How to Raise Rates the Right Way

Your business can increase its rates without turning off clients

Back Web Only Dec 12, 2016 By Kelly Azevedo

Earlier this year, I was booking an appointment with a company I’d frequented for the past eight years when the receptionist informed me that their rates were changing — increasing by 25 percent, effective end of the week.

As a loyal customer this was a little concerning, not because the value was lacking or there are no other options in the market, but because this announcement was so haphazard. It felt like an afterthought and made it seem like the business didn’t consider how their changes might impact a client’s budget and decisions to rebook. The way they handled the change didn’t convey that they valued their customers.

As the end of the year approaches, business owners all across the Sacramento region are beginning to make their 2017 plans. If you’re a service provider you may be looking at the books and decide that it’s time to raise your rates. Consider this your step-by-step guide to raising rates without turning off clients.

Step 1: Give Plenty of Notice

Depending on how often your clients visit, you’ll want to give them a few weeks to a few months notice of any billing changes. This can be accomplished with a letter to their home or business address, a dedicated client email, fliers distributed from the office or with a phone call. Raising your rates isn’t a bad or negative choice so don’t hide it as if you’re ashamed.

Step 2 : Have a Reason

No one wants to pay more “just because” or to enrich the personal life of the business owner. In a competitive market, excuses like “I deserve more” simply do not fly. Instead point out additional services you’ve added, team members who are serving clients, facility upgrades, new certifications or expertise that you’ve gained.

This can be as simple as announcing “Our new rates for this service will be $____ beginning on date to reflect the added value, expertise and quality of service we provide to each client.”

Step 3 : Offer Alternatives

One thing the service provider I frequent did do correctly when increasing their rates was to start offering a package with lower rates when you pre-purchase five, 10 or 20 sessions. More service providers should adopt this practice to encourage loyalty and increase the lifetime value per client. Whether you’re a hair stylist, car wash, massage therapist, gardener or tutor, packages are a great way to ease clients into higher per-visit rates.

Step 4 : Stand Firm

One of the reasons that some service providers don’t formally increase their rates is that they fear the pushback from clients. This is not only a normal fear but almost guaranteed to happen at some point. Take comfort in knowing that companies all over the world change — from coffee shops to Apple — change their pricing and the market always adjusts. If you’re providing great value and taking care of your clients then attrition should be minimal. For those who insist the new pricing is just too high, all you’ll need to do is smile, say you understand and remind them of the new rates if they choose to book again.

Raising your rates as your business grows is normal, and when it’s done with foresight and planning it can remind your clients of all that you provide and even increase their loyalty. Done incorrectly and you’ll have complaints along with annoyed clients to manage on top of running a business.

If you’re considering a change in rates in the coming months, use this simple system as a roadmap to raising rates the right way.

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