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Location

Legal

Personnel Management

Risk Management

Insurance

Business Success Tips

Sample Documents

Checklists

Contributing Authors

	Stephanie Chandler Author of The Business Startup Checklist & Planning Guide
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	Steven D. Strauss Author of The Small Business Bible
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	Joe Kennedy Author of The Small Business Owner's Manual
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	Tom Severance Author of Business Start-Up Guide
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Pricing

A problem for many small, home-based businesses is that they set their

prices when they first open their doors and fail to raise them, ever.

Afraid they will drive away customers, these businesspeople get stuck

in time, charging and getting paid amounts that are years out of date.

So how do you raise prices, earn what you are worth, and not lose customers

in the process? There are several steps to take.

Step one: Decide upon a reasonable amount. If it has been a while

since you have raised your rates, you may be a bit out of touch with

what the market will bear. What do your competitors charge? That

is a good place to start. Like Goldilocks, you do not want to be too

hot or too cold. You want to be just right (unless what you offer is

qualitatively different). Decide upon an amount you think is fair

and reasonable.

Step two: Give clients reasonable notice. Whether you intend to

raise your rates $10 an hour, or 25 percent, or whatever, you need

to give your clients advance warning so that it is not a shock and is

something for which they can plan.

When you tell them, be businesslike. Do not apologize, and

don’t explain. Confidence is key. People raise their rates; that is a

fact of business. You are good at what you do, and you deserve to

raise your rates, too. Be sure that you tell clients your new rates are

in line with the norm in the industry. If you do feel the urge to explain

the rate hike, you can always say, for instance, “My fees are

still reasonable, and I have not raised them in years. I have to keep

up with my overhead,” or “I decided that I need to raise my rates

10 percent every other year.”

Step three: Test (optional). If raising your rates makes you nervous

and concerned that you will lose clients, consider trying it out

on a few clients for starters. Discover their reaction. If it works,

then roll out fee increases across the board. If not, retreat!

Step four: Handle resistance. Clients who voice their displeasure

will need a little extra TLC. Explain how much you do for them and

how much extra you do that is gratis. Make sure they understand

that your new fees are not out of line, and anyway, if they switched

to someone new it would require time and training, and that would

eat up any savings they might get. Reiterate all that you do. Explain

that you dislike raising your rates but really have no choice and that

based on your longstanding working relationship, you hope they

will understand. If they still balk, consider giving them a perk,

maybe another 60 days at the old price. That might work.