About This Episode
As an entrepreneur, one of the hardest and scariest parts of running your business is raising your rates, even if it’s very well deserved. Today we’re not only talking about why raising your prices is essential but also about how to do it with confidence and without losing clients!
What we’re talking about
- Planning your Price Increases
- Preparing to Raise your Price
- What to Say When You Raise Your Rate
Planning your Price Increases
When thinking about boosting your rates, the most important parts are your approach and planning it out. For most customers, how you go about raising your prices is more important to them the fact that you’re increasing your rate.
The first part of the planning process is figuring out where you’re at right now versus where you want to be with your pricing. Often, our ideal price is a big jump from where we are. So we need to be planful about how often we raise our rates and how much. This allows our clients time to adjust their finances in response to your price increase.
Once you know your dream rate and timeline, work backward. Based on where you’d like to be, what’s the difference between what you’re charging now and your ideal price? Then, decide how to stagger the price increases. You could simply divide the difference by the number of months or years in your timeline and increase the same amount every time. Or you could tier and stagger the amount of each increase.
It’s important to plan because we don’t want to raise our price too little in the beginning and get stuck having to do massive price increases later.
Let’s say you want to make $150 per hour in three years and you currently charge $75. Raising your prices by $10 this year means that you’ll have to increase your rate by $65 in the next two years. That’s a much bigger shock to your client’s financial system than raising your price by $25 each year.
If it’s starting to sound like it’s going to take you a REALLY long time to earn your ideal rate, keep in mind that you can always raise your rates for your new clients more aggressively.
Preparing to Raise your Price
Now that you have your price increase plan, you need to do two things to prepare for your price increase:
- Decide when you’ll raise your price: Pick a date that the price increase will go into effect. Ideally, you should give your clients two to three months’ notice before the effective date. Choose one effective date for all your clients.
- Decide how you’ll notify your clients: How do you usually communicate with your clients? Keep things consistent by sticking to your main form of communication. Also, consider the amount of the price increase. Higher increases may need a face to face conversation.
What to Say When You Raise Your Rate
We’re at the hardest part of raising our rate- telling people our new price! Real talk, this is the part that sucks. We fear that our clients will reject the amount we’re asking for, and, in that rejection, reject us. Which is why this part is so scary.
Take a deep breath because it’s time to draft your price increase letter or phone script. Here’s what you need to include in your letter or script:
- Appreciation for the client: Acknowledge the relationship you’ve built over the years.
- State your new rate and effective date: Do this in one clear sentence.
- Note about how you arrived at your new price: This is not an apology, explanation, or justification. It’s simply giving context to why you’re raising your rate in one to two short sentences.
- Gratitude for referrals (optional): Thank clients for referring you and update them on changes to your services. If you plan to charge new clients a higher rate than your current clients, mention that so they know what price to quote for referrals.
- Invitation for further communication: Let them know that if they have questions or concerns about the increase, they can contact you.
When you send your letter, always send it as a PDF and ask clients to write you back and confirm that they have read and received the rate increase letter. If you don’t hear back from your client after a week, follow up to ensure they have received the rate increase letter.
12 Essential Things To Do Before Raising Your Service Rate (and FREE rate increase checklist)
How Raising My Rates Brought Me Closer to My Clients (and FREE rate increase template letter)
Should You Charge Hourly or By the Project (and FREE perfect pricing spreadsheet)
Price Your Products and Services for Profit Workshop
How to Set Your Prices So You Aren’t Broke (and FREE perfect pricing spreadsheet)
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