It’s right around this time of the year when firms send out a customary announcement informing their clients that their rates will be increasing in the New Year. The process can be stressful for those who fear that their clients will react negatively and switch providers, but it is less so when you take a moment to think about the more likely outcome.
For your prospects, your new rate will be taken at face value. They have no expectation of your prior fees, so even if you recently decided to take a significant jump upward, you will find them amenable as long as you are in line with the marketplace. As for existing clients, keep your announcement brief and free of apology. (You have nothing to apologize for, you are running a business.) Include a sentence that explains why you are increasing or adjusting your rates. As appropriate, emphasize value-adds to the client (e.g., new capabilities, technologies, or some other change that benefits them). These reasons are more palatable than citing general market inflation or the firm’s increased costs. Also, do not send your communication to your most significant clients without setting their expectations. If they engage you for high-volume work an increased billable rate will amount to a meaningful sum for them, so pick up the phone and talk them through the news. If their reaction is concerning, work toward a compromise to keep them happy.
Make no mistake, regardless of whether your client is a small business or a major institution, they will be momentarily perturbed to learn that the exact same services they engaged last year now cost more money. But it is highly unlikely that any of them will fire you as a result of this exercise. If you think back, you’ll recall that you’ve almost never lost a client (that you didn’t want to lose) after a reasonable fee increase. While the occasional super-rate-sensitive client may balk and switch to a lower-cost alternative, you’ll probably only be relieved to see them go. Either way, your new rate will bolster your profit margin.
As you take these various elements into consideration, you will become more comfortable with the idea of communicating (and collecting) your new rate. Before long, you’ll be looking to the next billable horizon and go through this exercise all over again. In the meantime, you’ll have a much easier communication to send to your clients: your annual holiday card.
Authored by David Ackert