How To Raise Your RatesBy Alyssa Gregory
The more you work, the more experience you have, the better you become and the more you should charge. Plus, with the cost of doing business increasing, you need to raise your rates regularly in order to maintain your business. Rate increasing is important even in a recession, although it may be at smaller increments during times of budget reductions. Here are some things you can do to make the process of rate increases go smoothly.
There is always a bit of apprehension when you have to let your clients know that you are raising your rates. To make this part of the process easier for your clients to handle, give them as much notice as possible. I try to give at least three months notice that there will be a rate increase so my clients have enough time to make any necessary budget adjustments.
Set a Schedule
The timing of rate increases shouldn’t be arbitrary. Set a schedule (i.e. annually) and make sure your clients are aware of that up front. This is a very important provision to work into your contract so there is clarity and expectation from the beginning.
Make It Fair
The last thing you want is to lose a client because they can’t afford a huge jump in your rates. If you’re just starting out and realize that your rates are much lower than they could be, you will probably risk losing clients if you double your rate in one shot. You can do it incrementally on a more frequent schedule and it will be easier for your clients to digest. You can also begin billing all new work at your higher rates. Although it may require more management in terms of your bookkeeping practices, it allows you to slowly get your current clients up to your new rate, without losing the potential for more profit from new work.
Send It In Writing
Notify your clients in writing of your rate increase. I always include it as a note on the bottom of their invoice for the months leading up to the increase, as well as via e-mail sent to all of my clients. When necessary, you may also want to consider creating an addendum to your contract specifying the new terms.
Balance It Out
Even if your rate increase is marginal, your clients probably won’t greet it with excitement. Offer a small incentive – a special, a one-time discount, a giveaway – to sweeten the situation. And make sure you thank your clients for their business and express your appreciation. It can go a long way to making the increase easier to accept.
What do you do to increase your rates without risking your clients?
Image credit: Sanja Gjenero