It’s time to raise your rates for 2012! I know lots of people cringe at doing this, but honestly it’s much easier than you think. So here’s what you do…
First, send out 30 or 60 day notices to all your clients giving them a heads-up that fees will be increasing. I would wait until January to do this rather than right now in the middle of the holidays. (And ideally for next year, plan on doing this in October/November instead of January.)
Not sure how to word your notice? Simple is always best. Here is a sample script you can use:
This letter is to let you know that the fee for your support plan will increase to $[NEW FEE AMOUNT] 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 TWO OR THREE MAJOR ACCOMPLISHMENTS AND GOALS YOU’VE HELPED THE CLIENT ACHIEVE. USE FACTS AND FIGURES, ESPECIALLY DOLLAR AND PERCENTAGE INCREASES, AS MUCH AS POSSIBLE].
I look forward to continuing our wonderful relationship and helping you achieve your goals and dreams!
You notice that in the second paragraph, you should bring up a few of the significant accomplishments and goals you’ve helped that particular client achieve through your work together. You should include facts and figures whenever possible.
If you aren’t yet, start trying to track and identify dollar and percent increases that your work and support is directly or indirectly responsible for (e.g., how many more clients have they been able to work with? How many hours of time were you able to put back in their pocket? How much more money have they made since working with you? How much have their profit percentages increased since then?).
These things serve as a reminder of your value (in terms of how it relates to them and their business) and why they continue to work with you. This is the WIIFM (“what’s in it for me?”) factor.
Just remember, you don’t need to offer excuses or drawn out explanations. You’re not asking for their permission because you’re not an employee and it’s not up to them. It’s YOUR business and you don’t answer to clients when it comes to those decisions. You being profitable and making sure you are stable, secure and growing financially actually helps clients because if you aren’t doing well, you will not be able to help clients as well as you could be.
If you have any other questions around the topic of raising fees, please do post in the comments and I’ll try to help. 🙂
If you REALLY want to learn how to earn better in your business for 2012, in ways that are WAY more client friendly and attractive, get my pricing and packaging guide: “How to Price and Package Your Support Based on Value and Expertise–NOT Selling Hours!” Click here to check it out!
One question someone asked is by how much you should raise your fees. This is such a personal question that it’s difficult to answer. In all honesty, however much you want to raise them is your choice. Granted, you may lose some clients who may have been spoiled by unrealistically low prices (this is often a failed strategy of new business owners who think it’s a way to get people in the door, but they soon find that those clients are only there for the cheap and hit the door as soon as you try to raise fees to more appropriate, sustainable levels). There is no right or wrong answer and raising prices can be a way to get rid of unideal clients as well as what you can do when you become more in-demand.
I think it’s a good idea to raise your fees at least a small percentage every year or two years. This keeps your practice growing financially and it helps get clients in the habit of expecting periodic increases (they shouldn’t expect you to be doing any less than they would/should be doing for the financial health and success of their own businesses).
I know raising fees can feel traumatic because people deal with such personal issues surrounding money. Often, however, it’s more traumatic for you than your clients, who often don’t bat an eye. This is about your own confidence and money issues, rather than anything they are typically worried about. If they appreciate and value what you’ve been doing, this really will be a non-issue for most of them (unless they were unideal to start with and you took on clients who really can’t afford professional fees–but you can’t afford to work with anyone who can’t afford you).
So think about raising fees anywhere from 3-10% each year or every two years. As you get your feel for this, you’ll grow into knowing what feels right for both you and your clients.
This is great information, however, I’m at a crossroads with whether to raise them or not. I tried raising my rates about 6 months ago and got so much upheaval. I was even threatened with the prospect of having the majority of my clients leave.
Obviously it had nothing to do with my performance, but simply based on monetary value. How would you address this issue?
Hi Jennifer 🙂
I have some holiday engagements today, but I definitely will come back to help you with this. Are you up for some back and forth comments here for a bit of free mini-coaching on this?
In the meantime, tell me more about why you tried raising your rates six months ago? What propelled you to do that? Did you feel you weren’t charging enough in the first place? Were you realizing that you weren’t making enough money in relation to the amount of work you were doing? When you raised your rates, how did you go about the process? What is your rate now and how much was the increase? (Oh, and have you utilized our free Pricing Calculator yet?)
I’m going to lastly leave you with a little hint… a lot of this is going to depend on how you are shaping expectations in clients. I’ll talk more about that once I hear back from you with your answers. 🙂
Yes, I absolutely agree. Simple and straight talking has always worked wonders for me. Last year, around Jan, I communicated with my customers via email and was pleasantly surprised with the acceptance rate.
Thanks, Danielle. I appreciate all help and advice. 🙂
I hope your Christmas was truly a blessing for you and your family.
I tried raising my rates (from $125 p/mo to $180 p/mo) 6 months ago because I realized I wasn’t charging enough for what I was doing for my monthly clients. I also tried switching an hourly client to a monthly package and the talks stalled. He insists on staying hourly (which is fine), but I cannot get him to agree to a higher hourly rate, either. I have been working with him for almost 4 years and have never raised his rates. (He is charged only $10 p/hr-should be a minimum of $15 p/hr) It’s time, you know?
I sent out an email to all my existing clients approximately 30 days prior to the rate change and received no feedback whatsoever. So, in order to make my monthly goals, I will have to ramp up my marketing efforts and try to attain new monthly clients.
I just downloaded your calculator and will take a detailed look at it.
Hi Jennifer 🙂
Happy to help!
Ah, yes, you are suffering from a classic problem in our industry. What you’ve done is set rates that really amount to employee wages, not professional level fees, and that has sent all the wrong signals/expectations/understandings to your clients in the process.
If I can be really candid and direct, I’ve been in this business so long I don’t even have to know the rest of the details–you are absolutely not charging anywhere near enough to sustain your business and clients are getting the wrong idea about the nature of the relationship. This is part of the reason they are so resistant to you raising your rates.
And you are about to make another classic mistake–thinking that the way to remedy things is to take on more clients. When you are not charging properly/enough in the first place, taking on more clients will actually REDUCE the quality of your work and service to clients. It’s a recipe for burnout and failure.
So you took the right steps with the process of giving clients courteous notice, etc.; however, the problem in your situation is more in the roots, in the foundation of your business and your message. This is where setting proper expectations and context is so important to a business that wants and needs to charge professional level fees because the right message and tone needs to be there in order for proper fees to make sense and to acclimate clients to expecting that you are a professional who values what you do and that you have something of great value to offer them.
So let’s talk about expectations. There are a number of things that go into setting proper expectations, which by the way, is also about bringing clients into your business with the proper understandings and mindsets. Your website plays a vital role in this task. When clients go to your site, it must display a professional look and feel so that it instills both credibility and confidence in them. A professional who wants to be able to command professional fees needs to “look the part” so if your biz website looks amateurish, it’s going to be more difficult for you to set that expectation/correlation in clients.
Your message plays a vital role as well. This is why I’m always telling people to stop calling themselves assistants. When you are a business owner, you are not anyone’s assistant, nor can you be. When you call yourself an assistant, the only way people understand that term is in the role of employee. Which is another big reason why you are having a problem with these clients balking at your rate increases–they are viewing you as an assistant, an employee and they therefore are expecting to only pay an employee’s wages, not professional fees. This is why I’m also always trying to raise peoples’ consciousness about what they are in their business (and it AIN’T an assistant, lol).
Which brings up another thing. In addition to choosing a more befitting title in your business (such as Administrative Consultant, because it helps set more professional connotations and preconceptions that are more in alignment with a professional who charges properly), you want to also watch the words you use in your marketing message. I can see a few words I really advise you to delete from your website and biz vocabulary immediately–words like “affordable” and “reasonable.” These are essentially code for “cheap.” What they actually are doing is attracting cheapo clients, instead of clients who value the work. It focuses them on money (and expecting it for cheap) instead of on how your work helps improves their biz circumstances (which is your true value).
Think of this conversation as the start to growing and raising your awareness and understanding of being a business owner. As you start to think on these things, you’ll begin to move forward in your business journey and understanding about how to you need to change/alter your thinking about what you are and what you do in business and how you operate and work with clients so that you are able to bring new clients in with the proper expectations/mindset, charge well and properly for a professional (i.e., NOT employee level rates) and therefore not have to take on more clients that you will be able to sustain which ultimately will kill your business.
I’m really glad you downloaded the Pricing Calculator. That alone will do much to get a better sense of what you REALLY need to charge in order to have a more financially healthy business and begin taking steps to change things.
With your current clients, you have a few choices. You can invite them to get on board with your new fees to stay on your roster and if they don’t, let them go. If you aren’t able to do that financially at the moment, then what you can do is a sort of process of weeding those clients out of your practice over the long haul. We all outgrow certain clients as we grow in our business so this is a natural progression for all of us. What you do is simply bring all new clients in under your new rates and standards. As you fill your practice with more ideal clients who have the proper mindset about the nature of your relationship and professional fees, you will be more in a position to let old clients go who simply refuse to get on board. Either way, at some point, you will simply NEED to get rid of those clients because they WILL keep you from growing. There is no way for you to improve your business keeping on clients who refuse to understand that you are a business and you need to charge properly and professionally in order to stay in business.
Hope this helps. If you have any questions on any of this, I’m happy to keep the conversation going here as I’m sure it will help many others as well. 🙂
Oh, another thing I forgot that I wanted to talk about which is related to the words we use… Never, ever call what you do “general.” Here again is a word that diminishes the value of what you do and how what you do actually helps clients. We see so many misguided people demeaning themselves and their work by calling it “general/generalized” and the fact is, administrative work is the very backbone of every single business on the planet. There isn’t a single business that can escape administration. Its role and importance is absolutely vital. Yet we see just about everbody in this business demeaning it, devaluing it by referring to it as “general” and “mundane” and “tedious.” Yeah, maybe it’s not all sexy, but that doesn’t make it any less important. And administrative support is every bit it’s own specialization and category of business distinct from web design, graphic design, copywriting, you name it. It is its own category of business/specialization entirely. So you need to talk about it in those terms and respect it and value it in order for clients to value it as well. If you demean it, clients naturally will as well and they simply aren’t going to pay properly for anything you have spoken of so derogatively about. This is why the words and terms we use in our conversations with clients and in our marketing message are so important. All of them play a critical role in putting clients in the right mindset, setting the right expectations and understandings, and attracting the right clients in the first place.
Thank you, Danielle and Happy New Year! I have started to update my website by changing some of the verbiage and I will be updating my picture, too. 🙂
I appreciate all your advice and agree with it. I am going to be avidly working on retaining new clients at the rate I should be asking (utilizing your spreadsheet) and will start the process of weeding out the ones that just can’t seem to get on board. Growing pains…they are never easy, but are definitely a must!