How to Communicate to Clients a Rate Increase?

Do you want to communicate with your existing clients that you are charging a lot more to new clients, and now it is time for them to increase the rates?

I know communicating the same can be challenging. More so for someone if they haven’t done it for a while with a client. They find that the rate they are offering to new clients and the older one has a considerable difference.

I have been the same culprit when I was working for clients at $25 per hour.

However, I was getting more work than I could handle, so I increased the rates for new clients by $5. I was at $40 for new clients in a short time, but two to three of my old clients were still paying me at the rate of $25 per hour.

I asked one of the clients to increase the rates from $25 to $40, and I lost the client.

So for the other clients, I wasn’t increasing the rates. The reason being I wasn’t ready to take the risk of losing them.

Then I did something different from these clients, and they readily accepted the rate increase.

Let me help you as to what I did to help you communicate to clients the rate increase.

Increase The Rate Slowly

The first and the most crucial aspect of increasing the rates to existing clients is to increase the price in small tranches.

Like for example, in my case, I didn’t increase the price for existing clients from $25 for a long-time. However, for new clients, it was done in small amounts of $30, then for some more new clients, $35 and so on.

However, for existing clients, if you want an increase of 60% from what they are paying currently, it can be challenging for them to accept.

Ideally, I could have asked the client for a raise to $30 instead of directly asking for $40. It may have been a better choice.

Out of the three clients, this is what I did for my other two clients.

So when I lost my client when I increased the rate from $25 to $40. I wanted to go slow with my other clients, who were paying me at $25.

So for one of the clients, I told them my new rates but offered them $30. Clients readily accepted it.

I am still working for the same client at $40, whereas for new clients, my hourly rate is $55.

I increase the rates slowly for existing clients, and it works well for me.

The Right Time

One of the essential aspects of communicating to existing clients about rate increase is to do it at the right time.

By the right time, I don’t mean when you have too much work coming from the client that you should do the rate increase. Nor does it have to be when there is not much work from the client.

I mean, you should do it at the time of the new year or even at an interval when you and your client’s relationship has crossed a benchmark.

It is imperative to choose the right time to increase the rates. Otherwise, it can be tough to communicate the same.

Even when you are doing a rate increase at the right time, it is essential to provide the client with an ample amount of time to accept the new normal. It is a crucial aspect of communicating the rate increase.

Give Time Before the New Rates Kick In

Even when it is the right time for you to increase rates, you should give your clients ample time to adjust to the new normal. When you are in a good business relationship with a long-term client, you don’t want to surprise them.

For example, you can let them know about the new rates you want the client to pay after 90 days or even 180 days. I think a 90 Day time is the bare minimum.

Moreover, it will make sure you have a lot more work at the client’s lower rates. Later, they can have a pause before the new rates kick in.

I have seen it happen time and again with me. When I give them ample time before an increase in rates, clients often plan a lot more work with me before the new rates kick in. I am not sure if it is the case with developers only or generally with freelancers, but often clients have plans for their site, and a rate increase is a way to get it done now than later when it can cost a lot more.

Communicate Rightly

Clients don’t care why you are increasing your rates but what they care about is how well you have been a great asset.

It would be best to share how and why you are an asset to the relationship and build their business. Be Confident.

In communication, you shouldn’t use the words like “I think I should raise the rates.” You aren’t asking client’s permission, but you are asking them to pay more. So it would be best if you said like this is my new rates.

However, you shouldn’t sound too arrogant either or sound like they can’t pay what you ask, then screw them.

There is a thin line between being rude and confident, and you have to make sure you aren’t being rude but still sound confident enough.

Remind them how you are a problem solver for the client and how you help them bring in more business. It is the right way to communicate with the clients about the rate increase. Moreover, it has a higher probability that your rate increase will not make the client mad at you.

Provide them a Discount

Offer them a discount rate instead of your market rate that you are asking for new clients. You are in a long-term professional relationship with the clients, so you need to make sure that you offer them premium services and discounts to keep them doing business with you.

So if you ask for the market rates for new clients, the existing clients who have helped you managed to build and grow your online profile deserve a discount for sure.

Whenever I am increasing my rates for existing clients, I always offer them a price lower than what I charge my new clients. Moreover, I still think I am too slow in increasing the rates to existing clients, but I also make sure that increased rates are part of the business.

My clients pay me well, and I am passionate about working for them as well. I work as if they are my sites and often do things that are right for their business. They can sense that because I don’t like to speak it but show it with my actions.

So, the rate becomes secondary in the process. Moreover, if I offer a discount, they will grab it with both hands.

Be Open to Clients Negotiation

No matter how well you communicate to clients a rate increase, it doesn’t mean clients won’t negotiate.

So one should be prepared for client negotiation. Negotiation is part and parcel of any professional relationship, and so you should be prepared for it.

You are offering clients ample time, but they may negotiate a project instead of a timeline.

You offer clients a discount, but they may want to get more discount for more works from you.

Whatever it is, be prepared for negotiation from clients. Again, the idea is you shouldn’t be too rigid on raising the rates. What is more important is to make a lot more money doing what you love.

The Email Template

I always like to communicate the raise in a Skype call. However, if you prefer email, here is the template to use.

Still, when I am doing a Skype call, I use the same wording. I don’t read the email on call, but I like to keep the pointers the same.

Now that we know what all things one should include in detail when

Hi X,

We have been doing business for X long years and it is pleasure working for you and your company. I really hope your business is growing as you expect.

My hourly rate for services I offer to you is $X and I haven’t increased the rates for you since X. However, for new clients my hourly rate is $X. You can check out my Upwork profile for hourly rates I charge new clients.

I’ve been resisting change to our rate because I don’t like to be raising the rates too often. You know how I work and provide services that can help your business grow.

Still, I think, as a long term client, you don’t need to pay $X per hour. However, will prefer if you move from $X to $X. Moreover, I will not make the increase in rates instant and we will continue to work at the $X rates for another 90days.

If you have any queries regarding this change then please don’t hesitate to contact me.

Thank you once again for great professional and personal relationship we’ve built over the last few years. I like to thank you once again for the opportunity you have given me to work on some exciting projects.

Thanks,
X

The above email can be used as a script. The essential section is

As a long term client, you don’t need to pay $X per hour but will prefer if you move from $X to $X. Moreover, I will not make the increase in rates instant and we will continue to work at the $X rates for another 90days.

In this one statement, you are increasing and offering them discounts and giving them time to adjust to the new normal.

Final Thoughts

Remember, you don’t need to justify a price rise in your communication to clients for increasing the rates. It is part and parcel of any business, and freelancing is no different. In the process, you are bound to lose some clients as well. The clients who are not ready to accept a price change aren’t worth investing your time either.