You work hard. Really hard. You receive excellent feedback from your clients and customers on a regular basis. You’re constantly burning the midnight oil to make sure everything is taken care of and kept on-track. In fact, you deserve a raise! Here’s where things get tricky. How do you raise your rates when you’re your own boss?
This seems like it should be an easy conversation to have… “Hey Boss, can I have a raise? Why, yes! Yes, you can!” Unfortunately, as an entrepreneur, there’s a bit more to it than that. Giving your paycheque a bit of a bump can be done a number of ways. We always recommend doing what you can to reduce expenses and boost your take-home pay. But sometimes price increases are required.
It’s OK to Raise Your Rates
There are plenty of reasonable justifications that should allow you to adjust your rates guilt-free. A few are your:
- Experience changes and you get better at what you do
- Services change and improve
- Quality of work increases
- Expenses increase as time passes as well (due to factors out of your control, such as inflation).
Not sure how to approach this matter in a way that won’t end up costing you? Don’t worry! We’ve got all the advice you’ll need to add a few more bucks to your bank account without risking those important client relationships in the process.
Sticker Shock is Not Fun
The two most important things to keep in mind when you’re keen to up your rates are consistency and communication. Let’s spend some time talking about that first detail: consistency. I recently went through an experience as a patron of a local business that’s the exact opposite of how I would recommend raising your rates. Having frequented this same business for years and years, I’d come to establish an expectation of costs. Then, I came in to find that their rates had not only increased, but had done so dramatically. The same service I’d received last time went up 25%.
This sort of sticker shock can be a nasty surprise for clients. This is especially true when there’s not a substantially-improved service offering to go along with the sudden increase in cost. There’s an easy way to avoid this issue. Raise your rates incrementally in a consistent fashion, rather than all at once after years of being the same. To refer back to my experience, if this business owner had bumped her rates up by 5% over the course of 5 years, her rates would be sitting in the exact same spot as they are now following her massive single increase – but you can bet I wouldn’t feel half as burnt by these incremental changes, if I’d even noticed them at all! Plus, she’d have benefited from all that extra income over the course of those intervening years. Food for thought, to be sure.
Nobody Likes an Invoice Full of Surprises
Along with consistency, the second detail when it comes to rate increases is communication. I had booked my service well in advance but didn’t find out about it until I was presented with my invoice after everything was already said and done. I immediately voiced my concerns to the business owner. She agreed the rate increase was steep and offered to invoice me under her old fee structure.
Between the surprise in my invoice and the dramatic increase, I’m not sure if I want to return. I’ve been a patron of this business for years but this cracks the trust we have previously built.
The same lesson can be applied in my own small business. If I increased my rates like this, I’d be bound to lose at least a handful of clients. Ironically, this sort of rate increase can often have the opposite intended effect on a business, resulting in less income flow than there might have been before the price hike when rates were lower, but business was better.
How to Raise Your Rates the Right Way
There’s an easy way to increase your rates and give yourself a raise the right way. It simply involves following those guidelines:
Don’t just send your rates skyrocketing overnight. Embrace steady, incremental rate increases on a regular basis.
Likewise, don’t just surprise your clients with a fee increase. Let them know about things ahead of time – prior to engaging services. This enables them to plan and budget accordingly.
Follow this advice, and your clients will have no problem paying for all your hard work and dedicated service!
Looking for an innovative angle to communicate that upcoming rate increase to your clients? Need a hand with marketing in general? Reach out to us today at The Marketing Girl. We’ll work with you to launch your forward-thinking business ideas so your company can bring in those big sales. Get in touch today – we can’t wait to get the ball rolling!