by Jessica Leone
As a freelancer or new small business owner, it’s common to start out with lower rates to start building your customer base. But as you grow, raising your prices is inevitable in order to be more profitable.
If you find you have more work than you can manage, your competitors are charging more, or you provide a unique service, it may be time to raise your rates. While this isn’t always an easy conversation to have with your clients, you may be surprised how happy and loyal customers stick by your side.
At the same time, keep in mind that it’s much easier to keep the clients that you’ve developed a strong relationship with versus seeking out new ones.
12 helpful ways to raise your prices without turning away your hard-earned customers
There are many factors to take into consideration if you’re thinking of raising your rates. Often, with higher quality work, improved value, and more experience under your belt, there will be justification for the increase. Identify what the benefits of a price increase are for your customer, and communicate these benefits to them.
If you’re still scratching your head on how to approach this, here are some ideas. Or, scroll further to see them all wrapped up in an infographic, plus some extra tips.
1. Check your industry. Research your product’s market value and competitor prices to justify your price increase.
2. Have a clear structure and plan. Be sure you raise fees high enough to avoid frequent fee hikes and loss of customer trust.
3. Add fees. For a temporary price increase, consider adding a fee to cover rising costs of products.
4. Offer price tiers or options. Give your customers options to pay what they want. Offer different levels of goods or services at tiered prices. For example, McDonald’s added a Dollar Menu & More in 2013 to provide more variety.
5. Pick the right time. Consider your business’s seasonality, growth stage and sales cycle.
6. Raise at intervals. Make the change gradual by raising prices in stages to see how customers react. For example, Starbucks raised its coffee prices three times within three years.
7. Give two months’ notice. Don’t surprise your customers. Instead, give them advance notice and time to fit the new price into their budgets.
8. Charge only new customers. Thank your long-standing customers and notify them of an increase that will occur at a later date.
9. Increase value. Justify your price increase by offering a better quality product, a new range of products, or added features. For example, Proactive uses phrases like “America’s #1 acne system just got better” to communicate the improved value of its products.
10. Be transparent and specific. Make sure your customers are informed and understand why the price increase is happening.
11. Explain your new pricing. Clarify to customers how this new pricing is for the product’s cost and value.
12. Have confidence. Don’t apologize for the increase; rather, emphasize the added value.