Stop! Do These 3 Things Before Raising Your Rates

There comes a time in every entrepreneur’s life when you have to raise your rates.

  • Maybe you’ve been in business for years without a pay increase
  • You’ve realised the cost of living has gone up, and what you’re charging doesn’t cover your expenses
  • Perhaps your skills have recently improved through a new training course or certification.
  • Or maybe you just want to attract a higher calibre of client and increase your own business’s profitability.

Whatever the reason, it pays to have a plan in place before your big announcement.

Here’s how to raise your rates

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.

Will you 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.

Is your wallet prepared for the hit it will take should that happen?

Consider when your rate 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 plan might not see an increase for 8 months or more, while a monthly client might be shocked to find his or her rate is going up in a week.  

If you can, give you clients at least 30 days notice of the increase, so they can not only budget a higher expense, but shop around for a new service provider if they choose to.

Finally, 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 [whatever date], then offer to let X number of new clients lock in your current rate, if they sign a contract 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.