Archive for May 5th, 2009

Raising Your Rates

In my post last week on growing pains and strageties, my colleague Julia Lilly of 360 Admin asked a great question. I thought it was good information and decided to share it as a post in case anyone missed the comments.

JULIA LILLY:

This poses a great question… how do you present a raised rate to your customers without creating ill will? Do you give them six months notice or a gradual increase to the desired rate? I have only had my clients for 6-8 months, and I don’t want them to think it is part of my “strategy” to raise rates once I have them dependent on me. But, due to lack of experience, I did not set my rate properly in the beginning. Advice in that narrowed down area?

DANIELLE:

That’s a great question, Julia!

Here’s what I do… I always give current clients a couple month’s notice and at the same time bring any and all new clients in at the new rates/fees. I tend to do fee increases at the beginning of the year so letters would go out to clients in November letting them know ahead of time what to expect.

I don’t know how many clients you have, and even though I really, really vehemently discourage fear-based decision-making, if you only have one at the moment that you are very much dependent upon, you might decide to make just a modest increase if you’re really worried about losing them.

It will at least get them used to the idea that you are a business, and a professional, and fees are occasionally going to be raised for various reasons. On the other hand, you might want to sit tight with that client and work to bring new clients on board at the new higher fees/rates.

Once you aren’t so dependent on the first one, you can then bring them up to speed at the same rates as the rest so that you aren’t managing a bunch of different policies (too much administration will slow your practice down considerably–you don’t want that).

Here’s a rough template of what I use in my own practice as far as verbiage for your rate increase letter goes:

Dear [CLIENT],

The fee for your monthly support plan will increase to $X per month effective [DATE]. It is such a pleasure working with you, and I really love watching you grow and move forward in your business through our work together. [HERE, INCLUDE 2 OR 3 MAJOR ACCOMPLISHMENTS YOU’VE HELPED THE CLIENT ACHIEVE. USE FACTS AND FIGURES, ESPECIALLY DOLLAR AMOUNTS AND/OR PERCENTAGE INCREASES, WHENEVER POSSIBLE.] I look forward to continuing our wonderful relationship and helping you achieve your goals and dreams.

Signed,

YOU

Don’t be overly concerned with “ill will.” The clients who feel they are getting value are not going to be concerned with that. Truly, it’s usually ourselves who have the most problem raising rates due to self-confidence issues, not clients. You’d be surprised at how often they will say something to the effect of It’s about time. What took you so long? Honestly!

And the clients who don’t want to pay more, really don’t want to pay in the first place. In business, there has to be an equitable exchange of interests. You can’t work just to suit clients and their interests or otherwise operate fearing their “ill will.”

Anyone who asks you to not charge for your value is asking you to deprive yourself of the ability to make a living, keep yourself healthy and take care of your family. Would they ask themselves to do that? I think not. So you don’t need any client who has been taking advantage or otherwise doesn’t want to pay for your value. Let them exclude themselves. It will help clear your practice out of ill-fitting clients and pave the way for the ideal ones to come in.

And saying that, do be prepared whenever you raise rates to lose a few people. The ones you lose are mainly going to be the ones who were only there to get something for nothing in the first place.