To start, here’s a little price increase notice sample. I then follow it up with 6 ways to how to tell clients you’re raising your prices below:
Dear John (your client’s name is John, right?);
How are you doing? We used to be so close. Lately there’s been some distance between us; I just want to make sure that, from your end, everything is still good.
I mean, the work we’ve done together has been nothing short of terrific. I’m so grateful for the opportunity to work with you and your team! The challenges that your assignments provide have kept me at the top of my game; and you have always been appreciative of my team’s long hours, late nights, and responsiveness to last minute changes. What we have together has been beautiful!
And yet, recently I’ve been feeling…well…different about us. You see, I’ve started with a number of new clients (no one like you!) and the thing is, they are paying me a much higher rate. The experience I’ve gained over the last few years is being recognized by others. Plus, we’ve upgraded all our computers, hired some really top notch people, and the work we’ve been turning out shows it. (Haven’t you noticed?) I’m proud of how we’ve grown, and how much more value we deliver today.
So. What I’m trying to say is…we’ve changed. But our relationship with you hasn’t.
I’m not saying I want this to end — but it can’t stay the same. Just think back to the work we did in the beginning and compare that to the work we’re doing today — you can see the difference right? We’re way better at what we do, and besides that, who knows you like we do? All of that is valuable.
I know that this may be coming as a surprise to you; it is kind of sudden. So I want to give you a chance to get used to it. We are increasing our prices to $XX for any new projects starting after 9/1. That gives you a few months to plan ahead. I know you may have budgeted the rest of the year at our old rates, so I will accept new orders for work to be delivered before 12/31 but only if they are paid in full before 9/1. This will enable us to finish any planned work for this year without busting your budget.
Outside of these exceptions, we will be charging our new rates going forward. If you don’t feel that you are getting a good value at that rate, let us know and we’ll be happy to help you find someone who might be able to meet your budget restrictions.
I really hope this price increase doesn’t come between us. A higher price reflects our higher value, as well as our commitment to maximize that value — so that we can bring the best service to great clients like you.
Your service provider
6 things to keep in mind when you send a price increase notice
Ok. Maybe you don’t want your price increase notice to look quite like that. In fact, you might not want to write a price increase notice at all. I prefer to deliver this kind of news in person, and then follow up with something in writing. Still, let’s look at what that letter did well, and what you might want to do a little differently.
1. Check in on the work you have been doing.
Before you talk about the prices, you need to check to see that there aren’t any unresolved issues in your relationship. Ask them point blank: “Is the work what you are expecting? Do you feel that you are getting a good value for what you are paying us?” If there are any issues, they will come up when you start talking about price, so put those to bed first.
2. Recognize the value you have been creating for them.
You have been doing some great work, right? Be prepared to remind your client about that. It’s easy for the client to get into a “What have you done for me lately?” mode. It’s OK to remind them about some of your accomplishments, and the way your services have progressed, so that they remember. Also, be prepared with a list of ways that you’ve upgraded your offering to them, new people, better technology, better service. You are offering more value — you need to be prepared to show it.
3. Let them know that others have been paying these new rates.
Your price increase isn’t arbitrary. You started by first raising your prices with new clients. That establishes that there is a market for your services at that price. You are not here to negotiate — you are here to inform them that this is your new rate. The fact that others are paying it makes it more real (to you and to them).
4. Easy does it.
This is going to come as a shock to them — so give them some time to get used to it. Set the date that the new rate goes into effect months into the future. Give them time to finish up any work you’ve already started. Recognize that you might be messing up their budgets; so if they have things pre-planned, find a way to accommodate them. Letting folks pre-pay at the old rates can be a great way to do that. It insures that you get to do the work (and that you don’t have to wait to get paid) and gives them a way to stay within their budget.
5. Put a firm end date on it.
But even these accommodations have to end at some point. After that, it’s all at the new rate. You’ve given them time to plan — and yes — shop around if that’s what they are going to do. Now it’s time to get paid.
6. Don’t apologize.
You aren’t sorry. You are proud, you are confident, you are sure that your work is worth this. You’ve been letting them get it for less for a while. It’s time for them to pay you what you are worth.
When you send out a price increase notice, raising your prices doesn’t mean that you have to break up with your old clients (though some will leave) but you do need to reestablish your value and the relationship. I know it seems daunting, but it will be worth it when you start getting paid that higher rate!
Photo credit: Death to Stock Photo, christophe mallet