5 Ways to Raise Your Rates and Keep Your Clients
It doesn't matter whether you're a freelancer, a small business owner, or a large corporation – every service provider wants to raise their rates.
Of course, most of us never do it.
Why? Because we're terrified.
We ask ourselves, "Am I really worth more?"
We worry, "What if our clients leave?"
We wonder, "If I screw this up, can I fix it?"
I can tell you from experience that most of these worries are unfounded. In fact, not only will raising your rates increase your profit margin, in many cases it will make you more desirable to the client as well!
Here are five tips for making the transition to higher pay a bit easier.
Be More Specific about the Services You Offer
Generalists have a hard time charging higher rates because no client feels compelled by a vague service offering. Clients want to feel like your service was made for them.
Have you ever noticed how most photographers specialize in weddings or senior portraits? That's because they know that if they have a service targeted to that specific clientele, then they can charge a higher price.
If you can solve a more specific problem, then you can charge a much higher rate.
This usually means offering your current services in a more targeted way. Take some time and think about how you can solve a more specific problem for your customers. Then charge them for it.
Make Rate Increases a Regular Part of Business
It's hard for some of us to increase our rates because we never had a plan to do so in the first place. We just roll out of bed one morning and say, "Man, I wish I was charging more."
Of course, even though we feel that way, we rarely do anything about it. We hesitate to raise our rates until it’s the “right time.”
As you probably know, waiting for the right time usually means waiting for a long time. Instead, I suggest scheduling rate increases into your business.
If you plan to raise your hourly rate by $10 after every 5 clients, then you remove the emotions associated with rate raising. It’s simply a business decision that you were planning on making. When client number six shows up, you increase the price. And that's that.
This strategy also makes rate hikes easier to explain to clients (if they ask).
Offer an Upsell or Cross-Sell
Another alternative is to offer an upsell (some type of add-on service) or a cross-sell (an additional product or service) to your current offering.
This allows you to keep the current price of your services the same, while making more money overall.
For example, if your service is knitting blankets, then maybe you could sell limited edition patterns as an upsell. Or perhaps you could offer special bows to go with the blankets or sell a matching storage bin for the blankets ... you get the idea.
Offering a closely related upsell is often a great idea because it continues to solve the problem that the customer has, but in a more complete way. These options allow you to make more money from the same number of customers – even if you aren’t directly raising your rates.
Sell Your Service in Different Blocks of Time
If you are currently charging an hourly rate, then consider switching to a weekly or monthly rate – or even longer if that works.
Say you charge $20 per hour. That's $800 in a 40-hour week. Could you switch to charging clients weekly for $850? That’s a $50 raise with no additional effort.
Quick changes like this can give you an instant rate increase – and because the client is viewing the package in a new time frame, they rarely put up a fuss. Supermarkets play this game all the time with different unit sizes and prices.
Moreover, the longer the time frame you sell, the less you have to worry about selling. If you sell your service in three month blocks, then you only need to find four clients per year. One month blocks? Twelve times a year. One hour blocks? Yikes. That's a lot of selling.
Let your Clients Choose to Pay You More
Another excellent solution is to offer price tiers.
Price tiers are simply different levels of service at different prices. For example, let's say that right now you sell your services for $50/hr. With a price tier, you could offer your basic service for $50/hr and extended support for $60/hr. And then maybe you offer a rush service for $70/hr.
These are just examples, of course. You'll have to figure out how to divide the price tiers in your business. That said, you'll be surprised how many people choose the higher price tier if you give them the option. Some clients always want the best – and they will pay you for it!
Price tiers are a great way to get comfortable with the idea of charging more. Once you realize that people are willing to pay more money – and that higher prices won't drive them away – then you might be ready to take the leap and raise all of your prices instead of just offering a few high-end options.
Regardless of which route you choose, you should try raising your rates. Pricing products and services is not an exact science and the only way you can discover the right price for your business is to try to find it.