Pricing your own services is never easy. There seem to be a million factors that can go into how to price yourself - local market, client demand, experience in the particular niche... And then just when you think you've found your comfortable rates, you're ready for growth. Whatever made you realize that you're due for a change, here are some ways to know when to raise your rates, and a few options on how to go about doing it.
When Should I Raise My Rates?
There are several things that can bring you to the conclusion that you may be undercharging.
- If you find that you're working nonstop, delivering loads of value to your clients, and still aren't able to make ends meet or put any money aside for savings, then you are most likely undercharging for your services. The key here is that you need to value your time, your expertise, and the value that your deliverable brings to your clients. Don't be afraid to ask others in your field about how they charge, what sort of rates they recommend for your level of expertise, and what their pricing journey has been!
- If you're not being challenged by the work that you're doing, then you may have outgrown your current clientele. You may love your clients dearly, but it's easy to get in that comfort zone and let your work get stagnant. It's so invigorating to have projects and clients that challenge you to grow! Ideally, there should always something about a new project that excites and/or scares you. When you're in the comfort zone, though, that's a good time to consider a move to a higher level of clients. Bigger projects, bigger budgets, bigger expectations!
- If you're doing a great job of continuously educating yourself and growing your skill set, then you may find that you're suddenly giving too much value and expertise for the rates you're charging! You should absolutely always strive to keep clients happy with your quality of work (remember to always under-promise and over-deliver!), but growth in your expertise and offerings should always be reflected in the rates you charge.
How Do I Raise My Rates?
There are three basic ways to raise your rates - gradual increases, one big leap, or re-structuring your offerings. Let's go over each one.
- Gradual increases is probably the most common way to raise rates, but not necessarily the best. A benefit to this method is that your current clients are less likely to give any pushback, and so your client drop-off should be minimal with each increase. The downside to this method is that it takes time and it can leave you in a grey area where you're not the bargain service provider, but you're also not the high-end service provider.
- Increasing your rates in one big leap takes more courage and faith, but can offer a cleaner jump from one clientele to another. The big benefit to this method is that you make a pretty clean leap from one type of client to another since more of your current clients will most likely be priced out with your higher rates. This method also takes less time because you're doing just one big increase, rather than a series of smaller raises that are spaced out. The big downside to this method is that you will lose clients and have to trust that new clients will find you. Think of it in terms of going from minor league to major league - you're looking for major league salary, not minor!
- The final method to increase your rates is to re-structure your offerings. This means that you change your package offerings so that they get less for the current rate, and instead you offer add-ons or additional fees that will, in the end, give you more money per project. For example, a photographer may have a package that offers a portrait session that's 2 hours long and includes 20 high resolution photos and 2 prints for $500. Using this method to increase rates, this package may change to include 2 hours long photo session for $250, and then digital photos are $50 for each one or $1000 for the entire gallery, and then each print is now $50. If they purchase the same amount of product as the original package, this would total to $1,350. The big benefit to this is that your clients don't have sticker shock instantly by looking at the numbers, so your client drop-off will be low. The downside is that you're likely to have client pushback on the add-ons. However, we'll go over a few ways to respond to that!
What Do I Say If Clients Don't Want to Pay More?
We all have clients that ask for discounts or push back when rates increase. What do you say to them?! It actually all goes back to owning the value that you bring to your clients. Portraying confidence in your skills (even when you've got some self-doubt) and knowing that at the end of the day you're providing an excellent service that your clients need will be key to letting folks know why you're worth every penny!
- For gradual increases, you can point to inflation, raise in cost of operation, expanding your expertise over time, and keeping up with the local market to justify your rates.
- For big leaps in pricing, you can point to making a shift to larger projects to work towards the long-term goals for your business. It's best to be honest with your clients and trust that they'll support you because they want the best for you, too! For those clients that just can't keep working with you, it's always a good idea to give them a few recommended pros that can help them closer to their price range.
- If you raise your rates by re-structuring your offerings, a great way to highlight the benefit of this is to show clients that they now have options. Essentially, they can create their own package by selecting items a la carte! Yes, the rates are higher in total, but that goes back to knowing your value and making sure that you're aligned with the current market and your goals for growth.