In the 2 and a 1/2 years of running my consulting company, I have raised my price three times. Each time I wondered if I would I still be able to book clients. Right now, ICB Consults has a waiting list of people wanting to work with me. My current rate is $375 an hour. When I started my rate was $65 dollars an hour. I have grown drastically. Many business owners are scared of what will happen if they raise their prices. The fear of losing clients is too much of a risk for them .
This is one of the main things you need to focus on when selling to current or future clients. This is an investment it is not about the dollar sign attached. People buy into investments. Cars are investments. Homes are investments. Businesses are investments. Outline the benefits of your services and how working with you will do XYZ for their business. One of the benefits my clients receive is that I have ran an online boutique several years ago. Starting with $400 dollars and turning it into a business that brought in high 5 figures with low investment of capital behind me. When individual clients want to work with me, I talk about how I transitioned from retail to consulting seamlessly, with relevantly no knowledge of the industry or any clientele. Their business is an investment that they’re betting on, and that your business will help them win.
How To Raise Your Rates
Don’t just raise your business rates out of nowhere; so many people do. You need to first determine a strategy that reinforces the investment versus them only seeing the sticker price.
Determining New Rates
I follow a simple equation when it comes to determining new rates for my business.
skill level + living expense x 15%
When you first launched you were naïve and new. You have since learned new skills, niched down your business, and became an expert in your industry. People need to pay for that knowledge you possess. All of the information I have learned is from 6 years in the game. Learning everything from payment gateways, eCommerce platforms, social media, customer acquisition and more. Your skills also come from the classes, conferences, and webinars you attend. Next, calculate how much it cost to “live” every month, if cost were determined by your highest expense month. Your leaving expense covers all of your bills, eating, shopping (basics) and other monetary cost. Now, add your total living expense to your skill level and multiply it by 15%. You always want room for emergency and other considerations.
I am firm believer you want to keep on as many clients as possible. You don’t want to push them all away at once. If you do you’re basically out of luck because all of your current clients left and you don’t have new ones signing on at the new price.
Give them these options:
Current Client: Opt-in 15% off of your new rate for 30 days. This gives the option to save 15% off your new sticker price, if they opt in for a certain contract length. This is the option I gave to my clients. It depended if they signed 6 months or a 1 year contract.
Potential Client: Opt-in 10% off of your new rate for 7 days. If you’re in the process of changing your prices, let potential clients who are on the fence know that you will be raising your prices in the next couple days. Tell them you will give them 10% off your future rates, if they sign within the next 7 days.
Spread the news
The final step in making sure that there is no sticker shock in raising your rates is by spreading the news to your audience. This is something that can help you so much. You are getting a chance to show some transparency; on why you’re doing this. People prefer honesty, well, at least I do. Sending out a newsletter to your audience is a great way to do this, in addition to, blogging. You can show before and after of your growth. This is what I was doing when I first started and this is what I am doing now. People can actually connect with your “why” versus them just hearing you say it.
Sticker shock will keep people from signing with your service based company. Following this simple outline can help you raise your rate thus attracting the right clientele for your small business.