Hourly billing charges for time spent, so the bill is a surprise and questions feel expensive. Fixed-fee billing agrees the price up front, so you know the cost before work starts and can ask questions without watching the clock. For most small businesses, predictability wins.
The two options at a glance
Accounting fees come in two shapes. Hourly billing charges a rate for the time the work takes, totalled at the end. Fixed-fee billing agrees a set price for a defined scope before any work begins, often spread as a monthly amount.
- Hourly — pay for time used; the final figure depends on how long it takes.
- Fixed fee — pay an agreed price for an agreed job; you know the cost in advance.
Neither is dishonest, but they create very different incentives and very different experiences for the client.
Tax treatment compared
This is a pricing choice, not a tax one, so the deductibility is the same: accounting fees for your business or rental are generally deductible either way. The difference is certainty and behaviour.
| Point | Hourly | Fixed fee |
|---|---|---|
| Knowing the cost up front | No, it depends on time | Yes, agreed before work starts |
| Asking questions | Feels like it adds to the bill | Included, no clock-watching |
| Budgeting | Harder, variable | Easy, often monthly |
| Incentive | Bills for time spent | Bills for the outcome |
The behavioural point matters. On hourly billing, clients hesitate to call with a quick question because every minute is chargeable, and the relationship can suffer. Fixed fees remove that barrier, so you actually use your accountant when you should.
The hidden cost of hourly billing is behavioural. When a quick question carries a meter, people stop asking, and small issues that a two-minute call would have solved grow into year-end problems. Fixed fees flip that: because the price is set, you pick up the phone, and the accountant would rather answer early than untangle a mess later. The model quietly changes how often you actually use the advice you are paying for.
Cost and cashflow
Fixed fees make cashflow predictable. You can budget the exact figure, often paid monthly, and there is no nasty end-of-year invoice for a job that ran long. Hourly billing can be cheaper for a tiny, contained piece of work, but it carries the risk that a tricky issue balloons into hours you did not foresee.
For ongoing work, compliance, GST, year-end accounts, the predictability of a fixed fee is usually worth more than any theoretical hourly saving, because it lets you plan and removes the fear of asking for help.
Spreading a fixed fee monthly also smooths cashflow in a way an annual hourly invoice cannot. Instead of a large, variable bill arriving after the year-end work, you pay a steady amount you have already budgeted for. For a small business managing tight cash, that predictability is often worth more than shaving a little off the headline figure.
Risk and admin
The risk with hourly is the open-ended bill and the chilling effect on communication. The risk with fixed-fee is scope: the price covers an agreed job, and genuinely new work (a tax investigation, a major restructure) sits outside it. A good fixed-fee arrangement is explicit about what is in and what would be quoted separately, so there are still no surprises.
Clear scope is the answer to both. Agree what is included, agree what is extra, and the model takes care of the rest.
The fair criticism of fixed fees is scope creep in reverse: a price set for a defined job should not silently absorb a major new project like an IRD audit or a restructure. A well-run fixed-fee arrangement names what is included and flags clearly when something would be quoted separately, so the certainty is real on both sides and nobody feels short-changed.
Which suits which owner
- Ongoing compliance and you value certainty — fixed fee, every time.
- One small, well-defined task — hourly can be fine and occasionally cheaper.
- You want to ask questions freely — fixed fee removes the clock.
Talk it through with us
Fernway works on fixed fees. We agree the price before we start, so you know the cost up front and can pick up the phone without watching the meter. The scope is clear, and anything genuinely outside it is quoted before we do it, never billed as a surprise.
Book a free review and we will tell you the fixed fee for your situation, no obligation.
This is general information only, not personalised tax advice. Confirm your situation with us or check ird.govt.nz.
In plain English: fixed fees mean you know the cost before work starts and can ask questions freely, which beats an open-ended hourly bill for almost every small business.
This is general information, not personalised tax advice.See our full disclaimer.