We all need to raise our rates now and then. Some will do it this time of year and others (like me) will wait until later on, around the spring/summer period.
Whenever you do it is up to you. But you do need to keep your clients in mind. Raising your rates too frequently or too much can lead to you losing clients.
Do you want to lose your clients? Well, that will depend on the client and the ability to gain new clients in the future. One year I raised my rates and lost too many clients. I had to do a quick scramble to get some new ones, because I was too stubborn to think that I may have done it wrong.
In truth, I could have handled things a lot better. And I know you can too.
Losing clients when raising your rates doesn’t mean you had bad clients. It means you didn’t know your clients well enough or you made some mistakes in the action you took.
So, here are my top five tips for raising your rates without losing clients. Try them the next time you raise your rates so you don’t have to get back to the drawing board for new clients.
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Stop Raising Your Rates Too Frequently
If every couple of months you put your rates up, you’re going to make clients feel anxious. They may love your rate right now and not have enough money in the budget for you in the future. They worry about that and will start looking for a cheaper freelance writer for the future, where they will have the budget for some time.
Think of it like when you’re looking for your own business costs or when you’re looking at rent. You’ll have a budget and you don’t want to find that increases push you past your budget too soon. You’ll start looking for cheaper prices elsewhere. I remember my housing rent increasing one year past our budget, so we looked for somewhere else that would give us three or four years of increases that we could afford rather than just one or two.
But what if you need to raise your rates frequently because of your costs?
This is a fine line. Chances are that if your rates need to increase on a regular basis then you didn’t work out your hourly rate properly or you haven’t budgeted for the project properly. You’ll need to get back to the drawing board and see where you went wrong.
I only raise my rates once a year per client. The only time rates need to increase is if more work is added to the project—and clients expect that sort of increase because they’re asking for more work. If I’m still doing the same amount of work from one month to the next I won’t increase the rates every couple of months. That’s a sure-fire way to lose a client.
Clients usually expect price increases once a year. We have more experience as a writer and develop the niche more. And they’ve gotten used to working with us.
Don’t Raise Your Rates Too Much
There was a member of a mom forum saying that one of her employees had asked for a £6k per year salary increase. We won’t go into the reasons, but it was a personal reason rather than a business reason. I.E. the person didn’t have the skills or experience to ask for such an extra amount. It turned out that the £6k was a 25% increase.
While this was an employee, it works for your business too. If you ask your clients to increase your salary by 25%, they’re going to vote with their feet.
That’s a steep increase. If your social media manager or VA asked for a 25% increase, what are the chances that you’d have the budget for it?
Now if it was a 5-10% increase, you’d likely be more open to it. And your client will too. I never go over the 10%.
That was the mistake I made one year. I wanted a 15% increase because I wanted to work with rounded up figures. If I’d have dropped the percentage down I may have found it easier to keep my clients.
It all eventually adds up. So why not think about the percentage increase that you want to go up by and then decide if you’d pay that for a service that you’re currently paying for. If the answer is no, then you’ll likely find that your clients will say no and find someone cheaper.
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Make Sure You Can Justify Your Price Increase
While we say that you get to set your own rates and shouldn’t need to justify them, you need to think about it from your client’s point of view. If you were your client would you honestly view the price increase as good value for money?
Everyone seems to want the cheapest product possible. But there are clients out there who value experience and skill. They will pay a little more if they know that they are still getting a great deal and great expertise from whoever they are outsourcing to.
So, can you justify your price increase?
I tend to use the time, cost, quality triangle. Only two can be focused on at a time. So, if someone wants something done in a short space of time with the best of quality, then the cost will be high. If someone wants something cheap and in a short space of time, then the quality will need to be sacrificed.
Chances are clients don’t want to sacrifice quality, so it’s the time or cost that needs to be sacrificed. If time can’t, then the cost needs to increase.
You need to sell why you’re worth the extra money. Don’t rely on loyalty. Rely on your skills, experience, and what you bring to the company. What have you done for the client that nobody else can do?
Don’t Do a Standard Increase for All Clients
You may be tempted to do a standard 10% increase for all clients on your books. This isn’t the best road.
Your clients will have different needs and budgets. Some will be happy with a 10% increase while others will struggle to pay what they already pay you. You know your clients the best.
It’s really not the case that all clients need the same increase. Most of the time the clients won’t work with each other (unless one has referred another) so nobody has to know that one client is getting a cheaper rate than another.
But what if you need your lower paying client to up the amount they pay? Well, you have two options here. You can talk about an increase, even a small one, or you can look for a better paying client and drop that lower paying one when you have something to replace the income.
Depending on the client, I have done the second option in the past.
Some clients will want something extra for the rate increase. This isn’t quite the aim that you want. Something extra would already cost more, so you’ll find that you’re not actually getting extra money for your time.
Be Professional in Your Communication at All Times
Think about how other businesses deal with price increases. When letting agents tell their renters that rent is increasing, it is done through a simple letter. Renters have three options: negotiate a lower rate, vote with their feet, or accept the new rental price.
Let your clients know in a professional manner that prices are increase. Share the amount that you want to increase the price by and any other terms that you will expect. You can then add a line to say you’re open for communication about this price increase.
Some clients will say ‘okay’ and not contact you with work again. That’s them voting with their feet.
Others will be fine with paying the extra. They understand the value of the work and have it in the budget to pay more.
There are some who will want to negotiate a lower increase or want to stick with the same rate. Are you willing to negotiate down? If so, then there’s nothing wrong with doing it. Have a bare minimum that you are willing to negotiate down to.
Don’t name call or belittle anyone for not having the budget. If you can’t go lower than the price increase you’ve stated, then accept that some clients will walk away. You’ll need to find new clients who are willing to pay your new rates.
You could also give a time frame for when the new prices will come into effect. Give enough notice so clients can make a decision.
You Won’t Lose All Your Clients
There’s no need to lose all your clients because of a writer rate increase. But you can lose some. Even with the above tips, there will be the odd client who doesn’t want to pay extra. It depends on their and your circumstances, experiences, and skills in the niche.
But following the above tips to raise your rates will decrease the amount of clients who walk away. I use the above tips and haven’t lost a client yet that I haven’t wanted to lose—I.E. those where I have the replacement income.
It takes time to develop a relationship with your clients and you can’t keep raising your prices ever few months. Clients expect and deserve some sort of stability, just like you do with anyone you outsource to.
Are you ready to raise your rates without losing clients? Need some help with something like this? Let me be your freelance writing mentor to build your courage and skill to raise your writing rates.