Raising prices can be scary. What if no one is willing to hire you at your new rates? Will you lose clients?
But don’t worry, like most things in business, prices are temporary. If it REALLY doesn’t work out, you can always lower them again. But you shouldn’t have to.
There’s an audience for every price point.
Whether you’re selling packages for $1,500 or $15,000, there are people who will buy.
But you can’t just throw a new price tag on your old products and services, you have to provide quality and value (or at least perceived value) that is inline with your new price tags.
In this post I’m going to cover when you should raise your prices, and whether you should do it gradually or suddenly.
So let’s raise those rates!
When should you raise prices?
I know we’ve talked about how much money we want to make, but that’s not a good enough reason to raise our rates. When you can provide more value, you can raise your rates.
Ways you can provide more value:
- Giving clients a better experience
- Learning new skills
- Focusing on the benefits of your service
Improving the client experience
That first bullet, giving clients a better experience, is a big one.
You can offer the SAME EXACT service you’re offering now, but provide a better client experience and charge more.
Clients are willing to pay more for a smooth and enjoyable process, EVEN if the end result is the same.
An analogy I like to use is a cheap hotel vs. a luxury one.
Both give you (hopefully) the same result: a good night’s sleep. But the experience can be VERY different.
There’s an audience for both cheap and luxury hotels (and everything in-between), but giving the luxury experience means that you don’t have to book as many clients to hit your income goals.
The best way to provide a better client experience is with smooth systems. Great systems keep your projects running on time, keep your clients in the loop, and allow you AND your clients to relax, because everyone is on the same page throughout the project. Get my systems checklist so you can streamline your processes now!
Learning new skills
Guess what? The more projects you work on, the more you learn. So every time you complete a project, you add to your skillset and the value you’re able to give to clients.
If you’re still charging the same amount you were five projects ago, it’s time to raise rates. You deserve to be compensated for the skills and knowledge you’re providing.
But completing projects isn’t the only way you learn new skills. Maybe you took a course, or completed a bootcamp.
However you’ve improved your skills, if you’re better able to help your clients, it’s time to raise your rates!
Positioning your business properly
Finally, perceived value is perhaps the biggest hurdle. If you haven’t positioned yourself like a pro, and focused on selling benefits instead of features, people won’t pay premium prices.
But if you present yourself as an expert, and show HOW what you offer really benefits clients, then people will be much more willing to invest in your services.
If we go back to the hotel analogy, if you position yourself as a cheap motel, and give off those cheap motel vibes, then no one is going to want to spend premium prices with you.
But if you position yourself as a luxury hotel, everything about your brand screams luxury, and you’re able to convey to your potential clients HOW you’ll help them and what the experience is going to be like, then you’ll attract clients who are willing to invest with you.
Should you raise prices gradually or suddenly?
Is it better to raise your prices all at once, or gradually get them up there? Honestly, it’s up to you.
Raising prices gradually
Gradually raising your prices, say a $300 increase every three projects completed, is a good way to test the waters and see if your audience is willing to go along with you. There’s no huge commitment, or re-positioning, as you just slowly bring your audience along for the ride.
The nice thing about gradual price increases is that you’re not taking a huge leap. The clients who were willing to hire you $300 ago, are probably still willing to hire you after the price increase.
You don’t have to go in search of clients with vastly different income levels, which can be hard to do sometimes without completely re-positioning your business and having to build up a new audience.
But the gradual increase can be hard, because you’ll need to provide more value with each increase, but you’re likely not raising your rates fast enough to work with fewer clients at a time.
So if you’re currently charging $1,200 for a project, and working with four clients at a time, bumping your prices to $1,500 along with creating a better customer experience and repositioning as you go, might stretch you awfully thin.
It might be easier to jump to a higher (but not HIGH) number (like $2,500) and cut down on the number of clients you’re working with as you work improving your business.
Raising prices suddenly
Raising your prices all at once can be great. If you’re ready for a re-brand or unhappy with past clients you’ve attracted, jumping straight to a new client base can be a great fix.
By raising your rates significantly ($1,000+) you’ll be completely re-positioning yourself in your field and attracting different clients. And as long as you can provide the service and experience to back it up, making the leap isn’t too scary.
But there are some disadvantages to jumping in price that much.
First, if your own branding doesn’t say “high-end”, you’re not going to attract high-end clients.
Second, if you did like some of your old clients, they may no longer be able to afford you.
Third, if you can’t provide the service expected at this level, you’ll end up with unhappy clients.
If you have been waiting over a year to raise your rates, you’re probably ready for a significant jump. If you’ve been gradually raising your rates all along, and overall like the clients you’ve been working with, a gradual raise in your prices might work better.
How to tell past clients you’ve raised your prices
Worried raising your rates will scare away past clients? You don’t have to worry as much as you think you do.
Clients likely aren’t rehiring you for the same project every single year. So raising the rates on your big packages probably won’t effect them much, if at all, for quite some time.
If you offer additional services, such as monthly retainers, or hourly work, you can grandfather past clients in for a specified amount of time. For example, let’s say you have a client who has a monthly retainer with you. About three months out from renewal, you should drop them a line saying something like:
I wanted to give you a heads up that our retainer contract is expiring in 90 days. Since we originally signed the contract I’ve learned a whole lot of new things, like ____ and ____, so will be raising my monthly retainer rate to ____ starting with the new contract. These new skills will allow me to better serve you and your needs.
When it gets closer to the renewal date, I’ll send you an updated contract.
Ninety days notice for a price increase on most services is plenty of time for clients to ask questions or find a new provider. And if they’re not willing to pay for your expertise, a new provider is what they should find.
Another option is providing a large price bump for new clients, while gradually increasing the price for past clients. This will still attract higher-paying new clients, but slowly bring past clients along–or slowly phase them out so that you’re not cutting off all your income at once!
Take action! Raise your rates.
Raising your rates is scary. It’s scary the first time, the third time, and then eventually you get confident in doing it. When that happens depends, but it does happen, I promise! When you become confident that the value you’re offering clients is worth the price tag, raising your rates becomes easy.
And when your rates are higher, you can provide more value which makes both you and your clients happy.
Decide if you’re ready to raise your rates. Are you going to provide a better experience? Have you learned new skills? Is your offer positioned as a premium solution to your clients’ problems?
Then, decide if you’ll raise your rates gradually with each project, or suddenly as part of a repositioning of your brand and business.
And finally, decide how you’ll handle current/past clients. Will you grandfather in their current pricing? Raise their rates more slowly? Give them 90 days before your new rates take effect? Make a decision and tell them.