004 Wait, Before You Raise Your Rates…Try This
This is the fourth installment of pricing. Let’s get to it.
In every business owner’s life, there comes a time when you simply have to raise your rates. Maybe you’ve been in business for years without a pay increase. Maybe your skills have recently improved through a new training course or certification. Or maybe you just want to attract a higher caliber of client.
Whatever the reason, it is possible to do it AND it pays to have a plan in place before you make your big announcement. Here’s where to start.
First, take a look at your current clients. Will you raise their rates as well? If the answer is no, then you have to consider if keeping them will be worth your time, or if you’ll feel resentful at the amount of (lower paid) time you are spending with them. Resentment can build up, so be wary of this. It’s better to raise their rates than provide substandard services due to hidden anger.
If the answer is yes, then you have to prepare yourself for potential fallout. Simply put, there are some clients (you likely know who they are) who will balk at a price hike. They’ll threaten to leave. They may actually leave. Are you prepared for the hit your wallet will take should that happen?
Second, consider when your service increase will go into effect. This might be different for each client, depending on when/how they’re paying you. A client who is on an annual service plan might not see an increase for 8 months or more, while a monthly client might be shocked to find her rate is going up in a week.
If you can, give your clients at least 30 days notice of the increase, so they can not only budget a higher expense, but shop around for a new provider if they choose to find someone else.
Last, if you’re a little flexible and want to gain a few new clients, you might think about creating a last minute offer. Announce that your rates are going up on [X date], then offer to let X number of new clients lock in your current rate, if they’ll agree to a payment structure (3 month payment) right now.
Sure, you’ll still be working at your old rate, but with a few new clients on the roster, your cash flow will definitely improve.
The most important thing to remember about rate increases is this: You have to feel good about the prices you charge. If you think your rates are too low, chances are good that they are. Raising them will not only make you feel better, but it might just let your current and prospective clients know the value of your services as well.