Wondering if it’s time to raise your rates?
As a service-based business owner, this is a decision you’ll likely need to make every couple of years.
But that doesn’t mean it’s easy!
Even if you feel confident that you do need to raise your rates, you may not know…
How much to raise them…
When to raise them…
And how to let your clients know.
In this post, I’m going to answer these questions and more, so you can feel confident in knowing exactly how and when to 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 so important!
If you’re looking for more info on changing your mindset for business growth, check out my posts The 10 Core Beliefs to Achieve Success in Life and Business and How to Have a Growth Mindset for Success in Your Business and Life.
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.
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, 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, here’s a great workaround: 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 make sure to build an increased hourly rate for yourself!
You could also consider offering clients more bang for their buck. According to research from Genesys, 1/3 of customers will pay more for an increased level of service…so don’t write off the idea of offering the same services with additional perks. For instance, you could still offer your basic coaching for $120, but also offer coaching with written feedback or other perks for $180.Consider offering clients more bang for their buck. According to research from Genesys, 1/3 of customers will pay more for an increased level of service…so don’t write off the idea of offering the same services with additional perks.Click To Tweet
Looking for some other ways to re-package your existing services so you can charge more? Check out this great article, Make Your Services Easier to Sell.
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!
Even if you feel 100% confident in your new rate, the fear of losing a long-time client can be scary.
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. Remember: You shouldn’t feel bad about growing your business! Don’t apologize for charging what you’re worth.
Are you ready to raise your rates? If not, what’s holding you back? Let me know in the comments below!