Stop! Before You Raise Your Rates...Do This

Continuing on with the "Successful Business Tuesday" theme-

In every business owners’s life, (I don’t care if you are a service provider or a retailer) there comes a time when you simply have to raise your rates. Maybe you’ve been in business for years without a pay increase. Maybe your skills have recently improved through a new training course or certification. Or perhaps your profit margin is slipping and you have to make adjustments. Maybe you just want to attract a higher caliber of client. It’s a fact of life, it happens.
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Whatever the reason, it is imperative to have a plan in place before you make your big announcement.  But where to start? What do you do, as to not lose existing customers? Do you raise prices across the board or only new clients? What if your clients will not accept the price increase? How can you stay ethical in pricing and still implement the changes?

Start by taking a look at your current customers. Will you raise their rates as well? If the answer is no, then you have to consider if keeping them will be worth your time, or if you’ll feel resentful at the amount of (lower paid) time you are spending with them. And lets be honest, resentment can build up, so be wary of this. Resenting your customers is poison for your business! It’s a much better idea to raise their rates than provide substandard services due to hidden anger. 

If the answer is yes, then you have to prepare yourself for potential fallout. Simply put, there are some clients (you know who they are) who will balk at a price hike. They’ll threaten to leave and they may actually leave. Realistically, are you prepared for the hit your wallet will take should that happen? 

Next, consider when your rate increase will go into effect. This might be different for each client, depending on when/how they’re paying you. For example a client who is on an annual coaching plan might not see an increase for 8 months or more, while a monthly client might be shocked to find his or her rate is going up in a week. 

If you can, give you customers at least 30 days notice of the increase, so they can not only budget for a higher expense, but shop around for a new provider if they choose to.

Finally, if you’re a little flexible and want to gain a few new clients, you might think about creating a last-minute offer. Announce that your rates are going up on [whatever date], then offer to let X number of new clients lock in your current rate, if they sign a contract right now. 

Sure, you’ll still be working at your old rate, but with a few new clients on the roster, your cash flow will definitely improve as you transition to the higher rates. Plus this should off set the existing clients who leave due to the price increase.
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The most important thing to remember about rate increases is this: You have to feel good about the prices you charge. If you think your rates are too low, chances are good that they are. Raising them will not only make you feel better, but it might just let your current and prospective clients know the value of your services as well.

See you next Tuesday for more successful business tips and mini trainings!

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