How to Raise Rates Without Scaring Clients

Every agency will need to raise its rates at some point. The costs of running an agency are rising, and your team’s growing experience means you are providing your clients with more value. However, the inevitability of raising your rates doesn’t make it easier. You owe your success to your clients, and you may feel guilty or be worried that charging more will scare them off. These are valid concerns, but when approached tactfully, you can raise your rates while maintaining client relationships.  

In this blog we discuss key questions to ask yourself when raising your agency’s rates and how to communicate the raise to your clients for the best outcome.  

1. What is your current pricing based on? 

Before raising your rates, assess your current pricing model and determine if it is still working for you. If your agency is still relying on traditional pricing models, you may consider transitioning to value-based pricing. Typically it more accurately reflects the value you provide your clients and allows more room to raise rates.  

Also, be sure to evaluate your sales estimates. It doesn’t matter how much you’re charging if you aren’t accurately estimating your projects or are allowing a slough of out-of-scope requests.  

2. Where does your agency fit within the industry?

Review competitor agencies and freelancer pricing to determine what the industry standard is. If you are currently charging below the standard, raising your rates will be relatively easy. You can charge above the standard and remain competitive in the market, but you must position your agency correctly and clearly demonstrate the value you provide. If your agency specializes in a specific industry or offers exclusive services, you can charge more for this expertise.

3. What strategy is best for your business?

You may choose to raise your rates uniformly, or you may choose to tailor the raise to the relationship you have with each client. If you don’t have an established relationship with a client, it can be more difficult to raise rates as they can easily switch to another agency with minimal disruption. In this case, the best approach may be to raise rates with new clients only. Or go ahead with the increase, with the awareness that you may lose clients.  

On the other hand, your long-term loyal clients know the value you provide and are more likely to accept the price increase as you are not replaceable. You may choose to reward loyalty with a smaller increase if you do so, be sure to let the client know that they are getting a deal because you value their support.   

Communicating the Increase to Clients 

How you communicate a rate increase to your clients is key to the outcome. This is not a conversation to have over email. Deliver the message in a meeting or on a call to gauge reaction and act accordingly. Each client’s respective account manager should utilize their existing relationship with the client to communicate the rate increase. Be prepared to answer any questions clients may have and demonstrate the value you provide them to justify the increase.  

Timing is crucial when it comes to raising prices. Notify clients at least three months in advance; however more notice is better. Nobody likes a surprise extra cost, and allowing your clients with ample time to rework their budget will increase the likelihood of a good outcome. 

Final Thoughts 

While it may involve a few awkward conversations, your clients understand that rate increases are necessary. Transparent and honest communication is key to successfully raising your rates without scaring away clients. Remember that it can be a long process and the further you plan ahead, the better.  

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