NFIB

Time to Raise Your Fees?
08/ 06/ 2002

by Jeffrey Moses

To determine if it's time to raise your fees, ask yourself the following questions:

1. Has it been two years or more since you raised your rates?
2. Do you feel that your skills have increased appreciably?
3. Have you taken advanced training of any type in your field?
4. Do people comment that your rates are low?
5. Do you have more business than you can handle?
6. Are others in your field with comparable experience charging more?

Answering "yes" to any of these may indicate that you have ample reason to raise your fees.

When discussing a raise in rates with customers, your attitude is all-important. Don't bring up the subject hesitantly or apologetically. Instead, be firm in the surety that you are worth every penny of what you'll be asking.

Always give your customers advance notice of increases--usually a month or more. If the thought of notifying customers about an increase makes you uncomfortable, bring up the subject at an appropriate time during a conversation that has focused on other issues. Perhaps at the end of a talk you could say, "I'd like to speak with you about one other thing. It's been over three years since I've raised my rates, but as you know, prices are always going up. It's time for me now, and I want to give you advanced notice so your budgeting won't be affected."

Normally, rate increases are from 10 to 15 percent. Larger increases may seem exorbitant to customers (although if you've received training that greatly increases your value, you may want to ask for increases up to 25 percent). Seldom will a 10-15 percent increase result in a customer deciding to do business with another provider.

Raise your rates in customary, understandable increments. If you currently charge $55 per hour, for example, raising your rates 15 percent would put you at $63.25. This is an unusual figure, so you might want to round it up to $65. Rounding down to $60 would result in an actual increase of 9 percent--slightly on the low side for a raise by a service provider, but still worthwhile.

If you feel that a customer might negotiate a rate increase with you, start with a slightly higher figure than you really want. If youÆre aiming for a 15 percent increase, tell the customer you are raising your rates from $55 to $65 an hour--an increase of about 18 percent. When the customer counters, you might settle on $62.50 or $63.50, which is right in line with your real goal.

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