Most of us prefer to raise our rates at the beginning of the year. It's a new year and after some reflection of what the past year has shown, it's not a bad time to advise clients or customers of the impending rate change. That doesn't mean you can't raise rates any other time of the year and, in fact, you may be leaving money on the table if you don't raise your rates earlier than year-end.
Major corporations like Netflix raised their rates and customers didn't blink. Economists, including those in the Federal Reserve Board, are projecting price increases in 2018 thanks to higher energy prices and borrowing costs. Want to lessen the blow? One word can make all the difference.
Time to Raise Your Rates?
If you're feeling too busy or overwhelmed and don't have time to consider a new project or business development, it's high time to look at whether you're not charging enough for your products or services.
Have you recently completed new training, received a certificate or participated in a workshop that taught you new skills you could offer your clients? Do you know if your colleagues or competitors are charging more?
If any of the above is true, you need to raise your rates. If those reasons aren't compelling enough, consider that by not raising your rates, you're losing money this year because costs are increasing across the board. Not only are expenses rising, but by not raising your rates, you're losing income that can compound over years.
How to Raise Your Rates
Raising fees can be daunting for some people because they emotionalize it. We wonder if clients will think we don't deserve it or maybe think we're not worth it and it paralyzes us into inaction. These are not good reasons and, in fact, costing us money since the cost of living is going up.
Communicating your new rates needn't be difficult. In fact, one word can help change your mindset when it comes to communicating your new rates: you're not *raising* your rates, you're *changing* them. Sure, you're raising them, but most of us don't love hearing we're going to be paying more. Simply changing the word helps communicate to your client that change is necessary to grow and this is the new rate.
Depending on your business, you may opt to let your clients know you're going to be changing your rates in the near future by phone or email. With one client, I simply added it to my monthly invoice on December 1st as a note. When I emailed my invoice, I simply mentioned that beginning January 1st my rates for all of my clients are changing (again, note that I didn't say I was raising them, simply that I was changing them).
I added how much I appreciated the opportunity to work with them and how much we've been able to accomplish over the past year and that I looked forward to our year ahead. That was it. I didn't apologize for raising my rates nor ask them if this was ok with them. The fact is we're running a business and this is part of the business. The result? My client said, "cool. I'm excited to try some of the new things you've learned."
For another client who I knew would have a harder time absorbing a higher cost, I offered her the following options: raising my rate and keeping our hours per month as they were or raising my rate and reducing the number our hours so she could continue to pay me the monthly rate she could afford. She opted for the second solution the first year and found the additional funds to bring my hours back to what she needed them to be the following year, at my new rate.
In all cases, tell them you appreciate your relationship and enjoy the work you're doing together. You're raising your rates across the board because you provide value and want to continue to do that.
What if you lose a client or customer? Can I be the one to tell you that's not necessarily a bad thing? In fact, you may want to lose a client or customer. Why? It opens up your business and mental bandwidth to take on better-paying clients or customers who value your product or services.
Bottom line, if you feel you're worth what you're charging, so will your clients. Raising your rates isn't a sign of weakness, it's a sign of strength and you should be regularly evaluating your position with your clients so you can make price adjustments accordingly.