. Ask the firm to write down:

Every entity and every return covered (company, trust, individual, partnership).
The number of BAS lodgements included, if any.
What condition your records must be in, for example "bank accounts reconciled to 30 June in the accounting software".
What is excluded: ATO audits or reviews, amendments, new entities, payroll set-up, restructures.
How excluded work is billed (hourly rate or a quoted price before work starts).
When the fee is reviewed.

If you cannot get these points in writing, the "fixed" fee is really an estimate. The engagement letter guide lists the clauses to look for.

Hourly billing: how to keep control

Hourly billing is common for advice, ATO matters and clean-up work. Before agreeing:

Ask for the rate of each staff level that may work on your file.
Ask for an estimate in hours and a cap, with a requirement to contact you before exceeding it.
Ask whether time is recorded in units (for example six-minute units) and whether phone calls and emails are billed.
Ask for itemised invoices.

Hourly billing is not a bad deal when the work is uncertain. A single question about the GST treatment of one contract may be quicker and cheaper billed by the hour than through a package upgrade.

Monthly packages: read what is bundled

Packages often combine the accounting software subscription, bookkeeping, quarterly BAS, year-end statements and returns, and a number of meetings. They spread the cost evenly across the year, which helps cash flow.

Check:

Minimum term and exit terms. What happens if you leave mid-year after the year-end work is done but before the year is paid off?
Software ownership. If the software subscription is in the firm's name, ask how you get your data when you leave. See switching accountants.
Volume limits. Bookkeeping in a package may assume a maximum number of transactions or employees.
Advice limits. "Unlimited phone and email support" can still exclude written advice.

Worked example: the same year under three models

An illustrative company needs year-end statements and returns (estimated 16 hours), four quarterly BAS (2 hours each, 8 hours), and in this year an unexpected ATO review (6 hours).

Model	Calculation	Cost for the year
Hourly at $190	(16 + 8 + 6) × $190	$5,700
Fixed fee $3,900 for year end and BAS, review billed hourly	$3,900 + 6 × $190	$5,040
Package $420 a month including one ATO matter a year	$420 × 12	$5,040

In a year with no ATO review, hourly costs $4,560, the fixed fee costs $3,900 and the package still costs $5,040. The package is cheapest only in years when you use its extras. The answer changes with your own pattern of work, so rebuild it with the annual fee estimator using the rates you are quoted.

Questions that reveal the real price

"What would make this fee increase during the year?"
"What did a client like me typically need beyond the fixed scope?"
"If my books are not reconciled, what is the clean-up rate?"
"Is the price per entity or for the group?"
"Does the fee include GST?"

Unfair contract terms and small businesses

Standard-form contracts with small businesses are covered by the unfair contract terms provisions of the Australian Consumer Law and, for financial services, the ASIC Act. Since November 2023, using an unfair term in a standard-form contract can attract penalties. A clause that lets a firm increase fees at will, or holds your records hostage, may be open to challenge. See the complaints guide for where to go.

Frequently asked questions

Can I ask for a fixed fee if the firm usually bills hourly?

Yes. Many firms will quote a fixed price for a defined scope once they have seen your records. Expect the first year to be priced cautiously.

Should I pay in advance?

Monthly payment is common for packages. For one-off work, paying on completion or in stages is normal. Avoid paying a full year in advance without clear refund terms.

Is the cheapest hourly rate the best choice?

Not necessarily. An experienced accountant at a higher rate may finish in fewer hours and spot issues that save tax or penalties. Compare total expected cost.

Do accountants charge for the first meeting?

Practices differ. Ask before booking whether the initial meeting is free or billed.

Sources and where to check

Australian Competition and Consumer Commission — unfair contract terms for small business contracts
Tax Practitioners Board — registered agents and the Code of Professional Conduct they must follow
business.gov.au — choosing an adviser and contract basics
Australian Small Business and Family Enterprise Ombudsman — help with disputes over contracts and fees