How to Raise Your Rates as an Entrepreneur
For entrepreneurs, especially ones with service-based businesses, the question of when and how to raise your prices can activate a whole symphony of business and personal drama.
Today I want to share the exact process I use for deciding when and how I raise my prices.
I know so many people lose sleep over doing this (I used to as well) and because of that, often attach themselves to a “business authority” and do exactly what they say, instead of going deep within to find out the best way for themselves and their business.
So to be clear, I am not sharing this with you to be another authority in your ear insisting my way is the one, right and true way—I am sharing this with you because when I raise my rates, I do it differently than a lot of other folks in my industry. In fact, the way I have raised my rates is the direct opposite of what many big name business coaches suggest.
What I do works so well for me that 80-90% of my clients choose to work with me an average of 2 times after their initial package is complete (you can read more about that here).
My hope in sharing this with you is it that it opens you up to consider that there is no ONE RIGHT WAY or ONE RIGHT TIME to raise your prices. And if what I do resonates with you, you can experiment with it in your business.
When to Raise Your Rates
Despite what a lot of people will try to tell you, there is no perfect time to change your prices.
You don’t have to wait to raise your rates until you are overbooked, or until your business is losing money because you have been undercharging for so long.
Also, you don’t have to raise your rates because of inflation, because it's been a year since your last fee increase or because your BFF in the same industry just raised hers.
I watch too many people make decisions about their rates from arbitrary or disconnected places within themselves and then create a lot of drama about it after the fact.
How I do it:
In my company I make decisions about rate changes when I get the intuitive sense that it is time and when I have the metrics to back that intuition up.
(This means, in order to explore this method then you need to have a strong relationship with your business intuition and a way of tracking your revenue, retention rate and lead generation actively quarter over quarter.)
If the data supports the intuition, then we next put the potential rate change through the filter of our company values to make sure it is internally aligned. This saves me and my team from indecision because the answer is clear.
Finally, I consider why this will create a better experience for my clients. This might sound strange because most people assume that clients always want the less expensive option, but if raising my rates means I can hire a new team member to enhance their experience, up-level our systems and support me as the CEO to take additional trainings that make me a better coach and a more energetic human, that means I can help them live their dreams.
If raising my rates doesn't help me better serve my clients, I probably won’t do it.
Between intuition, the metrics to back it up, plus both internal and client alignment I make a decision and move forward with it.
*By the way, if this process feels aligned to you but you don’t have a set of working values and the systems to back this all up, these are some of the things you learn how to build and use daily in the upcoming Vision + Process Mastermind. Learn more and apply here.*
How to Raise Your Rates
Once you have decided you are going to raise your rates and have a clear reason you feel good about doing it, the next challenge is: HOW?
This is the point where people start to lose their confidence because now you have to make it real by saying your new price out loud.
In the coaching industry, many “experts” teach that you just start saying your new price on consultations from that day forward and use your mental brute force on any objections while doing your best to appear calm.
This feels like shit for most people.
And it usually doesn’t work. Most heart-centred coaches go through long, hard client dry spells that destroy their self-confidence while trying to do it this way.
How I do this:
After I feel solid on all sides of a rate change (including what amazing things are in store for my clients because of this increase) I email my existing clients and let them know my rates are going up, how the package will change at that point and when it will happen.
Then I offer them the opportunity to pre-pay for their next package at my current rate.
Let me remind you, you don’t have to do this if it doesn't resonate with you.
But personally, this is what I would appreciate as a client, so it's what I do for my community as a show of appreciation.
I also send an email to my bigger list telling them a price change is coming (especially if it is a significant one) for my programs.
The point is NOT to create urgency or pressure. I do it because I don’t want someone who has been planning to join a program with me to find out that my rates have gone up and they missed the cut off by a week or two.
That would annoy me as a client, so I don’t shroud my prices in mystery only to be revealed on a consult.
I tell folks what the investment is in those emails so that if money is part of the deciding factor for someone, they don’t have to do any mental gymnastics to see the price-tag for hiring me.
THIS GOES AGAINST WHAT MANY COACHES DO, I know, but I don’t do high-pressure or predatory sales, and I don’t try to coach people out of their objections, so it makes no sense for me to be anything but upfront about my rates.
(I only coach people on the topic of money once they are my client but if you need some help sorting out your own sales mindset, you can read this article I wrote for you about making more money without compromising your values.)
I hope that this inspires you to think more deeply about your approach to raising your rates and who you want to be for your company and your clients while doing it.
One last thing, If you want an example of how I let my list know I am raising my rates, make sure you are on my email list here. I am raising my rate across all programs on September 1, 2022 for the first time in a long time. I love my reasons for it and I can't wait for my clients, new and current to experience their own next level that will be made possible in the new programs I have created for them all.
