The New Year is the time to make changes to your personal and professional life. If you’re self-employed, it can also be a good time to raise your rates. Charging a higher fee is easy to do with new clients; you simply quote the new price during negotiations. Raising rates with existing clients, however, can be tricky.
“The underlying concern here is having the confidence to raise prices without losing customers,” says Ramit Sethi, author of I Will Teach You to Be Rich. “And if you do, are you prepared to lose those that aren’t willing to pay your new rates? This is a classic dilemma that many freelancers, consultants, and entrepreneurs face.”
If you know you provide a lot of value and you’re not happy with your current compensation, it’s time for an increase, says Sethi.
How to Do It
The best way to approach your increased rate announcement is by learning more about your clients’ needs, suggests Sethi. Through a phone call or survey, ask what services they might be interested in using that you currently aren’t providing.
Next, email or call clients to announce your rate increase. Remind them of the value you already deliver, such as solving problems or increasing revenue, and state your new rate. If your client provided ideas on new services you could add, consider if they’re something you’d be willing to add with the new rate.
“Hi [client name],
I’ve enjoyed working with you this year, and I’m glad you’ve been pleased with our results. I look forward to continuing the relationship 2019, and I wanted to let you know I’m going to be making a few changes for the New Year. To ensure that I can continue to provide exceptional service, I will be increasing my rate from $X to $X effective [date.] You mentioned that you could use help with [service]. I will be happy to add that as complimentary part of the new fee structure.
If the rate increase is an issue, please let me know. I’m happy to recommend other people at a lower price, but I believe the success we’ve had together demonstrates my contribution to your company. I believe at my new rate, I still provide great value.
I look forward to hearing from you, and I hope things are going well.”
The important thing is to remain assertive yet polite, says Sethi. “Emphasize the value you can continue to provide and have already provided in the past,” he says. “In other words, your value is telling the client how much time you’re going to save them or how much money they’re going to make with your help.”
Make It Regular
Raising your rates each year feels more organic than implementing a one-time increase, says Ed Gandia, coauthor of The Wealthy Freelancer. “After all, businesses across all industries have annual fee increases. It’s something most companies expect,” he writes on his blog High-Income Business Writing.
For some clients, a rate increase can come as a surprise that wasn’t expected as part of their budget. It can help to provide a grace period. “Set a period where you’ll continue to offer the lower rate,” he writes. “Thirty to 90 days is typical. After that, your higher rate kicks in.”
Be Prepared If Clients Say “No”
If you’ve communicated your value and your client refuses to pay the higher rate, that’s okay, says Sethi.
“You never want to make your clients feel bad, so even if they hesitate or say ‘no,’ you are showing immense value to them by recommending other people who might be a better fit for their budget,” he says. “Always focus on serving your client, which means that your sole focus isn’t to extract as much money from them as possible. It’s to make them successful. When you give as much value as possible to them, they will come back to you at some point in the future or even recommend you to their friends and family.”
You could also suggest a trial period where you provide the extra services you offered so the client can evaluate the new arrangement. Sethi suggests saying, “If I can do this in the next 30/60/90 days, can we revisit this conversation about keeping me on at my increased rate? And would you be willing to put that in the contract?”
Any time you raise an existing client’s fees, you run the risk of losing them, says Gandia.
“So before you try it, think carefully,” he writes. “If you lose this client, how will it impact your business? If it would be devastating, you may want to hold off.”
Raising your rates can be an uncomfortable conversation, but it’s better than going through life never raising your rates, says Sethi. “You want customers who appreciate the value you bring to the table, and sometimes that means getting comfortable with the realization that you’re not going to be for everybody,” he says.