When you start a business, you might not be entirely sure what you should charge for your services. After all, you’ve nothing really to compare it to.
But the rate you settle on when you start your business doesn't need to be permanent. In fact, as the prices of materials fluctuate over time, your work increases in worth as you gain experience, and after networking with fellow professionals you might realise that you've been undervaluing yourself.
Whatever the reason, you've made the decision to change what you charge. Here's what to do next…
Step one: Communicate the change
Get in touch with your clients or customers, giving them a month's notice of the change. If you work in a business-to-business capacity it's likely that your contacts will need to discuss budgets with their finance department. Others may no longer be able to afford you, and will appreciate the advance notice – whether you want to negotiate with them or let them shop around is up to you. Don't just get in touch with your active clients, either. Using this change as an excuse to call people that you've fallen out of contact with could result in new work.
Step two: Justify the change
Your clients will want to know why you're changing your rates. Go into the conversation prepared and confident. Have comparable examples of market rates and, if applicable, evidence that the price of raw materials has changed. For creative work, you can justify your cost by comparing it to the hourly minimum wage. Don't be afraid to talk yourself up – if they've been consistently happy with your work there should be no reason for them to argue about a small change. Emphasise that your experience has increased since you were first hired, and that you're updating your prices to reflect that.
Step three: Demonstrate value
Now is not the time to rest on your laurels. Once you've decided to increase your rates you need to ensure your clients will feel justified with their decision to continue working with you. In the months leading up to the price change you should go above and beyond. This may mean delivering work early, taking on last minute jobs and triple-checking your product's quality. Then, when you notify them about the change in price they will already know that you offer more than your cheaper competitors.
Step four: Reward loyalty
If you offer a range of services at different price points, give your clients the opportunity to upgrade in advance of the rate hike. By letting them know that prices are going up, they might feel more inclined to make an upgrade that they ordinarily wouldn't, due to the time constraints. They'll also appreciate your letting them know about the changes to your business’ rates in advance and giving them a chance to act on it. Another way to reward loyalty is to offer long-term clients a short-term discount while their budgeting department gets its head around your higher prices. This takes a bit of pressure off your contact, and reduces the chance of them shopping around.
The important thing to remember when deciding to change your rates is to be confident that you are worth the extra investment from your clients. No one likes to be undervalued, and if you’re as good as you think you are, your clients will stick with you.
