Have you been thinking about raising your rates? Whether you're a service or product-based business, you'll likely need to make a decision about this every couple of years.
While it's necessary, that doesn't mean it's easy. However, even if you feel confident in the idea of raising your rates, you may not know:
- How much to raise them
- When to raise them
- And how to let your clients know that you are raising them
No worries! I've got you. I’m going to answer these questions and more, so you can feel confident in knowing exactly how and when to raise your rates.
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How to Confidently Raise Your Rates
1. Take a Close Look at Your Money Mindset
Before you consider raising your rates, I’d encourage you to think about how you think about money.
Ask yourself this important question: Do I Believe I’m Worthy of Making More Money?
Your beliefs about self-worth play a huge part here, so spend a few moments considering this carefully.
As you decide on how much you’re going to raise your rates – and then communicate this increase to clients – feeling confident and worthy is super important!
Your mindset plays a critical part when it comes to your view about achieving business success. Not only do you want to examine your own beliefs and reframe any negative ones, but you want to stay in a growth mindset as well. This can make all the difference.
2. Pay Attention to the Signs it’s Time to Raise Your Rates
Knowing when to increase your rates can be one of the trickiest parts of this whole process. The good news is that there are clear, tell-tale signs.
Some signs it’s time to raise your rates include:
- You have more work than your current schedule can accommodate
- Your competitors charge significantly more than you
- Clients are asking why you’re so cheap
- Your hourly fee works out to be too low (calculate how much you’re actually making per hour…you might be surprised at how low it actually is!)
- Your rates have stayed the same for a long time
In general, I recommend revisiting your rates every 1-2 years and raising them incrementally.
It’s actually quite common for service-based businesses to raise their business rates every single year whether they need to or not! So don’t feel bad about increasing your rates, especially if you’ve been in a holding pattern for several years.
3. Raise Your Rates for New Clients First
Wondering how much is too much in terms of raising your rates? Try out your new pricing with new clients first.
When prospective clients reach out to you, quote them a price higher than your usual rate, and pay attention to their reaction.
Are they shocked at how high it is? Or are they quick to accept your offer?
How they respond will give you a good idea of whether your new rates are in the right ballpark or not!
4. Offer a New, Higher-Priced Product or Service
If you’ve decided you really don’t want to raise your rates for existing services, a great workaround is to simply create a new product or service at a higher price point.
For instance, if you’re currently charging coaching clients $120/hour and don’t want to increase this, come up with a coaching package that costs $400-$500…just be sure to build an increased hourly rate for yourself!
When you're designing your new, higher-level product or service, think about how you can give your client an enhanced experience rather than more “stuff”. As a matter of fact, 86% of U.S. adults are willing to pay more for a better customer experience.
So spend some time brainstorming some ways to create a stellar, unique experience for your clients. Because better experience equals happier clients.
5. Communicate Your Rate Increases Confidently
When you’ve decided it’s time to raise your rates – and you’ve figured out how much you’re going to charge – it’s time to let your existing clients know.
This part can be pretty nerve-racking! I still get nervous when I have to introduce a rate increase.
Anyway, even if you feel 100% confident in your new rate, the fear of losing a long-time client can be scary. It's completely normal to feel this way.
Here are some strategies that can help:
- Give clients plenty of advanced notice. You should never ever raise your rates retroactively, and should always give at least a month’s notice.
- Offer them the opportunity to book in advance at the existing rate. For instance, give them your existing rate if they book a 3-month package before your scheduled rate increases.
- Communicate the change with confidence. You shouldn’t feel bad about growing your business! Don’t apologize for charging what you’re worth.
Don't Fear Raising Your Rates
Raising your rates is a necessary part of doing business. But I get it. It's uncomfortable and a little bit scary.
Don't let fear keep you from taking the leap. And remind yourself that you're allowed to make a living. So approach your rate increases from a positive perspective. If you're doing it for the right reasons, then there's nothing to fear.
Are you ready to raise your rates? If not, what’s holding you back? Let me know in the comments below!
UPDATED on August 29, 2022