How to increase your fee so your client still feels valued
I am often asked by clients, friends and colleagues what the best way is to increase their fee, without alienating or losing the client. There is no easy way to increase your fee, especially if you charge an hourly rate or a standard fee for service, and it is obvious to your client that you have increased it!
My recommended way - and this does depend a bit on the type of business you have and your relationships with your clients - is to send your client an email or a letter spelling out that the fee is increasing, by how much, when it takes effect, and why you are increasing it. Then, depending on the client (and this includes how many clients you have, how much business they give you and your personal relationship with them), follow up with a phone call, or raise the subject when you next meet with them.
Below is an excerpt of an email I sent to a client a little while ago:
Given the increase in costs I have had over the last 12 months, I have unfortunately had to increase my fees. You will be aware that this is my first fee increase in over two years. Please be advised that my hourly rate for [your company] is now $xx per hour plus GST. This will take effect from [date - at least one month or one billing period from the date of correspondence]. Thank you again for your support over the last year. I look forward to continuing to work with you.
My client’s immediate reply was: No problem you are still worth every cent! And thanks again for all your glorious work 
However if that hadn’t been the reply, and if my client had complained, I would have sat down with my client and reminded him of the value I provided to his business (with actual outcomes).
This blog post has been prompted by an email I received this morning that has left a nasty taste in my mouth. It was a somewhat abrupt email from the accountant of a person I engage on a regular basis to provide a service (and no, I’m not going to name names, because despite the execution, this person is also a friend). Given the nature of our relationship, combined with our regular communication (I am in regular email, twitter and phone coversation with this person) I was a bit shocked. I was also disappointed, for the following reasons:
- the email came from the accountant and said that if I had any concerns I should talk to the accountant, not the owner of the company, who is also the person I have the relationship with
- it was a group email (fine) but all the recipients were listed in the TO box (not fine) without any of us being BCC’d – I have major issues with this from a privacy perspective
- there were only 9 of us – why not email us individually or discuss in person or, better yet, send the email from the business owner.
I fully understand that business needs to increase fees over time, and I have no problem with that. But what gets me is the execution. It’s making me feel that my business, and my money, isn’t valued.
I’d love to hear how you inform clients of a fee increase. Or if you have had particularly good – or bad – experiences.
This entry was posted on Wednesday, May 19th, 2010 at 3:01 pm and is filed under communication. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
8 Responses to “How to increase your fee so your client still feels valued”
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May 19th, 2010 at 3:29 pm
Great article and advice Mel.
I am currently undertaking a rate review and will be contacting my clients personally as you suggested. I agree this is the best way to handle this issue and if you remain personal and professional then clients will respect the decision.
This will be my first rate rise in over 2 years of business so fingers crossed all goes well! Will let you know.
Jodi
May 19th, 2010 at 3:33 pm
Thanks Jodi. Good luck! Don’t forget to focus on the value that you provide your clients. And that’s it’s your first rate rise in 2 years.
May 19th, 2010 at 4:40 pm
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May 19th, 2010 at 4:44 pm
Good topic.
I review at the beginning of each year, I have a variety of services so not all fees change every year. And feel it still comes back to value offered, your relationship with your clients and how you communicate the upcoming changes.
Ensha
June 6th, 2010 at 12:48 pm
Hi Mel,
I encourage my clients to have a small annual rise, typically around 30th June.
I suggest an alert is placed on the invoice about 3 months before it happens, so they have time to get in quick while the prices are low.
I hate group “To” emails.
It is so unprofessional!
September 22nd, 2010 at 12:41 pm
Thanks Mel.
Great article, but my recent experiences have been how maintain, not increase, fee levels. Clients are challenging us to provide the same high quality service and match lower priced alternatives. Using the integrity and relationship approach I demonstrate to clients other value measures and invite them to adjust our service scope and level – ‘what would you like us not to do?’
Its a tough market, but fortunately I find most appreciate true value when they see it.
Stephen
January 6th, 2011 at 9:36 pm
Great advice Mel. It’s a sticky subject for most of us, but eventually, every business must raise prices due to our natural inflationary economic system if nothing else.
In my business, as we are still growing, I’m finding that i can often add value along with a price increase, where both parties benefit; My client gets more value, and i get more money.
Look forward to more gems on your blog!
January 7th, 2011 at 10:30 am
Thanks Mathew. I agree adding value is the way to go – and the way to sustain price increases.
Will be trying to blog more in 2011.