How to announce a fee increase to clients without losing them (the 10 Dos!)
Are you holding back when raising your prices because you’re afraid of losing clients? While it’s natural to be worried that a price increase may cost you clients, that doesn’t have to be the case. How you handle the communication is actually what determines the difference between whether you keep a client or lose them, not increasing your rates, so here is how to announce a fee increase to clients the right way.
The 10 Dos when announcing a fee increase
Thank your clients
Before approaching the subject of increasing your fees, always, always say thank you to your clients first. Show them how much you value their business, sincerely express your appreciation with the risk they took on you and how they have been a key factor for the growth and success of your practice. If your clients feel valued, they are much more likely to be understanding when you move on to talking about your price increase.
Explain your costs
When thinking about how to announce a fee increase to clients, always bear in mind that honesty is the best policy. Don’t put it off or try to hide it, explain to them up front about why you need to increase your prices and focus on what they stand to gain from this increase. The aim of this conversation is to help them understand why you are asking for money and why your product or service is worth more now than when they started with you.
Add features to offer a better product/service
When you announce your fee increase to clients, highlight how it benefits them as much as possible. The more value added for them, the sweeter the deal and the more understanding they are likely to be. Consider what you can add to your product/service that doesn’t hurt your profit margin but makes a big impression on your client, such as additional support, increased availability, shorter turnaround or advisory annual strategic forward-planning meetings to discuss their business performance and goals.
Demonstrate your value
If you’re thinking a lot about how to announce a fee increase to clients without losing them, the first thing that you always have to do is to make sure that you are over-delivering first. If you’re providing incredible value and your client is really impressed with your work, then communicating a price increase will be much easier for them to swallow. As a rule of thumb, the first 100 days is the ideal amount of time that you can demonstrate your value.
Offer them an alternative
You want your conversation about your fee increase to be focused on value rather than price, so give your clients two options: a new higher-tier plan with the additional features and level of service that you mentioned OR a second, lesser-priced option which is a little less expensive than what they currently pay but it covers the bare minimum of what they need. By giving your clients this choice, it highlights that your prices reflect the value that you bring.
Set a deadline
Springing a price increase on clients without any notice is not good practice and may result in you losing clients, so always plan to set a deadline for the change. Communicate this deadline to clients and offer them one last chance to buy your higher-tier plan before you raise your prices. Many would be happy to take advantage of this ‘deal’ plus it allows you to demonstrate the value of the new package and it gives you a nice bump in revenue from multiple early upgrades.
Have a conversation
If you have the opportunity, always try to have a face-to-face conversation with your clients about your pricing. This might not be the way that you want to announce increasing your fees to your clients but it allows you to be aware of their reaction and respond to their concerns in real time. Money can always be an awkward topic, so try to approach it as a conversation rather than a confrontation and follow up the discussion with an email or letter outlining your new rate sheet and the additional benefits.
Pre-plan for hard questions
If you know your key reasons for a price rise and you can demonstrate the extra value that your clients will get, communicating your price rise shouldn’t be a problem. However, if we’re talking about how to announce a fee increase to clients successfully, then you need to plan for the clients who will be resistant to this change. Put yourself in your client’s shoes, come up with a list of concerns that they may have, and prepare answers to these potential questions.
You need to be setting expectations with existing clients right after a ‘win’ by informing them that you will be raising your prices after a certain amount of time. This immediately sets your client’s expectations to expect a discussion not too far in the distant future, so be confident from the get-go and never apologise to the client for the price rise! Clients understand that increasing rates are standard business process, so when you announce your fee increase, take control of the situation and make sure that they know that you’re not here to negotiate.
Before raising your prices, make sure you have considered both your current costs AND any cost increases that are likely to happen in the next year or two. You don’t want to go through this awkward process of increasing your rates only to find that 3 months down the line, you need to do it all over again, so always plan ahead and consider the market too.
Don’t be afraid to increase your fees
When thinking about how to announce a fee increase to your clients, don’t hold back for fear of losing clients. If you use these 10 tips when communicating an increase, you can be sure to keep your most loyal clients, who helped get your practice off the ground, happy as well as attracting new clients that will help you grow to the next level.