To put it simply raising your rates is something that you should just do.
The increase of your rate should be built into your business and every so often you should evaluate if you’re meeting your revenue goals and see what you may need to do to shift pricing for the better in your business.
If you’re like me you may feel nervous about raising your rates. What if you raise them and nobody books with you or you don’t get as many clients you know what if the current class you have a get upset about you raising your rates? All of those are valid fears but chances are its way past due for you to give a raise to yourself and no one is going to do that for you. You have to take control of your increasing value.
If you don’t have a few people walking away because your rates are too high then you’re doing something wrong. You should have a couple of people walking away or not willing to pay your rate because you’re targeting a certain audience you are not targeting everyone.
What about existing clients how can you increase your rates and not scare them off?
There are 2 things you can do to increase your rates and not scare anyone off.
1. Clearly Communicate Added Value
Perhaps you have a good relationship with the client or perhaps you like working with them perhaps and they want to keep supporting you. No one likes an increase in price when they don’t understand why or see the difference. In this case, you will have to do a great job of explaining how your business is changing how your added value warrants a higher rate. You will have to compare and contrast where your business was in the past and where it is today. You can’t simply say “it’s about that time” or “You bought some awesome new equipment”. Don’t talk about expenses or what you purchased talk about how your equipment upgrade, a shift in mentality or new strategy will benefit the customer and help them be better.
I am still going through this in my web design business myself. For me, I realized that after I build websites for clients they still needed a way to get people to come to their website. This observation allowed me to introduce the idea of strategy: first I will build your website and then I’ll help create a strategy to get you website visitors. Because of this new shift, it requires more work and will cost more than simply building a website.
A great method to implement is to write a case study of your existing client. This will help you observe the value you have already brought to a client and once you share it with your client they may have an appreciate for all of the work you did for them.
2. Allow the client to have a trial period
Give them advance notice and let them know your business is changing to increase the value for the clients you work with. Let them know you want them to be a part of the positive change as well. Offer them a trial for 1 – 2 months and allow them to get the features and benefits of the new value but at the current rate. When the free trial is over let them know “It has been 2 months and you have experienced the new changes, would you like to move forward under the new rate which is 20% higher than your previous rate”
It’s important to reference what the percentage increase is. Chances are the new value you are adding to your business exceeds the increase in your pricing. If you notice the percentage is higher and your price increase is 90% to 200% higher then don’t focus on this and keep the conversation on value.
Do not feel guilty about this price increase, the responsibility is solely on the client to decide if they want to move forward or not. Can you imagine working for the same rate and never increasing your pricing? I doubt the client would notice and give you a raise on their own. If the client cannot afford you then it may be best to part ways for now until they can afford you in the future. Don’t burn any bridges though. Point them in the direction of someone that can help them and be a resource of advice, or shift to the role of a trusted advisor for a small retainer fee.
Learn to give yourself a raise
I have seen many people put raising their rates into action and the best example I can think of is Lauren Hooker of Elle and Company Design. She was able to increase her pricing multiple times in less than a year and get to a point where she was able to maximize her demand and income.
When Lauren first started out by basing her design services on how long it took her to complete a project. This was basically a multiplication of how many hours she worked on the project and her hourly rate of $50/hour. She then realized this wasn’t the best logic wanted to take her business more seriously which lead to her re-evaluating her pricing.
Her pricing path looked like the following:
$50 / hour
$1,500 per project
$3,500 per project
$6,500 per project
Lauren had these great nuggets on pricing:
I’ve also learned the hard way that when you price yourself too low, you run the risk of people not taking you seriously.
In order for potential clients to take you seriously, you have to take yourself seriously
In order to view her full story about pricing check out her pricing journey in her own words: My No-Fuss Formula for Pricing My Services