How to raise your rates
Raise them on new business first, at the number you are afraid to say out loud. Keep existing clients on old pricing for one cycle, then move them with notice. Expect some to leave — the arithmetic usually still favors you.
Most people put off a rate increase until they are resentful, then announce it to everyone at once and apologize for it. That combination produces the most pushback for the least money.
Start with new business
New prospects have no reference point for what you used to charge. They hear the new number as your number, and the only cost of being wrong is one deal.
This gives you evidence before you touch anything that is currently paying. If three new prospects accept the higher price without hesitation, the increase was overdue. If all three walk, you have learned something cheaply.
The number
Say the figure out loud before the meeting. The one that makes you uncomfortable is usually correct, because discomfort tracks unfamiliarity rather than value.
A useful check: if nobody has questioned your price in the last year, it is too low. Some price resistance is evidence that you are near the top of the range rather than evidence of a problem.
Moving existing clients
Existing clients need notice, a date and no apology.
- Give one full cycle of notice. For a monthly retainer, tell them a month ahead. For annual work, at renewal.
- State it as a fact. "From March, the retainer moves to $4,500." A price presented as a decision invites negotiation; presented as information, it usually does not.
- Do not itemize your costs. Your rising costs are not their problem and the argument invites them to audit your business.
- Expect to lose some. Roughly one in five is a normal outcome and usually the ones consuming the most attention for the least revenue. See hidden cost.
A worked example
A designer has ten clients at $5,000 a month each, $50,000 in total, and is fully booked. She raises the price to $6,500, a 30 percent increase.
New enquiries get the new price from the next day. Existing clients get sixty days' notice. Suppose two of the ten leave. Eight clients at $6,500 is $52,000, more money than before, with a fifth of the time freed for new clients at the new rate.
She would need to lose three of the ten before the change cost her anything. When a fully booked practice raises prices, it is usually the clients who were already hardest to serve who leave.
What makes it easier
Raising prices from a position of scarcity is much harder than raising them with a pipeline. Do it when you are near capacity rather than when you need the money, because the willingness to lose a client is what makes the number credible. See pipeline not runway.
If you are currently under-booked, the sequence is to fill the pipeline first and raise second. See how much to charge as a consultant.
Questions
How do you raise rates with existing clients?
Give one full cycle of notice, state the new price as a fact with a date, and avoid justifying it with your own costs. Expect to lose roughly one in five.
How much should you raise your rates by?
Enough that saying the number is uncomfortable. If nobody has questioned your pricing in a year, it is below the market and the increase is overdue.
When is the right time to raise rates?
When you are near capacity rather than when you need the money. Willingness to lose the client is what makes the price credible, and that requires a pipeline.