Price Increases – How to Raise Your Rates to Clients

Attempting a price increase on your hourly rate is a tricky situation.

My dad, a long-time car wash owner, says, “Price is your throttle on the amount of customers you have. If you have more customers than you can handle, do a price increase.”

So if you have too many customers, congrats, business is probably good. This is a good problem to have, let’s be sure to celebrate the stress of “too much work.”

Price Increase: Three Examples.

Consider a price increase under these circumstances:

  • When you have too much work (previously mentioned).
  • When you have a client you want to get rid of. (Raise their rates.)
  • When you want to work less, raise your rate by 20% and lose 10% of your business, freeing up time for marketing or other tasks to grow your business.

There are two options for a price increase:

  • Raising Rates On New Customers.
  • Raising Rates On Existing Customers.

Price Increase on New Customers

This is easy; try a price increase of 20% on the next call with a potential lead. If you’re not losing 25% of your sales leads because of your price, then you’re too cheap. Increase your rates until you’re losing sales.

Price Increase On Existing Customers

This is the tougher one. Often times clients expect a discount because they’re bringing you “more business.” And they have a point, so the first thing you do have to ask yourself is, “Do I really need to raise my rates, and is it a good idea?”

Most businesses live on repeat business, so you don’t want to alienate those customers. So why and when should you execute a price increase? Read on.

Ilise of Marketing Mentor and author of “The Creative Professional’s Guide to Money,” says, “Never tell a client by email you’re raising your rates. This conversation requires that you speak with them in real time, on the phone or in person, so you can be there for their reaction and respond accordingly. Also, be sure to give them a reason for the price increase.”

Perhaps you have too many clients to meet with. Maybe you have hundreds of customers and email is the only feasible way to communicate.

Daniel, of, gives an example email template to use.

Hi there. First, I wanted to thank you for being such a great customer. I really value your business.

I also need to be able to keep my own business running, so I want to explain my new pricing.

New customers pay 2x (or whatever) more than you do, but since you’re always so good to work with, I’m offering you a 40% discount. In plain English, means 10% more than what you’re paying now–but 40% less than new customers are paying.

I know your business, I know what works, and you’ve seen proven results from my company that prove our value.

As always, you and your business are important to me, so if you have an issue with this, please email or call me and let’s discuss it.”Daniel Will-Harris
Designer and writer, at

Notice that Daniel gives them a clear reason for the price increase. He’s open to a phone call to discuss this as well. He also notes to the customer that he has past experience with their projects. He acknowledges that changing to a new vendor would be difficult.

To attempt a price increase you must be okay with losing potential customers or even missing out on the return business from a long-time customer.

Before you take action, ask yourself if you have too many customers, or a problem customer, or if you want fewer customers. Then make your decision and stick with it.

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