Let’s talk about raising your rates.
In 2008, my first public coaching offer was “two hours for $99”.
Just in case the coffee hasn’t kicked in yet, that’s $49.50 an hour. Minus transaction fees.
That’s less than a mid-range plumber in a small town.
Whatever service it is that you’re offering, the odds are pretty good that you’re charging too little.
Some of you are charging WAY too little. So little that nobody’s taking you seriously. This leads to a lack of clients. (Or a lack of good clients, which is sometimes worse.)
Others among you are charging a basically decent rate, but not enough to meet your branding or financial goals. Yes, technically, it’s an OK rate. But it doesn’t afford you the freedom opportunities you’re craving, and it sure as hell doesn’t make you look A-List.
We’re going to talk about fixing that today. You might be surprised by how simple the process is.
There are 3 parts to a rate increase.
Here they are, in order:
- What’s the point?
- Can you pull it off?
- To warn or not to warn?
First, what’s the point?
There are (generally) two reasons to raise your rates. Sometimes they cross over. Sometimes they don’t. Mine did. Yours may or may not.
You can raise your rates to:
a.) Make more money.
b.) Level up your brand.
Sometimes you don’t give a flying fandango about branding, you just want the cash.
Sometimes you’ll happily give up every cent you’re getting to just up-level your brand and get taken more seriously.
Sometimes it’s both. You want more cash AND a snazzier positioning in the marketplace.
You need to know why you want to raise your rates for soul reasons. It’s just important to know yourself and your motivations. If you don’t – if you’re just doing it because some business coach on Pinterest is making a stink about it – well, it’s not an empowered approach to business.
Then you’re the 23-year-old outside the nightclub, wearing a too-short dress and surrounded by frat boys, saying you just want a boyfriend already.
It’s not exactly an alpha move, you know?
Once you know why you’re doing this, move on to the next section.
Not sure which camp you’re in? I have an exercise for you.
Imagine getting really drunk in a dive bar and whining to somebody – me, perhaps – about what you reeeeeally want.
Are you drunkenly slurring that you just want to make some more ****ing money already because you have GOALS, DAMMIT?
Or are you crying into your tequila that you always believed you could be an A-Lister?
I admit, this may or may not help in answering the question, but it’s a fun exercise.
Next, can you pull it off?
The truth of the matter is, there is technically no upper limit to what your rate can be.
Your personal brand just has to be capable of pulling off the rate.
Have you ever seen one of those articles where they tell you that you can’t wear miniskirts after a certain age?
And it’s actually total BS, because it depends on about a billion factors, including but not limited to your legs, your personality, the occasion, and the skirt?
Rates are like that.
Certain people can pull off high rates.
Certain people can almost pull off high rates. (This is most people.)
Others are currently hopeless.
1. “Pretty much pulling it off” example!
Years ago, I think Scott Stratten was doing viral video consulting for $450 an hour or some such nonsense.
I thought about it.
And I’m not even a video person. I’ve made all of five videos in 10 years.
But I thought hard about it, because Scott can pull it off.
2. “Almost but not quite pulling it off” example!
Jon Loomer charges around $500 for an initial call about Facebook advertising, and I thought about that, too. I’m not even really on Facebook, but I thought about it. His content is VERY good, particularly his case studies, and I really felt like the money would be well spent.
However! I didn’t sign on because there didn’t seem to be a way to get in touch before I scheduled the appointment.
This was probably a deliberate move on his part to limit new clients and reduce random questions from internet flotsam and jetsam such as myself. On a level, it was a smart move. But for me, it seemed standoffish, and I couldn’t bring myself to drop five hundred bucks on that.
So he probably pulls off the rate for many, but he didn’t for me. If he had, I would have bought anyway. I would have grumbled, but I would have done it.
3. “Not even KINDA pulling it off” example!
Someone I knew in social media did a rebrand many years after I’d seen her last. I checked out her new site – nice, probably expensive, but fairly unexceptional – and she’d changed her focus and her direction.
I looked at her services page and saw she was charging $1000/hour but “unfortunately had a six month waitlist”.
I about spit out my yogurt laughing.
Sure, you do, honey.
Sorry, sweetheart. You’re just not a $1000 an hour girl.
She couldn’t even kinda pull it off.
4. “Pulling it off with bells on” example!
On the other hand, I’m getting boudoir photography for a price that I am not willing to even say out loud, let alone write down in black and white.
I’m paying an amount of money that makes me dizzy to have someone photograph me while mostly naked because… they pulled it off.
We’re not going to say any more about that because I’m starting to get uncomfortable.
So before your rate change, you need to think long and hard about whether you can pull off the new rate.
It’s different for every situation, but some factors to incorporate into your navel-gazing are:
- Are you getting clients now, at this rate?
- Is your rate currently WAY too low?
(If you’re not getting clients now and your rate is WAY too low, that might be why. It’s possible that your prices make you look like you’re running a lemonade stand, not a professional service business. If that’s your situation, close your inbox right now. Log in to WordPress, find on your services page, double the dollar figures, click Update, and see what happens. Give it 60-90 days. It’s not like you’ve got anything to lose.)
- Do you have an up-to-date website?
- Do you have up-to-date social media profiles?
- How’s your headshot? (Hot tip: A good, new headshot made 100% bigger than the current one can sometimes do more for branding than pretty much anything else. You’re welcome.)
- How are your last 10 pieces of content? Are they the best they can be? Would a complete stranger forward them to another complete stranger?
- Is there anything actively embarrassing about your web presence?
- How high is your proposed new rate, as compared to the old one? (If it’s less that 25% higher, you can probably just go ahead and make the change.)
- If you’re in a commoditized industry, or one that people pay for with insurance, what is everyone else charging? (Massage therapists can’t go much more than 20% above local norms. Executive coaches can basically add a zero if they want to. Bummer, I know.)
Take an honest look at these questions, and see where you stand.
Most of the issues are easy fixes, if you commit to them.
(If you’re finding yourself avoiding these easy fixes, reread the Upper Limit Problem post. If this is you, you need to deal with this. I say this as a person whose headshot was taken with an iPhone 4 on the way out to a bar. One step at a time.)
The last step is logistical. No pesky introspection required.
When you raise your rates, you have to choose between announcing it ahead of time, and just pulling the trigger and making the change.
There are pros and cons to each.
If you have a somewhat active client base and you announce your rate change ahead of time, you give existing and prospective clients the chance to lock in a few sessions at the old rate.
This can make you an absolute fortune.
It can also burn you out.
If you don’t announce the rate change, you can cull your client list and catch a bit of a break. Many of your current rate clients won’t come along for the ride, and you might be able to get yourself a bit of a breather.
So consider how you want to do it logistically.
Also consider if you want to grandfather old clients in at their original rates. For most of my career I’ve done this, and up until a couple of years ago, I didn’t regret it.
I’m in a weird spot.
I have some clients that are still with me who signed on in 2008.
That’s 9 years.
That’s a lot of years with no rate changes.
By a couple years ago, I had to work VERY hard to not resent that.
If I had to do it again, I’d do what I advise clients to do, which is to tether old clients to one rate change behind.
If they came on at $100/hour and you change your rate to $125, they keep paying $100.
Later, when you change your rate to $150 an hour, they bump up to $125.
That makes it so you never hate your clients, which would be bad for both your business and your digestive system.
See? Three steps.
Figure out why you’re doing this.
Check to see if you can pull it off.
Decide on the logistics of the change.
Then chill. Breathe in and breathe out.
Raising your rates is not nearly as dramatic as it feels.
I’ve had a lot of rates over the years.
I started charging less than a plumber.
I got caught up thinking I was a hotshot A-Lister and charged $550 for a while. (I did pull it off, inexplicably, but I was nauseous before every call. Real nauseous. Like, with puking.)
Eventually I settled to where I am now. I usually have a small waitlist, which means I could charge more and still keep a full book, but I like my prices at this level. They’re low enough that clients can buy the number of sessions they really need, not “the most they can afford”.
I get to work with people for as long as they want to, not for as long as they can afford to, and as a provider, that’s very rewarding.
You’ll have a lot of rates over the years. You’ll move them up. You’ll move them down. You’ll batch, and love it, or you’ll batch and exhaust yourself. You’ll give deals and feel regret, and you’ll give deals and feel awesome.
It’s never permanent, and it’s never as scary as it seems.
Next up… the 2 words I use to get clients.
When you’re done here, go check out The 1-Question Clarity Call, in which I tell you the simple, 2-word question that has been responsible for almost all of the money I’ve ever made from client work.
So go check that out, and if you’d like more posts like these delivered straight to your inbox, click here to get on the IttyBiz Newsletter. (It’s free, and I’ll never raise the rates.)