Minerva News

Changing Times: When and How to Increase Your Rates

April 10th, 2017

You’ve quantified your costs. You’ve researched your competition. You know your customers inside and out. You’ve even figured out exactly how to describe your competencies in an authentic way.

 

And you realize you’ve been undercharging. A lot. How can you increase your rates without alienating those you already serve?

 

First, honor your current commitments. If you have agreed to do something for a particular price, stick to it. Changing your rates is prospective, not retrospective.

 

Then, decide exactly when the change will happen and let your clients know. Are you changing your rates immediately for all future projects? Or are you changing your rates starting on a particular date? If you’re near a natural “change point,” like the start of a new year or a new season, especially if your work has a seasonal component to it, consider using that (logical) date as the effective date for your new rates. Then, announce the upcoming change to your current clients, and be sure to give them plenty of notice about the change (or as much as you reasonably can). The correspondence might read something like this:

Effective June 1, we’ll be increasing our hourly rates from $110 to $125 for future projects. We can’t wait to continue our work with you!

 

Or like this:

Fun fact: The average cost to complete a creative business has increased by 32% since 2015.* But our rates haven’t change. Until now. Effective June 1, we’ll be increasing our hourly rates from $110 to $125 to reflect our increasing costs. We hope you’ll agree that the value of the work we provide will increase as well.

 

*Elaine Says: I totally made this up as an example. If you’re going to cite something like this, find the right statistic for your own business (or calculate it yourself!).

 

Or like this:

Happy new (fiscal) year! As you prepare your budgets for the upcoming season, we wanted to share a change to our pricing system. Effective, June 1, our hourly rates will be $125 instead of $110. We look forward to working with you in the new year.

 

The first option is short and sweet, and it ends on a positive note. The second is a bit more direct, and the third appeals directly to the clients you serve by acknowledging their timing and schedules.

 

If you have particularly large or important clients, consider contacting them directly instead of sharing a general update to start the conversation about an increase. For example:

Dear Important Client,

We’re preparing our project schedule for the next six months and planning on a small increase to our hourly rates from $110 to $125. Because you already receive a discount on our rates ($100 instead of $110), we are happy to continue honoring our discount. To that end, we propose an increase to $115 instead of $125. We value our relationship and the work we do together.

Thanks,

Creative

 

Lastly, if your work isn’t with ongoing clients, but instead is generally for one-time projects, make sure you update your rate sheet wherever it is posted (if it is posted somewhere). You probably don’t need to do as much announcing or rolling out of the new pricing. You can just update what you say. It may feel a bit scary the first few times, but the results will likely be worth it.

 

Want More?

Learn more on your own through our online course, Pricing Strategies. Your time. Your money.

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Posted in: Numbers Nonsense, StartingSMART

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