Raising your rates can be scary. What if no one is willing to hire you at your new rates?
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 websites 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.
Why should you raise your rates?
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. If you’re charging $5,000, but only providing $1,500 worth of service, your clients are not going to be happy.
Instead, you need to look at how you can add value to your clients, to accommodate the rates you want to charge. You can do this in a number of ways:
- Giving clients more attention
- Offering new products or services packaged in with your previous offerings
- Providing more experience–you learned some new skills
- Positioning yourself like an expert
That first bullet, giving clients more attention, is a big one. Clients who pay under $2,000 for a website rarely need much face-to-face (or Skype-to-Skype) time, but clients who pay over $5,000 often want a weekly check in. And that’s okay, because spending 15 minutes on Skype every week explaining where you are in the process and what you need next from the client really takes very little time or effort on your part, but adds a tremendous amount of value to the client.
Likewise, clients love knowing that you’re dedicating your full-focus to them. And because you’re not being pulled in a million directions by a bunch of different clients, you are able to provide better websites. And get paid for the increase in quality.
By providing complementary services or products along with our website design, we can add more value for our clients and charge accordingly. For example, creating matching social media covers, or providing access to WordPress tutorials take little effort* on your part, but give a TON of value to your clients.
*Building up a “vault” of WordPress tutorials can take a fair amount of initial time investment but can be re-used for each client. And you can build it gradually, starting with 3-5 short tutorials and adding to it as clients ask questions.
Guess what? The more projects you work on, the more you learn. So every time you complete a project, you add to your skill set 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 you raised your rates. You deserve to be compensated for the skills and knowledge you’re providing.
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 high rates. 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.
Gradual or sudden?
Is it better to raise your prices all at once, or gradually get them up there? Honestly, it’s up to you.
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 website, and working with four clients at a time, bumping your prices to $1.500 along with adding in more attention or services might stretch you awfully thin. It might be easier to jump to a higher number ($2,500) and cut the number of clients you’re working with as you work on adding value.
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 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.
Let past clients know
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 getting a new website from you every single year (if they are, we may need to have a conversation about creating websites that have some longevity). 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.
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.