![]() This will give your clients some time to review their options. You’ll want to give at least 60 days’ notice before bumping up your rates. After all, they’ve given you referrals and kept your business financially stable for years. Deciding When the Plan Will Take EffectĪ sudden and unexpected price increase can come off as callous to your most loyal clients. They’ll know June means increased rates, whether they like it or not. This will keep you ahead of inflation and will put both long-term and short-term clients on a predictable pricing schedule. Many independent contractors and small business owners implement annual price increases around the same time each year. So while this might be your first price increase, it won’t be your last. Setting Consistent Price IncreasesĪs the years go on and you set yourself apart in the industry, the value of your services will increase. If you want your clients to be okay with it, you have to handle the process delicately. No client wants to wake up to an email that says their favorite service is now $50 more expensive. This will subtly improve your profit margins without turning customers away.Ĭurrent clients can’t pay their invoices due to COVID? Check out our article about How to Write an Invoice When Your Clients are Struggling Financially.Ī price increase is not something that you introduce overnight. ![]() An extra few dollars on a package won’t usually make or break the deal. So, how much should you raise prices or rates?ġ0-20% is usually a pretty good range to start with. That’s even more of a concern now, with economic troubles related to COVID-19. It’ll be hard to explain why your rates have nearly doubled, especially considering the cost of inflation is nowhere near that high. If you suddenly introduce a 50% or 100% increase in your services, it’s safe to say that you’re going to lose a lot of clients. Unless you provide something significantly more valuable than similar companies, make sure to keep your prices competitive. It’d be much harder to explain why your service is worth $500 while your competitors are worth $100. But when they see that your new rates are in line with industry standards, you don’t have to be afraid that they’ll ditch your services for a cheaper yet equal option. You can’t entirely avoid disappointing your clients with a price increase. What are your competitors charging for the same or similar services? The best way to set a price increase is by comparing yourself to your competition. It’s harder to put a dollar amount on services than it is to put a listing price on a product. Related: How to Track Business Expenses Compare Yourself to the Competition Price hikes aren’t about putting more money in your pocket they’re about placing more financial value on the skills you possess and the services you provide.Įven the most loyal customers will turn their backs on you if they feel your price increase is unfair or unjustified. ![]() Related: How Do You Write An Estimate for Clients? If you simply tell them that you’re charging more because you want to hire an assistant to do your paperwork, they may not be as receptive.Ĭustomers may not understand the data behind the increase, but they should realize that this price increase is in their best interest. They’re more likely to go along with a price hike if it means they get high-quality service. No matter the reason behind the price increase, you need to focus on what a customer stands to gain from it. When that happens, the quality of services you provide clients is at risk. Right now, you might be spreading your resources thin. You may even be paying some subcontractors to help you scale your operation. After all, you have expenses that need to be paid and equipment or software that needs to be purchased. You know first-hand what it’s like to keep a business running from day to day. Orient Your Price Increase Around the Customer You need to prove to yourself and your clients that this is a good business move. You may also need a “pitch” for why your clients should continue to invest in your business. You’ll need to have a pretty good explanation for why your services are worth more now. That’s especially the case if this is the first time you’ve done so. The longer you’ve had clients, the harder it’ll be to explain a sudden price increase. Justifying Your Reason for the Price Increase Here’s what you’re going to learn about increasing your prices as a freelancer:ġ.
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