14/02/2025
How To Raise Your Fees -- There is a delicate balance between the fee you need/want to charge for your products and services and the fee your clients are willing to pay. With your business costs rising, there comes a time when you must raise your rates to remain profitable.
In addition, as your skill, knowledge and experience levels grow, you become more valuable to your clients and can ask for higher fees.
With proper communication to clients, you should be able to raise your fees effortlessly.
Here are 10 tips on how to raise your fees:
1. Don’t let fear and limiting beliefs stop you from raising your fees. If you hear yourself making excuses that you know are not true, your fears and limiting beliefs are raising their ugly head. Some of these include, “My clients will be angry with me and leave if I raise my rates,” or “I’m not worth the new rate.” What makes you uncomfortable about raising your fees? What’s held you back from taking the plunge?
2. Have a clear idea of where your break-even point is for profitability. Start with the bottom line: how much do you need to make to reach your revenue goals? But it’s not just about what you need to make, it’s also about what you want to make. There are two revenue goals for every business owner: 1. How much money you want to bring into your personal life from your business and 2. How much cash flow you need in your business to float new ventures. Think big; don’t keep cutting your goals just because you feel uncomfortable with big numbers.
3. Base your fees on the worth of the results your client receives. For example, as a small business coach and consultant, I help people increase profitability and think strategically about their business operations. This has high value to self-employed small business owners, and my fees are based on that value. If you can solve their problems, and if the problem is important enough to solve, then they’ll pay you an appropriate fee for that solution. (Hint: it’s not just that you can solve their problems and help them achieve their goals — it’s the experience they’ll have working with you that’s valuable, too.)
4. Base your fees for services on your level of expertise. If your expertise level is high, if you’ve put in many years of study and experience, you’ll be able to charge higher fees than someone just starting out. Because of this, you might consider raising your fees annually as your skill level grows.
5. Check your competitors. Are there people out there, with your same skill level, charging more than you do? Are they overcharging — or are you undercharging? If your clients typically see rates for similar services and products that are higher than yours, they may wonder why your fees are so cheap. Many people equate price with quality.
6. Do they see your product or service as a “commodity?” A commodity is a product or service that is the same, regardless of who is offering it. If you’re selling a gallon of milk, it’s the same gallon of milk that your competitors sell. In commodity pricing, there’s no room for differentiation in the customer’s minds, and he will be looking for the lowest price. So if you have a class called, “Copywriting 101” and your competitor has a class called, “Introduction to Copywriting,” your customers will see these two classes as equal — a commodity — therefore price becomes the only differentiating factor. However, if your class is unique or better or different than theirs, or your knowledge level is more robust, or if you can make learning interesting and engaging, then you can charge more. (You’d pay more for Oprah Winfrey to teach you how to create your own TV show empire than someone you’ve never heard of, right?) Bargain basement prices often scare off potential customers because they think your product or service is a commodity they can find anywhere. Use smart marketing, branding and copywriting to differentiate yourself from your competitors.
7. Decide in advance whether you’ll raise fees across the board for everyone, or only for new customers. You may have existing clients where you can’t raise them until the contract expires. You might decide to raise rates for new clients starting today and give existing clients a future deadline when rates will increase. Make a strategic decision about when you’ll raise your fees and for whom.
8. If you will be raising your fees with existing customers, it’s a good idea to call them or write an email, explaining that the fees will be going up to the new rate. Give them a date when this will begin. I recommend giving them at least a two-month notice. Will you lose some customers who aren’t willing to pay the higher rate? Yes. But if you do, then you need to ask yourself, “Why hasn’t this customer found value in what I’m offering so that the new rate was still acceptable to them?” (When writing or calling existing clients, remind them of the work you’ve done together and the results they got.)
9. Do the 80/20 evaluation. Find the 20% of your customers (or customer audience types) who bring you the least profit and either raise their rates or get rid of them. This may sound harsh, but you’re in business to make a profit and you can’t carry an unprofitable customer just because you like them. Refer them out to someone who can serve them at the fee the customer is willing to pay. Look to the 80% of customers who bring you the most profit (and who you most enjoy serving) and ask yourself: How can I find more customers like this who are willing to pay my fees and want to work with someone like me?
10. Set your fees based on access to you. Private 1-on-1 clients get the highest rate. People signing up for classes where you’re teaching live or mastermind groups where you are the facilitator are the next highest rate. Small self-study programs with no access to you get a lower rate.
This is the perfect time of year to look at your pricing model and make changes. Take a few hours and decide on your new fee structure, dates for the change-over, and communication avenues.
