Focus.com question from March 20, 2012: “What is the best way to communicate to clients that you are raising your rates?
I am about to raise our rates and I am wondering if anyone can lend some advice to do’s, don’ts, best practices or any other techniques that might be handy.
Additionally I have a few clients that I give a discounted rate to that are aware of it. I would like to do away with this discounted rate but would also don’t want them to feel offended or that they are any less of client. Any advice on how to handle this?
Lastly in addition to actually using this advice I will be writing about this subject for a well read online technology magazine. If there are any experts out that can chime in on this topic I would gladly quote you for the article and link to your website. The blog is a PR8 site so the link is well worth it,
Response from Tim Giebelhaus:
Assuming you are raising your rates because your costs have gone up, I would be honest with the clients. The clients do understand you have to make profit to stay in business and, if they value your service, they want you to stay in business. If, on the other hand, they believe they are being gouged, then they will look to another provider, even if there is not a significant savings.
While you want to be somewhat transparent as to your costs, be careful not to give too much detail or you’ll find some customers wanting to trim your budget in areas that don’t provide them much value (but are valuable to other customers). The largest costs are generally the ones the customers value. I’ve never found a customer wanting me to trim my support staff.
It is important to communicate the change in rates as early as possible so that the clients have a chance to adjust their budgets. You don’t want the situation where the client has finished the budget which will barely get them by and then you surprise them with the increase.
To reduce or remove a discount, a customer will want to see a difference in the situation that justified their discount to begin with. If they are not spending as much as they thought they would at the time the discount was offered, that is one of the easiest justifications. It is always difficult to remove a discount. A discount on a service contract is a very large discount as it is a discount on years of revenue instead of a one time discount.
If it is an increase you feel might be a problem for customers, I would introduce the increases to the largest customers in person. Ideally, there is a large enough lead to the increase you can work a heads up into a regular visits. If not, I would want at least a phone call.