Making more money as a business owner or freelancer is usually the goal for most entrepreneurs. However, being an established professional, it’s not always easy to increase your current rate. It takes finesse, great communication, and opportunity. If your local grocery store sells soap for $3.00 and tomorrow they bumped the price up to $9.00, you’d certainly make a fuss about the 300% increase. Especially if the store was remiss about informing you about an upcoming increase right?
Over the years as a freelancer, I’ve raised my price about five to six times without any kickback from clients. Honestly, my rate is about to go up again which is what brought on this post. Let’s explore the key factors that will allow you to do this effortlessly.
As mentioned, if you introduce new pricing on your clients without notice, you will have some unhappy people banging on your door. It needs to be handled with care. These are people you have developed a relationship with. Hopefully it’s a relationship you value and would like to maintain. [Here comes the hand holding] Whether you’re dealing with five clients or 50, this step needs to be taken. Show how much you care about them. If you have a small number of clients, give them a phone call or send a clever email campaign using MailChimp . When dealing with a larger volume of clients, you’ll probably want to engage with some kind of marketing campaign using a combination of email and other marketing methods. But what do you say once you have a plan?
Once you decide how to approach your clients, the next step is to figure out what you want to say and how you want to say it. Take this example with Frank, the web developer and Sarah, a long time client and blogger:
Frank: “Hey Sarah. I know we have a few more weeks on this project but I’m raising my hourly rate tomorrow.”
Sarah: “Umm ok. But, I haven’t budgeted for a price increase for this project.”
Frank: “I know but my cost of operation is increasing and I need to start charging more.”
Sarah: “Huh? I just want to start blogging.”
Sarah is sure to feel uneasy about this and will probably avoid doing business with you again. Clients expect rewards for loyalty…period. This keeps business coming back to you but also lets your customers know that you appreciate them. A better scenario would be:
Frank: “Hey Sarah! I wanted to let you know that I’ll be raising my hourly rate soon.”
Sarah: “Hey Frank, ok. Will this affect my current rate on this project.”
Frank: “Not at all. And to let you know I appreciate your business, I’m going to give you a 20% discount for new projects.”
Sarah: “Thank you! Do you offer referral discounts too? I have a few friends looking for great web services.”
So by giving Sarah a heads up, she’s more likely to respond in a positive manner and Frank even prompted her to think about how she could get more discounts while sending more business his way. Simple changes in communication tactics can make all the difference. If you’re doing an email campaign, you can design a fun email to send out letting your clients know of the rate increase along with any discount codes as a loyalty reward.
If you work off fixed pricing or flat rates, it’s a little easier since the client gets the total rate instead of an hourly break down. However, you still want to communicate the change. Your customers will start comparing similar jobs (this happens) and you’ll need to justify the increase in price. If you’re increasing prices, you want to offer more value with your service. This is what you need to let your current customers know. Practice transparency. Get creative. At the end of the day, you’re trying to keep your customer around if they’re worth it.
The last component to make a successful shift is to create opportunity. Whether it’s with a new service or waiting for a project to end, the opportunity has to be there. Without opportunity, you lack the finesse and customer acceptance of the change. Take note of how your customer’s business is doing. If they are struggling with money then obviously a price increase is just going to stress them out and your back at square one. It’s definitely possible to raise the rates or charge different rates for different clients too. Just make sure you keep a finger on the pulse of what drives your business.
Following these steps will help when it’s time for you to transition upward. You’ll want to make sure that you don’t change your pricing too often. Keeping consistent pricing for six months to a year is reasonable depending on what you do. If you’re in a market that has high fluctuation then of course you should adjust accordingly.
You must be okay with making mistakes or failing the first time around. There will come a time when you lose business or customers. It’s okay. Learn from your mistakes and correct next time around. If you stay in the same place, you’ll never get anywhere…make moves and fly!