As an entrepreneur you are in charge of setting your rates and deciding when you get a raise in your income.
The challenge for some of us can be, how do we communicate fee increases to our clients? And what do we do if fear or uncertainty is holding us back?
Firstly, know that you are worth a fee increase, and you should be implementing one every year. At the very least, to cover cost of living and inflation, but chances are that the longer you are in private practice, the more skilled you are becoming and the more training you are receiving.
Fee increases aren’t just extra padding to your personal pocket – they also cover taxes, business expenses, professional development, and savings. You can be sure that most of your clients are getting at least a small increase in their wages each year, so it’s only fair that you do too.
You should consider increasing your rates on a couple of different occasions.
Firstly, anytime your practice is full and you are starting to need a waitlist. This is a good indicator that demand for your services is high, and you are doing something right. A fee increase at a time like this helps manage the number of new clients coming into your practice, and serves as a bonus for you for all of the hard work you are doing.
Secondly, many practitioners raise their rates once a year, just to cover cost of living increases and general inflation.
In my practice, I have consistently raised my rates each year by about $10 or $15. When deciding how much to raise your rates by, consider what you feel your services are worth, what you would feel happy earning, whether you are currently earning enough income to cover your monthly expenses (including personal expenses, business expenses, taxes, and savings), and what a fair or reasonable rate for your area is. By no means do you need to charge what everyone else is charging, especially if your practice is very full, but you don’t want to raise your rates too high, too quickly and outprice yourself in your current market.
Once you have decided that it’s time for a rate increase, and how much you are going to increase your rates by, there are two things to consider.
One, is how and when to increase your rates for new clients, and the other, is how you are going to implement the rate increase for your current clients.
New clients are easy! You can raise your rates immediately simply by reflecting the new rate in your marketing and consent form and communicating it to all new clients. There is no reason to wait to raise your rates for new clients once you’ve decided to do so. This can be done any time of year, and does not need to be done at the same time that you raise your rates for current clients. In my practice, I typically raise my rates in August, just before I get a big influx in September, but you do whatever works for you!
As for current clients, this is where I get the most questions.
What if my current clients can’t afford the rate increase?
What if I lose clients?
What if people get upset with me?
Here’s the thing, there is no reason to lose clients over a rate increase. You can be flexible about it, and address the needs of specific clients.
Here’s what I do in my practice:
1. Give Notice
For current clients, I have always raised my rates on January 1st. 60 – 90 days ahead of time (usually in October), I send an email to my clients letting them know what the rate increase is and when it will come into effect.
2. No Need to Explain Yourself
I recommend avoiding explanations. I’ve had colleagues and mentorship clients who felt the need to explain the rate increase, such as to cover the cost of training, or due to rising business expenses, etc. Although you may feel like you need to justify yourself, you don’t. This typically comes across as uncertain or inauthentic to your clients and doesn’t usually have the impact you intend or it to.
There is no need to explain yourself. Simply state that your rates are increasing, and say what they are. You can be kind, warm, and compassionate of course. Thank your clients for their commitment to your services and let them know how much you enjoy being a part of their journey (or however you want to say it!), this will land much more authentically than trying to explain your reasons.
3. Be Flexible
There is no need to take a hard and fast stance around your rate increase, unless of course you choose to do so. When I email my clients, I tell them that if the new rate will cause any financial hardship, to please contact me and we will discuss it.
This typically happens with about 1 out of every 10 clients or so. In that case, I will have a brief discussion with them about their financial situation and the majority of the time I will make an exception for them for either 6 months or 1 year. Depending on their situation, we may decide on a grace period whereby after that time, they will shift to the new rate.
If you don’t want to lose a client due to a rate increase, then you don’t have to. Simply “grandfather” them in at the old rate until and unless their financial situation changes.
4. Follow Up
In the next session, follow up in person with each of your clients and ask them if they received the email about the rate increase and whether they have any questions. This is their opportunity to inform you whether it’s an issue, or that they’ve received it. In my experience, most clients are very understanding and it is rarely an issue.
p.s. If you need support with your private practice, please schedule a free Business Mentorship Consultation.