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Scan the news these days, and you’d be hard-pressed not to come across a story about price increases. The price of gas has gone up. Rents are increasing, and groceries are at an all-time high. It’s depressing, I know. But that’s the world we live in. And your business should be no different. At some point, you’ll have to raise your rates if you want to remain solvent.
The one benefit of inflation is that people are getting used to price increases. So it won’t be as much of a shock when you announce you’re raising your rates. Be that as it may, you still want to do it the best way possible to soften the blow for your clients.
So what’s the best way to announce a price increase to your clients? Let me share some methods with you, along with some points that will make the task easier for you and make your clients more receptive to the news.
Signs you should increase your prices.
Before I get to how to increase prices, here are four signs indicating it’s time for you to increase your rates.
1) Your operating costs are increasing.
As the cost of subscriptions, software and other expenses go up. You need to raise your rates to offset the economy’s effect on your business.
2) You’re consistently busy.
Suppose you have an abundance of projects that never seems to end. Or you find yourself turning down work because you don’t have time for it. Raising your rates can help you offset things and enable you to engage the help of subcontractors to ease the burden.
3) You’re prices are too low.
Some clients won’t take you seriously if your prices are too low. If you want to attract a higher level of clientele, you need to raise your rates.
4) You’ve increased your value.
Over time, you’ll gain experience and knowledge. As the value you offer increases, so should your prices.
So now that you’ve deiced to raise your rates. Here’s how to inform your clients of the price increase.
Keep it short.
Announcing a price increase is a serious matter, and you want to ensure your clients take notice.
Keep it short and to the point, if you tell your clients via email. There’s no reason to include any fluff or to go into the philosophy behind the price increase.
If possible, announce the increase alongside more pleasant news, such as new or improved services you’re offering. It will help soften the blow.
And make sure you give the clients a way to contact you should they want to discuss your new rates.
Tell only affected clients.
Nobody likes to hear about price increases, even if they don’t affect you directly.
You may not be in the market for a new car, but hearing about rising automobile prices still leaves a bad taste in your mouth and may even affect your perception of the various auto manufacturers.
Don’t give your clients a reason to think negatively about you.
If you’re increasing the price of a business startup package you offer, there’s no reason to notify already established businesses because it doesn’t affect them.
Suppose the price of your website hosting and maintenance is going up. Notify the clients already paying for your plan. There’s no reason for you to tell clients whose websites you are not maintaining since it doesn’t affect them.
If you’re raising your hourly rate, only notify those clients you charge by the hour.
And there’s no reason to notify clients of a price increase if you’re not currently working on a project for them. They’ll find out the next time you give them a quote.
Only notify affected clients of these price increases. And if this means advising different clients about price increases for various services, so be it. Send out one letter to your web maintenance clients. Another note to your retainer clients. Another to your hourly rate clients, and so forth. Ensure your clients are notified only about the price increases affecting them.
Don’t give your clients a reason to think negatively about you if your price increase doesn’t affect them.
Give clients enough of a warning.
The more time you give a client to accept and adjust to new prices, the better.
Clients will resent a sudden price increase far more than a price increase that will occur in the future. The more time they’re given to think about it, the easier it will be for them to accept the increase.
Don’t forget some clients may require time to adjust their budgets. More prominent companies may need approval from higher up the corporate ladder.
The idea is to give clients time to come to terms with your higher rates.
And if you’re worried about losing clients due to a price increase, remember that it’s much easier for them to pay your higher rates than finding someone new to deal with. The chances of losing clients are slim. But should it happen, the increased revenue you’ll now receive from your other clients should make up for it.
Giving enough warning also allows clients to place new orders before your prices go up.
Don’t make excuses or apologize for a price increase.
Notifying your clients of a price increase is not the time to sugarcoat things. Be confident and direct, and inform them plainly that your rates are increasing.
Be as straightforward as possible. Say your prices are increasing. Don’t say you’re adjusting your prices or bringing them in line with your services. This will only confuse your clients. They all know what an increase means.
Do be empathetic with them. Tell your clients you appreciate their business. Thank them, and let them know it’s because of them you’ve been able to grow.
Show your clients that your appreciation for them goes beyond the money they spend with you.
Justify your price increase.
Justifying the reason behind your price increase gives the client something to understand and relate to. It shows your clients that your decision to raise prices isn’t only to increase your revenue. They’ll appreciate your transparency and will be more open to the change.
Explain in your own words why you’re raising your rates. Don’t use jargon or corporate speak. Be specific without going into too much detail.
- Have you increased or improved the services you offer?
- Have you undergone any new training or acquired new equipment or software that will improve overall results?
- Have your existing tools increased costs, causing you to raise yours?
Explain the increase in a way that highlights the value to your client and ties the price increase to the benefits they’ll receive by continuing to work with you. After all, if they now have to pay you more, it would be nice for them to know why your rates have gone up.
Remind clients of your value.
Your clients initially chose to work with you for a reason. Now’s a good time to remind them of that decision and what they can expect from you.
You may want to offer your clients a deal as an added value to accompany your price increase. You could offer them more deliverables along with the increase. Such as adding social media banners to your business startup package or free domain registration with your website maintenance plan.
For example, you could offer a free month of your website maintenance plan. Your prices are increasing for everyone on your maintenance plan. But as a long-time valued client, you can offer them the first month for free.
Small incentives will soften the blow associated with the increased expense.
Ensure your clients feel appreciated.
First off, personalize your email. Don’t write one email to send to all clients. Personalize your message by referencing the client and the work you do for them.
Explain the value the client is getting, not the pain points you and your business are experiencing. Higher prices should either mean better value for them. Or give you the ability to maintain the same high quality they’ve come to expect from you.
You could even offer them a deal to lock in current prices for a fixed period. Prices are going up next month, but you can lock in the current price for the next six months if you pay in advance.
Whenever possible, inform your clients of a price increase in person or over the phone. They’ll appreciate the personal dedication and feel better about paying the new rate.
Keep your clients happy while notifying them of a price increase.
You’ve worked hard to be where you are today. And you deserve to be financially compensated for what you do. You’re only doing yourself a disservice if you don’t raise your rates.
Announcing a price increase is never fun. But following the tips I provided should make it easier to communicate the change to your clients and ease the transition for them.
Get what you deserve. You’re worth it.
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